The incompetent and corrupt state

THAT THE State is an incompetent and corrupt entrepreneur is self-evident. Despite all the theories to the contrary that have been developed and tested over the years, history is full of state-owned enterprises going down in bankruptcy, after wasting substantial national resources or after forcing taxpayers to foot the bill.

There is little doubt that the phenomenon is not confined to Cyprus. It has manifested itself in Greece, in Russia, in China, in Cuba and, without exception, in all the countries of the world that have attempted to centrally “plan” and “direct” their economy, by utilising the services of obedient and conforming civil servants, whose basic qualification was their allegiance and loyalty. Their reward for their blind obedience was the accumulation of “vested rights”, including their right to indulge in corrupt practices.

Look at the case of Cyprus Airways, the case of Cyta and, very recently, the case of the Co-operative movement. The ailments of the co-operative movement have roots that date back several decades. Soon after independence, Archbishop Makarios extensively used, through Andreas Azinas, the cooperative movement as a tool for the political manipulation of the electorate – a practice that was closely followed by his immediate successor at the Presidency but also by most of the presidents that followed them.

Thus, the Cooperative movement was led into bankruptcy by systematically extending loans that did not have to be repaid. At the end, the taxpayers were forced to step in to cover the defaulting loans in order to avert a “haircut” of the small coop depositors, similar to the one that bank depositors suffered in 2013.

What is truly shocking is the audacity of the employees of the Cooperative movement, who unquestionably carry a good part of the responsibility for the collapse of the cooperative saving societies. Throughout this long period of time, the employees of the saving societies became accomplices to the perpetration of the crimes committed or, at least, were silent observers of what was happening under their nose, thus facilitating the looting.

These very people, instead of apologising to the taxpayers for their failure to discharge properly their duty, they are now aggressively seeking to secure compensation (that is many times higher than what other “normal” employees would be entitled to receive) for not being allowed to carry on as before!

Regrettably, the prevailing impression is that the State and State Enterprises constitute an inexhaustible source of wealth from which one can easily derive income, without providing anything substantial in return. Clearly, we have not learnt from our past mistakes. Clearly, we do not really care if we lead Cyprus into a new economic crisis, similar to that experienced in 2013.

My question is. Has the time come to consider the possibility of confining the State to its regulatory and supervisory role? Should we abandon the idea of elevating the State to an entrepreneur, given its catastrophic past record? The State is a proven incompetent and corrupt entrepreneur, capable of throwing billions down the drain (in its efforts to keep its boys happy). I am very much afraid that we have not seen the end of this saga. For as long as the political spectrum (to the left as well as to the right) is occupied by politicians, who are exclusively interested in serving their own self-interest, the problem is likely to persist.

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