Wealth creation in a country should be a fair, long, and well thought out process. Before the arrival of wealth, high quality infrastructure and education, integrated plans to promote entrepreneurs, ensuring investment security, equal access to resources and financial incentives for all, equal access to legitimate bank loans, training facilities, and other 'Doing Business' foundations need to be created.
Intensive focus is needed to nurture talent, innovative business ideas and encourage entrepreneurship. This takes a lot of thought and foresight, lots of investment too.
New assets are not created from net zero value; no one in the world is a billionaire from scratch. Every billionaire is an outcome of the collective intellectual, infrastructural and financial investment of the state and society.
A decentralised capitalist system ensures equal access of the citizens to the infrastructure, services, and resources of the state. The basic premise of such a system is that the state system does not consciously create walls of discrimination between citizens or social-political groups.
They try to listen to everyone and encourage everyone to make a business plan, initiate a start-up, and give them access to banking and other business or financial facilities institutionally. The liberal democratic system does its utmost to encourage and develop the creativity of the common man. In such states, institutions fairly support the implementation of ideas, and this open system itself creates new resources, wealth, and eventually new employment.
China does it a little differently, with special nurturing projects ensuring wider manufacturing facilities for interested parties. In addition, China has a very well-thought 'Beijing Consensus' that helps alleviate poverty and create jobs.
The decentralisation of the administration in a capitalist or liberal system ensures public participation in the resources, education and financial systems and infrastructure facilities of the state. When the sharing of state resources and power is fair, a natural process of creating innovation and entrepreneurship is activated. The outcome of this process is the emergence of the new rich, i.e., new millionaires or billionaires.
But in a centralised capitalist system, the state itself blocks the natural process of creating new wealth. Innovation, start-ups, career development initiatives of individuals get stuck at the lower levels of politics and administration, and cannot reach the secretaries and ministers of the capital.
New entrepreneurs do not get bank loans, financial incentives, EPZ facilities without the influence of gatekeepers.
When it comes to Bangladesh, we hear many stories that resonate with this. While the government sets up technology parks to encourage entrepreneurs, access to these facilities is reportedly difficult without political connections. Similarly, the government often provides incentives to sectors engaged in import and export. However, if you are an entrepreneur trying to access these without a direct party recommendation, your scope of receiving it is very low.
We see pictures of 'so-called' successful entrepreneurs in the media and social media with top officials of the government. This is because it is easier for new businesses to succeed with their blessings.
This can be better explained with Professor Douglass C. North's limited access order theory. According to it, the constant conflict over the control of a state's power and resources extends to all levels of society.
A society or a state can solve the problem in two ways.
Limited access order where access to resources is limited.
Create state systems with open access orders.
A common feature of limited access orders is that the political elites in the country divide up control of the economy among themselves, and everyone gets additional rent benefits (corruption-looting) from it. Since political instability, the prevalence of terrorism and violence reduce the likelihood of receiving additional benefits (rent and productivity of the citizens), the elites try to maintain adequate stability and limit the competition for power.
As the elites share the wealth and opportunities of society and the state among themselves, the access of the people to the state's resources, services, and facilities are limited. The Dominant Coalition terrorises the citizens and divides the state's land, labour, capital, bank loans, business, jobs, education, politics, power, elections, etc. among themselves.
But in return, the dominant coalition tries to give the citizens a conditional level of security.
On the other side of the limited access order, is the open access order, where the citizen and political-apolitical elites reach an agreement to distribute all the opportunities of the state equally among citizens.
Here, state institutions distribute opportunities based on merit. The institutions ensure the right of the people to participate in politics, the right to acquire resources, the right to education, etc. based on equality.
The process of creating wealth should be orchestrated via a fair, legitimate, and productive process with no shortcuts. The practice of manipulating public policy or economic conditions as a strategy for increasing profits, i.e. rent-seeking, should be avoided consciously.
In our political-bureaucratic financial system, cronyism and rent-seeking have become a part of the way some of our companies do business. The shortcut to getting rich in Bangladesh is to default to a bank loan intentionally in conjunction with powerful elites, i.e., to generate a Ponzi Scheme.
Listening to Bangladeshi motivational speakers, opinion leaders, thought leaders and intellectuals, it would seem that the state does not need to do anything to create an entrepreneur-friendly infrastructure, to improve the quality of education, to create jobs, to exit out of jobless growth, to ensure workplace safety, to safeguard the environment, to create a supportive infrastructure for business development, to create equal financial access for all. They have no demands of the government. According to them, young people can and will have to become a millionaire by simply working hard.
In reality, ideas or suggestions to make young people into rich entrepreneurs are deceptive. Projects have been initiated to make some selected people rich by arranging bank loans and awarding various licenses. There are big traps in such Ponzi projects. And motivational speakers have sold these stories. At the end of the day, they are indirect enablers of cronyism. In many cases, motivational speakers or stars have become entrepreneurs where they themselves have destroyed many potential sectors through their deceptive Ponzi model.
Leaders tell our youth not to look for jobs but to create jobs. The youth are repeatedly told to become entrepreneurs while the truth about jobless growth remains hidden. For the general public, almost all avenues of being an entrepreneur are realistically closed.
Banks do not offer loans to ordinary people as they are deemed not trustworthy, though some banks default on one-fourth of the total disbursed loans. Private loan flow is currently below 9 percent.
Over the last 12 years, the government has increased the price of water 14 times, electricity 10 times, gas 8 times. The price of land registration has skyrocketed. House rent and transportation rent is out of reach.
Moreover, our VAT and other taxes have increased many times.
More than half of the seven million SMEs did not get bank loans after the pandemic began. Additionally, Bangladesh's score is at the bottom of the list in the Doing Business Index. It scored only 29 out of 100 in property registration, 22.2 in enforcing contracts, 28.1 in resolving insolvency, and 31.8 in trading across borders.
Despite subsidising the power sector with Tk60,000 crores over the last decade, why is the country's electricity score just 34 out of 100? How will our boys and girls become millionaires or billionaires?
After all those Ponzi pills of the Ponzi devils, both the work and capital of our youths have been taken away. After losing work and capital, increasingly frustrated youths are getting addicted to drugs.
So I beg that we teach our youth that the only honest path to becoming a millionaire is one that is long, just, yet achievable. Demand the state to guarantee gas, electricity, and water access without bribes so that it can justify the price of fuel used in business and industry.
Ask the state to ensure the systematic disbursement of bank loans and fair access to banking and financial systems for commoners. Raise your voice to stop construction, transport and business extortion and to ensure eco-friendly refineries and ETP.
Demand social, business and financial security, demand justice. Demand the rule of law and accountability. Ask the state to expedite the criminal justice system, punish financial fraud and ensure wealth recovery.
Advise the Ministry of Industries and RAJUK to create office business and industrial production facilities rather than engaging in the plot business to get rich quick. Ask the government to decentralise power and access to resources.
Ask for democratic access into party politics and administration. Above all, tell the government to reform education and equip our students with the right skills. Our youth will take care of the rest.
Faiz Ahmad Taiyeb is a Bangladeshi writer living in the Netherlands. He is the author of 'Fourth industrial revolution and Bangladesh' and '50 years of Bangladesh economy.' He can be reached at [email protected]