So let’s assume there’s is a dual emergency in the healthcare and education ministries. Both sectors need urgent funds at a time when the national budget is thinly spread. You’re the President and you need to make a budgetary decision and you’re wondering, ‘what should I give priority?’ True, such fiscal constraint has recently populated city squares around the world with protesters.
A good thing about making budgets is that the economic indices are mostly well laid out to show what the expected growth rate is, revenues, and expenses. A good rule is that there should be a substantial amount of money in reserve to deal with such unforeseen emergencies, while income streams are constantly being improved. A stressed ministry is a sign that the government’s income streams are proving insufficient. The real issue then would be how to increase capacity and income.
Making a good appraisal of the emergency need is necessary. This scenario might become like the junior school debate, ‘Doctors are better than Teachers’. This would not help if the right perspective is not made quickly. What is this ‘right perspective’? That good health and education are equally important. An educated population is an empowered and potentially creative one. It is indicative of a good economy. But so also is a healthy population. An educated but ill person may be severely handicapped in putting his quality of education to use. I would say that the health sector should take immediate priority.
I think the health sector is quite productive and makes more returns, and faster too, than the education sector does. Putting priority on the health sector is a path to improving income streams. It’s about giving to a short term need in order to secure long term gains. In making this kind of policy there should be a clear pathway for significant monies gained from such input into the health sector to flow into the education ministry.
It should be very clear here that placing priority on an economic sector is not the same as shifting all attention to that sector. Well, such a shift is unthinkable in real life. It is only logical to spread the resources as a ratio, say 2 to 1. That’s two-thirds going into health and one-third moving into education.
Let me re-word what I’m saying. Merely allocating emergency funds to distressed ministries is not enough. While the announcement of such fundings might calm angry unions it would not do much if those fundings are not targeted at restoring the budgetary balance. For example, increasing the doctors’ pay may be counterproductive compared to expanding and improving health facilities, funding highly probable and practical researches, and training those doctors. Larger and better equipped facilities mean a wider healthcare reach, more qualitative healthcare and more income- more income to offset the initial need for emergency funds and to stabilize the hurting education sector.
Also, increasing teachers’ pay might not improve the quality of education. In an emergency fund case, this is an unnecessary expense. Rather, the one-third should be targeted at publishing educational texts, providing study aids, and pioneering new educational services. The best path out of a recession is to put in extra money, not into people’s salaries, but into the economic engine.
It’s wrong, I think, to adopt a ‘one size fits all’ expense cut at the slightest provocation. Cuts have to be targeted at proven non-productive areas, or sectors with less comparative advantage. And those cuts should be immediately put into the more inspiriing sectors. This a lesson we can learn from the Eurozone turmoil.
But when there are emergencies, there may not be quick exits and restorations. Since there’s always a danger of economic resources becoming more scarce than usual and suddenly too like we witnessed in 2008, I propose that these steps should form basic principles of economic governance.
The government ought not to wait till there’s an economic downturn, recession, or depression to take these steps. That is why there are economy quarterly reviews to see what sector is performing, how it may be expanded, improved, and made more creative, as well as to take positive action on those one’s that are less performing. This calls for transparency, integration of the populace into national economy and a greater oversight of economic flows.