Economics and Business Forum

On the poor, functions of government

From Friday

 Last week, I talked about the national budget and what it has to offer to the poor.

I said it is not the duty of government to spoon-feed able-bodied people, but to improve economic efficiency and reducing economic inequality. Today, I will talk of three other functions of government.

 

3.  Provide useful information

Our system of free enterprise enables honest and dishonest people to exist side by side. Sometimes it is the dishonest that accumulate wealth at the expense of unsuspecting members of the public.

It is the duty of the government that pharmaceuticals provide reliable drugs. Some drug vendors exaggerate the efficacy of their drugs and make sick people waste their money, buying things that do them more harm than good.

During the recent trade fair in Blantyre, I asked someone whether the various drugs which are being hawked in streets have received the approval of the requisite government institution, he told me they have not.

Quite often as I walk on the streets of Blantyre, someone usually a young lady, greets me and introduces me to a variety of drugs she is selling on behalf of a firm from overseers. The prospectuses or leaflets are quite impressive.

“This will control high blood pressure. This is for cancer and that one is for aged people,” she says.

I have at times asked to be shown a sample of the drug and have searched in vain for evidence that a government bureau has inspected and confirmed the curative powers of the drugs.

It is the function of government to ensure that all those processed foods said to contain vitamins A and B do not take the public for a ride.

Not many people take seriously a traditional healer who says he can cure all types of diseases, including Aids, give businesspeople medicine to make them prosperous ; people to win the love of  girls or boys they love or get back their lost property.

But deceitful manufacturers are beyond the ability of most ordinary people to recognise.

 

4. Stabilising the economy

The main macroeconomic phenomena are economic growth, inflation, unemployment, business cycles and in context of a developing country, we may add famines that follow droughts.

An ideal situation is one where an economy is growing at a steady rate, inflation is kept low where all people who are looking for jobs get employed.

But seldom are things like this. Brisk economic growth is often accompanied by galloping inflation, a drastic fall in inflation results in recession and nationwide unemployment.

The capitalist economy is prone to business cycles, the ups and downs in business activities.

When businesses discover that they are producing more goods than they are able to sell, they close up some of their factories and dismiss some workers.

Where many firms experience declines in demands for their services or products, unemployment results.

Sometimes the economy experiences shortages of vital commodities such as petroleum and diesel as well as double digit inflation which threaten to rise even higher.

It is the function of government to take appropriate fiscal and monetary measure to resuscitate an economy when it is in recession and apply monetary brakes on the inflation by reducing the quantity of money circulating in the economy.

 

5. International economic relations

A home market may not provide maximum demand for a firm products or services. The firm then looks to markets abroad for extra sales.

The function of a government is to participate in all international conferences as well as organisations which are dedicated to facilitating and increasing international trade and cooperation for members of bodies such as World Trade Organisations (WTO) and Southern African Development Community (Sadc). It is the function of a government to maintain good relations with trading partners.

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