That used to be us, the best in GCC. Are we going backwards? Have we lost our top spot? Have we lost our mojo? What’s the way forward?
Recently, Thomas Friedman of the New York Times, interviewed David Rothkopf, the chief executive and editor-at-large of Foreign Policy magazine and published it in his column (Capitalism, Version 2012). One paragraph really captivated my attention, because it summed up what I think are the route of Bahrain’s problems. Here it is.
“Rothkopf’s view, which I share, is that the thing others have most admired and tried to emulate about American capitalism is precisely what we’ve been ignoring: America’s success for over 200 years was largely due to its healthy, balanced public-private partnership — where government provided the institutions, rules, safety nets, education, research and infrastructure to empower the private sector to innovate, invest and take the risks that promote growth and jobs.”
A healthy nation requires the government to provide the necessary tools for the private sector to flourish. In simpler terms, the government has to always be one step ahead of the private sector.
Is this what we are noticing in Bahrain? The answer is no, or to say it in an optimistic way, not yet.
The private sector depends a lot on the institutions that are built to support its existence. For example, not allowing anyone to enter Bahrain only shows that we lack the proper institutions that monitor people inside Bahrain. It also shows that we are unable to force the rule of law to everyone inside Bahrain, or perhaps do we have laws at all about how foreigners should act here?
I saw once in a video where an American activist held her passport in front of the police and told them that they’re not allowed to touch it since it is an American property. The police believed it. Was what she said true? Absolutely not, because the police have all the right to handle an ID. If she does not hand over her ID, then technically she presented no ID. Why did the policeman not know this basic common sense law?
The proper way to go forward is to hold people liable for their acts, and build careful monitoring system, proper and publicized rule of law, and efficient enforcement mechanism.
Now the question is, why does the government not show a high level of attention into the interest of the private sector? I see a missing link. In Bahrain, the government does not have the mechanism that makes it profit when the private sector benefits. What I mean is, we don’t have corporate tax, we don’t have sales tax, and we don’t have income tax as well. So, the money that comes in to Bahrain really only fraction of it ends up benefiting the government. This is both good and bad. What we should do is make sure that it is only good, and get rid of the bad.
The good is that the private sector would keep its money to itself and grow, along with providing more and better paying jobs. The bad is that when the private sector needs the legal assistance of the government, it may face a deaf ear.
What we should do is not stop people from entering Bahrain, but make sure they behave well when they’re here. We’ve always had an open door policy, and I don’t intend to change it.
Awesome Blog, y36ek el3afya.. We need more young innovative entrepreneurs,,, it’s true, oil countries don’t have taxes, the government uses oil revenue to make the state’s budget,, well, Bahrain doesn’t have a lot of oil compared to other GCC countries, that’s why empowering the service sector is imperative to our economy. I don’t think income and tax sales would work in Bahrain,, wages are already low , people would go crazy, but corporate tax ? it could work
another issue , which needs to be tackled is corruption,, a lot of (Public Money) goes in the pockets of elites.
I dont think so the Kingdom can afford introducing a tax regime at this post crisis period. it will produce its own reactions to deal with. The country has recently countered a deadly political crisis, partly incited by a neighboring foreign Mullah regime. The society was conspired to be divided on the religious lines, and for a while it appeared that there were a huge rifts but thanks to the regime wise policies the rift has been healed and conspiracy failed.
Taxation will bring the capital class in actions. They will resist it for sure. Taxation has always been resisted by the dominant groups. Bahrain should avoid an economic conflict at this time.