I’m definitely one who believes in the power of government to solve certain problems. And the problem that I complain about most frequently in Africa is the suicidal way people drive. If only Government could crack down—requiring all drivers to actually have a license, ensuring that those licenses actually mean something, and actually punishing offenders of traffic laws—then the roads would be much safer and less intolerable.
Accordingly, I’ve never had much sympathy for those who complain that perfectly necessary and proper government regulations make it more of a hassle to run their business. “I have to listen to the food safety inspector!” “I can’t dump toxic waste in the town’s drinking water!” “I can’t chain my employees to their work stations!” Boo hoo.
But now I’ve had some experience wearing their shoes.
At BBOXX, we’re setting up a distribution network to supply solar systems in rural Africa. From a central warehouse in the capital, we deliver to a medium-sized “hub” in a major upcountry town. From there we ship smaller quantities to shops in rural trading centers, where motorcycles take the solar systems to the most remote customers’ households.
In Uganda this is surprisingly easy. 8-seater Toyota Ipsum station wagons travel daily from main towns to rural trading centers, overloaded not only with 12+ human passengers (often forcing one passenger to sit in the driver’s lap or astride the stick shift), but also with cargo: goats, chickens, bags of rice, TVs, and sometimes even solar systems. The rule in Uganda is, “It will fit.”
And it always does.
As a passenger, I complain loudly about my comfort… but once I am in the businessman’s shoes, I suddenly find it exceedingly convenient and quite reasonable to stuff a few solar systems on passengers’ laps for only USD 1 per box. Even though the driver is the only one who benefits from their discomfort, the passengers rarely speak up; Ugandans are just used to accepting things the way they are. Kakana! (Relax!)
Recently though I’ve been working in Rwanda, Uganda’s neighbor to the southwest. Sometimes referred to as the Switzerland of Africa because of its organized streets, disciplined people, and strong rule of law, shipping is not so laissez faire. Buses and matatu taxis are prohibited from carrying goods on their roofs, and overloading is strictly prohibited. As a result, drivers aren’t so willing to let you just toss your goods in their vehicle; passengers need their space. If they do ship your things at all, the prices are high: more than $1 for an envelope sent less than 50 miles, and a by-weight charge for larger items. Ostensibly, this is to make up for the fact that they can’t carry as many items, and that you may actually be able to win compensation from the operator if they were to lose your goods.
Even the taxes are higher in Rwanda! Or if not actually higher, at least they are actually collected—even from the informal sector. This has the effect of making everything more expensive. For example, in June I was buying sodas for a training, and the shopkeeper informed me there were two prices for soda: “Rwf 300 each, but Rwf 350 if you will be needing a receipt.” He explained: if he wrote a receipt, he would have to pay VAT.
I was needing the receipt.
If only things were just less regulated and less taxed and we could just ship however we wanted, everything would be so much cheaper and easier for us!
And I suddenly realized, “ahh, THAT’S why Republicans are always complaining about the government getting up in their business.” It’s easier and cheaper to operate your business if you can run it however YOU want to, and not how the government wants you to.
Concern gripped me. Am I becoming a Republican? I wondered. I almost started thinking libertarians might be right: that if we just leave businesses alone and let them do whatever they want, everyone will be richer and happier and less stressed.
And then I got back to Uganda, and remembered what it’s like to be a passenger.
I saw the potholes and the roads crumbling off into dirt and rubbish heaps, makeshift bridges spanning open sewage to get from the dirt to the shops, and remembered what low taxes get you. And I was suddenly happy to pay the taxes in Rwanda.
Whether you perceive government regulations as a burden or a blessing depends largely on what shoes you’re wearing at the moment. While we’re at work, it’s easy to want government to get out of the way so we can run our business the way WE think it should be run. After all, we all depend on businesses to produce the things we like and generate the wealth that pays us.
But we’re also all citizens trying to survive traffic, breathe clean air, and educate our children, and Government is what makes those things possible. Laws that require me to employ only expensive drivers with drivers’ licenses also make it less likely that others on the road crash into my vehicles and destroy my property. Emissions standards require me to subject my car to an inspector, but it sure is nice not to inhale black diesel exhaust from never-maintained trucks during a morning jog. Every time I get annoyed at having to pay higher prices in Rwanda due to taxation, I remind myself that those taxes are what pay for the country’s smooth roads, safe sidewalks, and bright streetlights that I so frequently applaud.
Oftentimes government regulations even help increase business profits. Uganda has some of the most dangerous roads in the world, and reckless buses are a major culprit: they race along narrow highways at terrible speeds in the hopes of squeezing in an extra journey, and bus drivers are overworked and exhausted from long shifts because company owners want to minimize the number of staff they hire. As a result, buses crash all too often, killing passengers and costing the bus companies between $30,000 and $50,000 per bus. A rash of 51 fatal bus accidents in 2013 finally forced the Ugandan government to put in place more regulations, such as requiring two drivers for every bus to reduce fatigue, and more strictly enforcing speed limits.
At the time, bus companies protested mightily. “Hiring more drivers will cost us money!” “Passengers want us to go fast to make better time!” “Lower speed limits will reduce the number of trips we can make and reduce our profits!”
But so far the laws have not caused any of the dire predictions, and in fact have probably increased bus companies’ profits. The Daily Monitor reports that fatal bus accidents have reduced by 52% since last year—not only saving lives, but also saving bus companies hundreds of thousands of dollars from not having to repair or replace wrecked buses, and increasing the number journeys they have made because of less frequent accident-related license suspensions. Before the regulations, any individual bus company would have found it difficult to make their buses safer because the higher costs could have put them at a competitive disadvantage. But with Government’s unique ability to require all companies to do the same thing, new regulations put all bus companies in the same competitive position, saving them from their own short-sighted reluctance to spend money.
I’ve now had the opportunity to help set up businesses in two vastly different regulatory environments: one with relatively effective government and strong regulation (Rwanda), and the other about as libertarian and chaotic as they come (Uganda). During that time I’ve sat on both sides of the aisle, both as a businessperson trying to increase sales and cut costs, and as a citizen trying not to be killed on libertarian roads.
And while I’ve learned greater appreciation for the libertarian position, I’ve also experienced firsthand the need for its limitation: no one has the freedom to run their business without considering its effects on everyone else.
When I am sitting in a matatu taxi and the conductor tries to squeeze another passenger in next to me, I tell them NO. Sometimes they whine and moan, “this is my business, you are costing me money,” but I’ve lost the patience to put up with it. Sometimes businesses just need to work a little bit harder so we can all enjoy a more livable society.