The cost of a huge government-

President Museveni addressing the 80-member cabinet at State House, Entebbe

 Cornelia Stott, in his book “The Sound of Truth”, writes that the greatest patriotism is to tell your country when it is behaving dishonorably, foolishly and viciously. Just three months ago, I wrote in these pages telling “those in charge” of this country how Broken Window Economics is misleading them in the fight against COVID-19 pandemic.

In summary, I told those in charge, who were evangelizing that some select sectors of the economy like Agriculture will not be affected by the pandemic, that economies work like human bodies: when the buttocks are itching, the brain loses comfort! As a patriot, I exhaust my fingers—telling them about the defects of their huge government—in this piece.

Dictatorship of Boredom

I have kept my eyes gazed on this government for quite a while. This government is huge, greedy and makes nosy, officious and dangerous intrusions into the smallest corners of life. During my classes on this government, often I wonder whether it is being run by people, putting us on or by imbeciles, who really mean it. When I try to read a script on this government or listen to anything that “those in charge” of it are saying, I feel like high-school student who has fallen two weeks behind in the algebra class.

Researchers of political history tell us that leaders grow huge governments on purpose—to establish a “Dictatorship of Boredom”. They (researchers) assert that a huge government is so tedious to put its regular citizens to sleep such that the leaders (those in charge) are the last people awake to spend all the tax money. That when regular citizens grow drowsy and torpid, they snore like a gas-powered weed whacker and cannot notice what government is doing!

Since 2006, it is as if “those in charge” (NRM leaders) have been on a mission to grow a monster government. Today, it boasts of a cabinet of 80 ministers, a legislature of about 440 MPs (most of whom are comedians), a stadium of RDCs and their deputies, an extensive list of presidential advisers (whom the president advises occasionally), presidential convoys (to the ghetto and elsewhere) and other hangers-on, an extensive local government spread around 134 districts, and a civil service of over 300,000 people. All these depend on tax revenue generated by this small economy that is mainly agrarian.

This logic is mind boggling. Did NRM intentionally choose the Leviathan model of government to establish a ‘dictatorship of boredom’? Why has government bored us, sooo much, for this long?

Yes, government is boring because political careers of “those in charge” of it are based on the most tepid kind of lie: "government will provide free sanitary pads to all girls in schools", “government will provide free internet in Kampala”, “government will provide free masks to all Ugandans above six years”, and name it. Of course politicians don't tell the truth neither do they tell entertaining whoppers!

A Monster government swallows citizens it governs

It is James Buchanan and Geoffrey Brennan (1989), who in their book “Power to tax”, warn leaders of establishing a Leviathan government—a type of government that grows like a monster because it is “assumed” to be made up of self-serving politicians, bureaucrats, professional groups and other pressure groups (civil society). They warn that a huge government often breeds two animals that eventually swallow the regular citizens it governs: indecisiveness and fiscal indiscipline.

A huge government not only becomes indecisive and fiscally undisciplined but also gets more “thugs” in a protection racket demand than what discarded first wives of famous rich men get in divorce.

Swollen and arrogant with pelf, the thugs occasionally go butting into people’s businesses to intentionally fail them. They grab people’s land, in the name of government. When people speak, they waylay young men, ship them to people’s places and tell them to “hit in the head and shut them up!” And after they lecture people on investment plans (how they became millionaires) and safe sex (reminding people to produce few children).

Huge governments borrow for fun

Momentous events in the recent years have confirmed prior views of those who have always been skeptical of this government and decried its incompetence.

January 24th 2020, a headline “Government to finance 2021 elections on borrowed cash” was in our tabloids. Later in the day, in the evening of prime-time television, Hon. David Bahati, state minister for Finance, Planning and Economic Development, appeared on TV explaining that a Shs2.4 trillion loan request was before parliamentary committee on national economy for approval. He went ahead to give a reckless justification saying that “there is no way we cannot have elections. We have to ensure by April, the resources which we need are provided”.

When Covid-19 came, late March, president Museveni, given his military tactics to tackle real life issues, switched the country on a “silent mode”. He told us (using jargons in Runyankore language) to “stop walking, keep quiet, and listen”. That in so doing, we would be able to know where the enemy (Corona virus) is coming from (okushabuuza).

Jail the “Covidiots”

While we were under cover, “those in charge” were trading us. On April 3rd 2020, there was a headline “Inside Shs. 304 billion Corona virus budget” in the Daily Monitor. Those in charge were to allocate Shs 82 billion to Health, Shs 81 billion to security, Shs 59 billion to disaster, Shs 36 billion to local government, Shs 30 billion to Kampala City Authority (KCCA), and Shs 14 billion to ICT. The devil is in details of what the money was to be spent on.

Few weeks after, parliament passed a supplementary budget of Shs.900 billion to “save our lives”. It was in papers! It was in tabloids, making rounds. In what seemed part of the deal, Member of Parliament (MPs) allocated 1% of the budget (Shs.90 billion, each bagging Shs.20 millions) to themselves to carry out supervision and advocacy on Covid-19.

