The African Enterprise (15/11/2021)
Public Choice Theory, If you see Sid, tell him.
Greetings from Abuja.
Over the last week, I picked up The Value of Everything: Making and Taking in the Global Economy by Marianna Mazzucato. In the book, she writes about the concept of Value in modern economies, showing how value extraction is now more rewarding than value creation. So far, it's a good read and some of my notes from this will eventually grow into essays that I share with you.
Coolest things I learned this week
Public choice theory
There is always a debate about how interventionist a government should be. This argument is often rife in the Nigerian twitter-verse with a lot of government policies unpopular and the feeling across the private sector that the government's intervention is a chokehold.
This same dissatisfaction was widespread in the 1980s where the backlash against the government was driven, in part, by the notion that economies should worry more about government failure than market failure. This notion is, in turn, driven by the fact that the government’s reach is larger and more consequential in scope. Hence, government failure became the backbone of the Public Choice Theory.
According to this theory, government failure is caused by private interests capturing policymakers through nepotism, cronyism, corruption or rent-seeking, misallocation of resources such as investing public money in unsuccessful new technologies, or undue competition with private initiatives.
In essence, governments consist of private individuals whose, when down to the decisions they make, motivating factors are no different from individuals in the private sector. So it's always a tradeoff between market failures and government failures. But given the scope of government intervention, do the gains in the economy outweigh the costs of failure?
In the 1980s when this logic began to heavily influence public policy, it led to a wave of privatization and outsourcing in the US, UK, and then across Europe.
If you see Sid, Tell Him
I love ads. I love David Foster Wallace's definition of what ads are supposed to do even more: Create an anxiety relievable by purchase.
Hence, going down the rabbit hole of Public Choice Theory described above, I was fascinated to see the ad for what has been described as a landmark for privatization policy of the government. If you see Sid, Tell Him is an ad for the 1986 British gas sale that encouraged British citizens to buy shares in the company.
More than 30 years later, Tell Sid remains a byword - according to the Rothschild Archive - for how a state-owned business should be out into private hands, leaving a legacy that means any government is obliged to consider offering the public opportunities in any privatization.
Talking about ads, one of the most memorable Nigerian ads is Cowbell, Our Milk. As a child, nothing created an anxiety relievable by purchase as that ad did. In fact, It was how we told the woman at the store that we wanted milk.
That’s it for this week.
If you have any thoughts or questions, hit reply and we can have a chat. And if you enjoyed it, share with friends.
Till next week,