Monday, July 21, 2014

Progressive Ideas for Creating More Jobs and More Income for Governments that Care!

Many of you might have come across this Chinese proverb: ' Give me a fish, I will eat for a day; teach me to fish, I will eat for the life time!'

Have you really understood the meaning?

Many of our philanthropy even now work on the principles of the first part of the above proverb. We try to help others by giving them a fish or some money or some other such thing  that they take it , consume it and fall back to the level that they were earlier. We do not try to create a situation wherein those whom we help do not fall back to the situation they were earlier. Simply put, we simply do not care to facilitate people to live a meaningful life of their own!

Many governments do the same thing. My country, India is a typical example. The Indian government reportedly spend or reported as being spent a good part of its earnings to give subsidies to the poor! They try to distribute subsidized food, LPG, diesel, kerosene, electricity, water, housing, etc by making these things a few rupees cheaper for the people who are not able to earn an income above some prescribed minimum levels. 

Let us find how it goes by some examples. Suppose that the electricity production cost as per the prevailing inputs is some thing around Rs.4 per KWh or unit. Suppose that the government make a scheme by which they are giving a subsidy of Rs.1 per every unit consumed by a house hold which is declared as low income whose electricity consumption is only about 30 units in a month or 360 units in a year. India perhaps has over 100 million of such houses. So the one rupee subsidy means a whopping 360x100x1= 36000 million rupees per year. Effectively the poor people got a benefit of 360 rupees per year or 1 rupee per day. It is less than the money you normally give to a beggar. Perhaps some  beggars might even abuse you if you do that.

But imagine the great money the government lost. They could have used the money for doing some great and useful work such as making some hospitals run better, making some existing roads well maintained, etc etc.

It is just an example. These subsidies do not make any impact in the life of any of the beneficiaries. Perhaps it helps the government officers and staff to adopt corrupt practices and corner a big chunk of that money for themselves. Perhaps some politicians in power also might get some of it from the officials by doing some arm-twisting tactics!

Same is the case with all the other subsidies. India is indeed a country of subsidies. It is the best and the easiest method by which the government can waste the governmental income. Giving a rupee each to thousands of beggars really does not require much effort! And it is also the best method by which public money could be spend without the auditors taking note of any irregularities!

Instead of giving the people a fish for a day, it would have been much better for the country to enable the people to fish. That is enabling the people to fetch for themselves by providing opportunities for them to fish. In other words, it means creating opportunities for people to get meaningful and remunerative employments or jobs for themselves that they no more require the peanuts given by the government as subsidies!

But creating opportunities for jobs is not as easy as giving alms and escaping from the greater responsibilities. For that the first and foremost requirement is to have a government that really cares for the people. You need a government made of matured and visionary leaders who could drive the governmental systems to perform.

Such governments would make laws and rules and ensure such rules actually work in facilitating the country to progress in such a way that unemployment levels keep declining year after year.

If the unemployment levels keep increasing, that merely shows that the government is ineffective and useless. It is a direct indication of a careless and non-performing government.

Now the question is whether it is possible for a government to enhance employment opportunities without it actually getting bankrupt? In my opinion, it is possible. Let us see how a government would move ahead in this case and what are the various options that the government could attempt.

Step No.1 : Government should spell out its policy of plans clearly with a time bound manner. If privatization is a policy, government should declare the list of businesses and services which are not to be done by the government. 

Step No.2 : Government should stop all subsidies and the money so saved should be distributed for existing and new ventures to improve government services and functions. If more people are required to be employed for this it should be done without hesitation. Money may also be given to private enterprises as grants for developing systems where the activities cannot sustain economically initially. For example, government may give subsidy to start new air routes, rail routes, bus routes etc where there is not enough remunerative traffic initially till such times the volumes of business become sustainable.

Step No.3: Government should consider lower corporate income tax and other tax concessions to all companies who keep growing with regard to direct employment with individual employee incomes with taxable incomes. Companies who use their surplus incomes to idle or used to acquire assets and employment abroad should be taxed at higher rates.

Step No.4 : Companies that earn export incomes by exporting locally manufactured items should be taxed at lower rates. However, those companies which export ores and minerals should not be considered for this benefit.

Step No.5: Incomes and profits out of educational services and agricultural activities above a minimum limit should be made taxable. Lands which are kept non productive should be levied penal taxes or should be made liable for take over by the government.

Step No.6: Substantial incentives to be provided for industries and businesses to set up offices and facilities in smaller cities. Unsustainable growth of metros should be prevented.

Step No.7: Corporate expenditure towards Research and Development, import substitution efforts, environmental management and workmen safety should be tax free provided the companies substantiate growth in these areas by employment creation. 

Step No.8 : Laws should be made that would allow real estate development for rental purposes. Real estate developers should be allowed to establish estate management companies.

Step No.9 : Law should be made to make the private hospitals to provide mandatory and time bound medical reports to patients and their medical insurance companies. It should be mandatory for the hospitals and doctors who provide medical services for a fee, to give such reports with proper bills which should enhance employment opportunities.

Step No.10: All government services such as land records, property registration, national identity, voter id, vehicle registration, licencing, company registration, policing, judicial services, infrastructure, etc should be enhanced with the involvement of private participation. Job creation data in these areas should also be maintained. There should also be a national job safety fund similar to the national pension fund, which provide subsistence allowances to its members during the time they become jobless. 

There are hundreds of such things that the government could do if they are really caring for the people!

And it is always to be remembered that more employment in the country means more income to the government. More income to the government means more effective its performance.

So more than any thing else, the first priority of any progressive government should be to generate jobs. Not merely the jobs that provide peanut incomes, but jobs that provide decent incomes!

Out of many parameters to judge, job generation should be the first criteria to assess the performance of any government!

[You may also read about enhancing employment in India]

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