The public uproar which followed, baptizing MPs as “selfish” did not catch my attention. Why? Because economists often tell us that the purity of motive that fired a young man with a righteous zeal to make the world a better place tends to evaporate when he is a Member of Parliament with a big loss-making farm and a nice looking home.
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Those in charge went begging international donor agencies that were vulnerable to the virus. The World Bank (WB) gave them Shs. 57 billion ($15 Million) as a donation, and later Shs. 175 billion ($48 million) to “fight” desert locusts. The International Monetary Fund (IMF) gave them a loan of Shs. 1.9 trillion ($491.5 Million), among other events that have happened lately.

Why are we so obsessed with borrowing yet we are too poor to pay back or to jail? Is it in our DNA that we should borrow for every expenditure? Why do we borrow to spend on unproductive ventures—politics, military, administration, etc.? What is really inspiring the current fiscal indiscipline? Those in charge know the right answers.

Stop the buck

Someone should remind them (those in charge) that it is fiscal and monetary discipline, restored by their government in early 1990s, which turned Uganda’s economy in a solid performance then. Remind them that it is fiscal discipline after 1992 which saw the economy grow at an average rate of 7.5%, poverty reduce to 21% (from 56% in 1990), and GDP per capita grow by over 3.5% (in real terms).

Those in charge should be told that ever since fiscal indiscipline resumed, beginning in 2006, all these achievements have reversed. Their government is bloated. Their government has become as fiscally profligate as those governments it fought. The economy has been growing for a few, without creating jobs. Poverty has increased, and household incomes have stagnated.

This is not good news to a government which inspires to attain a “midro” income status. As long as their government continues to spend on unproductive ventures, however much they borrow, we shall not be able to accumulate national wealth necessary to lead us to middle income status.

It is President Harry Truman, who in his farewell address to the American people, referred to his favorite motto, “The buck stops here”. Truman said to them that to build a strong state, those in leadership, whoever they are, must decide. That a strong state is one with the capacity to get things done, raise taxes, and provide public goods.

Truman’s wisdom draws from the “theory of comparative development” which argues that underdevelopment stems from having an incompetent state that is unable to create social order, discipline politicians, decide on policies, and provide public goods. In some sense, this theory speaks a lot about the same set of facts we have been putting to those in charge of this government.

Indeed, studies have always identified lack of collective decision-making at the political level as an institutional chronic disease in Uganda. They have always talked of the bad habit of indecisiveness when it comes to taking urgent decisions and policies. It is time for “those in charge” to reflect on some of these issues and appeal to their guile to reconsider some of them. Let them bury their pretense and take urgent decisions

How to restore fiscal discipline

Economists have, for long, talked about of five main policies which are essential in guiding developing countries to achieve fiscal discipline.

First, they talk of tax reforms. As they advise, Uganda needs a tax reform which is mainly based on a combination of measures to broaden the tax and enhance efficiency in tax administration. Broadening the tax base suggests removing key tax exemptions (be it sector—specific, or on interest and capital gains, or the exemption on import duties) as well reducing the size of the informal sector by necessarily incorporating it into formality. We have occasionally put it to those in charge how to achieve the latter.

Second, they talk of public expenditure reform. The reform should aim towards a reduced current expenditure and increased capital investment. Excessive current spending could be cut in the area of defense (military), politics (elections), and wages/salaries and pensions (in medium term). As revenue materializes, then capital investment, especially in the social sectors (education, health, social protection, etc.) should be raised accordingly.

Third, they talk of public debt sustainability. That countries ought to reduce the public debt-to-GDP ratio. There is need to escalate economic growth, consider concessional–multilateral financing options, and a fiscal correction on this front.

Fourth area of policy reform relates to fiscal rules through the revamping of the “Law of Fiscal Prudence and Transparency”. Revamping of the Law should proceed gradually, focusing on institutional strengthening. The design of a set of fiscal rules for government institutions should impose hard budget constraints on them and upgrade their fiscal responsibility.

A fifth area of policy reform concerns contingent fiscal liabilities. Uganda must start making transparent budgetary provisions to deal with their eventual materialization lest the “contingent risk” will make the restoration of fiscal discipline difficult.

And so?

All said, those in charge should take urgent decisions right from the onset. I know this is painful and could attract hatred if rolled across the entire public sector.

Leaders don’t need to be liked; they need to be respected. In her book “The Truth About Being a Leader”, Dr Keren Otazo, says that “if a leader tries too hard to be nice, not only will others likely look down on him as a ‘soft touch’, but may also take advantage of his good nature”. A leader just needs to be careful about doing favors or letting people

If the issues could be reconciled, the dominant characteristics of Uganda’s politics could be thrown into sharper relief and perhaps see some incipient signs of a future economic and political order in this country. It could give birth to an era where “those in charge” of this country concede that good economics is good politics. That good economic policies necessarily relax political constraints.

Mugabe Darious teaches Economics at Makerere University Business School.