Initiatives, decisions, and planning
06 July, 2012

There's a new government, which is always a good time to think about how to improve the way the government of Georgia does what it does.


I am not talking about what it does but how it does whatever it has decided to do. The new prime minister has named three policies: health, agriculture, and jobs.

From early on in the post-revolutionary period there have been several advocates of a libertarian ideology that alleges that it is dangerous for the government

to address issues such as these. Certainly the reluctance to regulate business or anything else is understandable particularly in a post-soviet county, but an ideological anxiety about regulation is silly. Regulation is not good or bad; it simply is. By prioritising jobs in the way the government has, there is now an official recognition of this. This doesn't mean that Georgia is sliding into socialism, there is certainly still a healthy skepticism about state interference in the economy. But moving past libertarian ideology will be a great help in developing Georgia and making sure that development reaches everybody.

The problem the government has had with health and agriculture is too many initiatives and not enough decisions. The main reason that there have not been decisions about health and agriculture is disagreement among the leadership about what to do and anxiety about the political consequences of the decisions that need to be made. Those are bad reasons not to make decisions about these or any other sector. A good way to make some decisions is to show what these sectors should look like beyond the political horizon, say in ten years. How many hospitals will there be, how many doctors, how many nurses, paid by who, how many farms and of what size, growing what, selling to who? If the leadership could agree on exactly where the sectors are going in the long term, then the planning becomes much easier because you are only looking at intermediary annual targets. If on the other hand you don't know where you are trying to go, or that is not publicly available, then policymaking is stuck in the swamp of frequent and periodic initiatives that never seem to deliver what was envisioned at the start and are never measured.

There is a bad habit of this government to keep the decision making private and to unveil initiatives after they are designed by a small number of people. A public discussion of these topics would be a good idea. The government could signal that it would be interested to have a long term plan of ten years, that it would be interested in a public discussion of what Georgia should look like in 2022. That would give all the different constituent groups and internationals with opinions a conduit to engage in that discussion. This would also be a good way to see how the sectors and ministries interact with each other which has been another traditional challenge for this government. Because once each ministry drafts what it wants Georgia to look like in 2022, then the discussion can begin about whether they fit with each other.


Georgian families pay a great deal for healthcare. Currently the government policy is a fairly passive copy of the American system of employer based health care. But among wealthy countries, the American system is the most expensive as a percentage of GDP but worst in terms of public health outcomes. The system came about during the second
world war and nobody who had the luxury of designing it from the beginning would want to copy it. The countries who have had successful outcomes all have the same system of basic care being provided by the government or some entity heavily regulated by the government and then private care for those who want more than that service.

The complex question with agriculture is who does it serve? The farmers, the consumers, the overall economy, the environment, or agricultural investors? The answer is of course all of them, so their interests must be considered and balanced and this is not easy. Choices have to be made and each of those constituent groups must have a voice in the policy design.

As for jobs, we need to decide what kind of jobs. Early comments indicated that the government wants to use infrastructure as a way to employ people. This of course has the benefit of employing people while ending up with a bunch of roads and bridges. But there are also programs for state funded security guards, and others that more or less simply hand funds over to people, for not doing very much. The difficulty is that this costs lots of money so although popular before elections is often not the best long term solution. The reality is other than simply handing money out, the government doesn't have much of an ability to create jobs. That isn't job creation anyway, its charity.

What Georgia needs more than anything is new bussinesses and entrepreneurship. This has been a traditional weakness of southern Europe and strength of the nordic countries and north America. The best thing the government and particularly the new Minsitry for Jobs could do would be to create and protect new small businesses.
Currently the experience of the minister and the statements of the new prime minister related to infrastructure and those projects are great. But it will be of equal long term importance if the ministry directly addresses the interests of small businesses as well. Because in fact that is where most of the jobs are now and it is where most of the new
jobs will come from.