Mitigating The Costs Of “Washington Consensus” Policies: Titbits For Ghana And Other African Countries
"African countries have for several decades been receiving development assistance from the Bretton Woods Institutions (BWIs) based in Washington, D.C. The assistance comes with policies that reflect a liberal ideology fashioned in Washington and dubbed the “Washington Consensus” (WC). The WC's underlying philosophy is the superiority of the market and private enterprise, as against economic control systems and “statism,” on “efficiency” grounds. Liberalization of product markets may promote efficiency in allocation of resources. However, in Africa, because of production/supply bottlenecks, liberalization only generates a sellers' market at the expense of consumers who become perpetual takers of prices that may be often riddled with high inefficiencies and “costs.” Universal liberalization may also particularly hurt the poor who are usually less able to protect themselves. The right approach is to institute “subsidized pricing” of the kind of goods and services used largely by the poor—a kind of social safety-net system—including food staples, rural energy, rural water, primary education, primary healthcare and public transportation. Discriminatory taxes relating to luxuries and necessities may also be used as an instrument to assist the poor."