About Nick: i am an economist based in malaysia. I write about ECONOMIC DEVELOPMENT AND POLITICAL ECONOMY, while sneaking in a pop culture reference or two.

The Perils of Over- and Under-Government

In the 1989 NBA Playoffs, the Chicago Bulls had just won a close game against the Detroit Pistons behind a series of high pressure plays by superstar Michael Jordan. When asked after the game what the strategy was behind those late game plays, Bulls head coach, Doug Collins described it as, “…get the ball to Michael and everybody get the [fudge] out of the way”.

 Collins was half-joking, of course, but sometimes the best thing that head coaches can do, at least in basketball, is to let their best players figure stuff out. In other words, they need to under-coach. Sometimes, choosing not to do something can be more beneficial than doing something that has a chance of blowing up in one’s face, even if it may succeed as well.

This idea may seem like a long way from being related to issues of a nation’s political economy, but it’s far more relevant than at first glance. In the past few weeks and up to the present, thousands of Malaysians around the country became victims of horrific floods. We’ve all seen the truly heartbreaking pictures – people trapped on roofs, homes wrecked and even swept away by waters, corpses found.

At the same time, we have seen other kinds of pictures as well. In particular, we’ve seen pictures of many a politician or influencer going down to the ground – turun padang – in an attempt to help, or be seen to help, victims of these floods. I don’t deny that there are many whose intentions are sincere, but it’s also not unreasonable to say that, at least for some, the motives are, at best, obscured by the actions that they took.

For instance, there were launch events for flood relief that were widely panned and individuals who, for some reason, needed to bring photographers with them to flood hit areas and individuals who felt the need to plaster their face all over flood relief boxes. Look, maybe it wasn’t the individuals themselves who planned this. It could be their teams. But as many of us know, when teams plan these sorts of things for their clients or bosses, it is because they believe it is what the client or boss wants.

What does this have to do with Michael Jordan and Doug Collins? Well, we’ve seen, in the face of the flooding disasters, the “Michael Jordans” or superstars of our nation. Volunteers from all backgrounds pulling together to cook hot food at Sikh Gurdwaras, to rescue trapped people and pets with their own boats and kayaks, and to help clean the homes of flood victims, among other amazing things that Malaysians do for one another when we need it. And, in times like these, sometimes the best thing to do is for individuals who aren’t helping, or who can’t optimally help, to get out of the way.

For instance, on a given boat, every seat taken by a photographer is a seat that could have been taken up by a flood victim. Every Ringgit spent on a launch event at a hotel or on pictures of individuals on boxes could have been used for flood relief. Certainly, we should not be naïve. For those who are public-facing, they do need the very public publicity that helping out during a disaster brings and so we should certainly expect these actions. After all, in times of crises, governments should be expected to “over-govern” – think of the vaccination programme by the government – but the question remains, to what extent?

Taking a step back, economic history has also shown us that over-government can be detrimental to economic development. Eric Jones, a British-Australian economist, described in Growth Recurring: Economic Change in World History how governments throughout history have, by virtue of over-governing even in seemingly innocuous ways or in performative manners, have suppressed the potential for growth in their countries. In his book, he states, that over the past few centuries in mainland Asian states, “…by the time elites had used a share of central revenues on defense and conspicuous display, there was not a lot left over for public investment by any ruler who might have been so inclined”.

The textbook definition of Economics is that it studies the allocation of scarce resources across a whole host of desires and needs. Lesson one of Economics is opportunity cost – what are we giving up when we choose to allocate resources to a given activity or product? When governments over-govern, what productive resources are they drawing away from other parts of the national development? Similarly, when we do launch events in crises, what resources are being taken away from more pressing needs?

This may sound like the mantra of “Government is inefficient, private sector always knows best” but this is not what I am saying. I do not advocate a completely libertarian view, where minimalist government is the answer to every single issue. I believe very firmly in the role of the state in economic development, and the need for it to not just solve market failures but to play roles that the market may not necessarily even conceive of such as providing public goods, undertaking strategic investments for economic growth and structural transformation, setting regulation and, as has been done so successfully in Malaysia, rolling out mass public health measures such as vaccination programmes.

Indeed, the question is not only how government prevents itself from ‘over-governing’, but also how it prevents itself from ‘under-governing’. Let’s go back to the volunteers (also known as heroes) from the recent floods. In Harry Potter and the Half-Blood Prince movie, Professor McGonagall says, “I think we agree, Potter's actions were heroic. The question is, why were they necessary?” This applies as well to our heroic volunteers. While every one of these volunteers stood up to be counted for, the real responsibility of crisis relief and mitigation belongs with government.

As such, why was it necessary for so much immediate assistance and rescue during the floods to come from ordinary civilians? Why was there, in this instance, ‘under-government’? We had national agencies and individuals who were not clear about what their roles were, all amidst a live crisis. This type of ‘under-government’ should never happen and certainly not ever again.

The conundrum then is two-fold. Firstly, all governments need to figure out where it is necessary for them to ‘over-govern’ – like mass vaccination programmes and crisis management – and to ‘under-govern’ – such as in matters of pure commerce. Secondly, they then need to figure out how the right balance between over-governing and under-governing. This is not easy; it requires trial and error, and we cannot expect perfect prescience on the part of anyone. But we should seek it nonetheless. And in 2022, let’s hope that the government figures out a way to achieve a better balance.

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