Errol Ennis If Jamaica is to be transformed into a true paradise it is for all, then every stakeholder must play its respective role. In the case of government there are many such roles. However, today I would like to examine the Government's regulatory role.
According to Thomas Jefferson, main architect of the Constitution of the United States of America, government was created to secure the inalienable rights of all citizens - i.e., the right to life, liberty and the pursuit of happiness. If everyone were to be allowed to pursue his/her happiness unfettered, then other persons' rights would be trampled on. It is within this context that regulations exist and are enforced. For instance, if everyone had the freedom to drive on any road in any manner they see fit, pretty soon we would have untold accidents. The Government has set and enforced road regulations to prevent the accidents and allowing an orderly flow of traffic on the roads. The regulation to drive on the left is not intended to restrict one's total freedom to drive; rather it is there to protect you and everyone else. On the other hand, there is no need to regulate which side of one's personal driveway one must drive as there is no trampling on anyone's rights if one chooses to drive on the left, right or centre of one's personal driveway.
There are numerous other cases of regulations such as with immigration, customs, firearm licences, banking licences all with the intention to protect. However, there are times when the Government and its agencies go beyond the need to protect and wants to set and enforce regulations for the sake of regulation.
It is often said that self-regulation is the highest form of regulation. This is so because persons in a particular industry have the requisite knowledge about that industry to provide the technical skills required for regulation. Secondly, persons in an industry have the most to lose if such an industry were to collapse and are therefore best driven to ensure there are no causes for such a collapse. During the financial meltdown of the Jamaican financial sector in the 1990s, the two sub-sectors that survived unscathed - building societies and credit unions - were self regulated. To this day, both sub-sectors remain strong. I have never heard any member of any credit union crying out to the Government for protection, yet there is a move by the Government to bring the credit unions under its regulatory tentacles. Mr. Ronnie Thwaites, during a discussion on the pending regulation of the credit union movement, remarked on public radio earlier this week "If it ain't broke why fix it?" And I agree entirely with him. This seems to be a case of regulation for regulation sake rather than for protection.
In the 1990s following the relaxation of the foreign exchange controls and the increasing use of technology to source and purchase vehicles for imports, a new class of briefcase vehicle importers emerged. Individuals could import vehicles out of Japan using a fax machine and computer as their tools. This brought down the prices of imported cars. The traditional importers who charged a standard 15 per cent mark up (even on the duty) started to hurt and cried to the Minister of Commerce for help. The then Minister of Commerce instituted regulations forcing the individual importers to carry spare parts. The argument was that unsuspecting car purchasers may not find spare parts (although a multitude of car parts merchants existed). The regulation was introduced ostensibly to protect the car purchaser when it was actually to protect the established car importers. This was a classic example of misuse of regulations.
Capacity to make decisions
Government and its agencies must realise that individuals have the mental capacity to make sound decisions when there is full disclosure of information required to make that decision. In the case above, a potential car purchaser can decide between a traditional importer and a non-traditional briefcase importer. The former carries much of the spare parts of that particular vehicle and usually has the competence and experience to repair the vehicle, but the vehicle comes at a higher price. On the other hand, the purchaser is on his/her own in terms of spare parts and repairs purchasing from the briefcase importer but at a much lower cost. Given complete information, any rational individual can make an informed decision and take the necessary risk. There was no need for government regulation beyond the provision of information.
The recent brouhaha surrounding Olint is another classic example. The Fiscal Services Commission raided their offices last year and continues to insist that Olint be regulated. The Minister of Finance's warning that he cannot protect the investors in Olint has apparently gone unheeded as demand for Olint's services continues unabated. On one hand, some financial journalists are insisting Olint be regulated, while on the other Mr. Errol Ennis has been slapped on his wrist by the ruling Government for his statements concerning the FSC's handling of Olint. Is it that investors in Olint need protection or is the FSC attempting to regulate for the sake of regulation? Whatever the letter of the law says, we must realise that the spirit of the law is the need to protect. If indeed Olint is an investment club and the members are taking rational decisions to put their money at risk, then the only role of the FSC and other regulators is to inform those investors of the high risk. It is no secret that the financial sector traditionalists have responded in the same manner that the traditional motor vehicle importers did in the last decade. However, the Government must rethink its regulatory role and not regulate for regulation sake.
Regulation for regulation sake tends to protect a small few at the expense of the majority. By protecting the interests of the traditional motor vehicle importers, the Government raised the cost of motor vehicles to the average consumer. The regulatory role of government is a critical one; however the Government and its agencies must be very careful that in attempting to protect one's rights they do not impede on the very rights they say they are trying to protect.
Robert C. Wynter is a partner in Growth Facilitators, a management consultancy firm. He may be reached at robwyn@cwjamaica.com .
