The Magic Wand
Jose S. Azcona Bocock
Interoceanic Railroad. CONADI. Mining and banana concessions. Nationalization of the economy. Collectivist Agrarian Reform. The history of Honduras is largely the sad tale of great illusions that at the time appeared to be grandiose, but whose implementation in real life did not fulfill the desired expectations and even turned into real nightmares. All of these had some aspects in common: it was assumed that an isolated solution was enough to get us ahead (magic wand), that most of the Honduran population does not have an entrepreneurial spirit, and that all have been replicas of something foreign.
We are facing another of these magic wands: “The private company, under any circumstance, is much more efficient than the state in providing services; it has already been proven in other countries.” This statement is not ridiculous or partially unfounded, but its acceptance as the sole and absolute formula is dangerous for our future. For this reason, the privatization processes must be accompanied by mechanisms to protect competition and democratic capitalism.
The greater efficiency of a free enterprise system with individual economic freedom is not disputed as the best formula for the prosperity of a society. It is obvious that whoever has a personal financial interest committed to a task will fulfill it in the most satisfactory way possible; for his or her own interest. Since, as Adam Smith (the father of modern economics) said in The Wealth of Nations (1776), “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest,” we can assume that whoever enters a business will always seek to obtain the highest possible profit.
The public interest is generally furthered by this natural inclination to obtain a profit. However, true free enterprise in a democratic society has other components without which economic life becomes simply a hunt for the strong against the weak: competition and equal opportunity. Pretending to continue promoting our state economic patrimony (as we have already done with a considerable part of it) without these safeguards is suicidal.
It is therefore important to create competition mechanisms before proceeding to deliver entire elements to individuals. In addition, it is necessary to create mechanisms to ensure free competition even if there is more than one company dedicated to the same industry. Collusion of companies for price control, pressure on suppliers, etc., violates free market principles and must be severely restricted by law. Without a legal system that protects free competition, the monopoly is maintained with all its arbitrariness and inefficiency, in addition to promoting the concentration of wealth in fewer hands.
This leads us to the need to prevent that the control of these companies is concentrated in a few hands. It is in the interest of the Honduran society to promote the existence of a broad capitalist base to ensure national prosperity. It is interesting to note that the Margaret Thatcher government in the UK, by proceeding with an overall privatization of state-owned companies, created a population of 1.2 million new owners, despite being accused of promoting “savage capitalism.” We believe that a system of actions can be designed to ensure that a considerable number of our fellow citizens have the opportunity to be the protagonists of our economic future.
We can expect great results from a process of investment promotion and privatization that is respectful of competition laws and equal opportunities. By doing this, we would be ensuring a solid foundation for our gradual and progressive economic take-off. We would thus obviate the need to resort to magic wands in the future.
(2000, LT)
