By Honest Ngowi
       economics made simple
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The issue of the strike by medical doctors in Tanzania had become extremely serious despite various kinds of interventions including threats from the Government before coming to an end this week. The news that even specialist doctors had laid down tools and that services at Muhimbili National Hospital (MNH) and Muhimbili Orthopaedic Institute (MOI) had been closed was the worst of all.

There are several angles and points of views from which the strike could be discussed in the bid to search for causes, impacts and most importantly sustainable solutions to what seemed to be a national crisis. Among the discussed angles and points of view are in the realms of law, ethics and economic, among others.

Economic hardships
At the centre of the crisis were the economic hardships that the medics - as well as other Tanzanians – are facing. What triggers and fuels such strikes is the lack of a living wage. Inter alia, inflation has affected the real wage by eroding the purchasing power of the shilling. The result is that the nominal wages are not adequate to cover the cost of baskets of goods and services needed for decent consumption and living. For example, the quantity and quality of goods and services that can be bought using the Sh700,000 monthly salary that doctors want to be increased to Sh3.5 million are by all standards low.

That is why the medics, as is the case for some other professionals have to moon-light by way of part time and other income generating activities (IGA) in order to make the long ends meet.

Government liquidity
Whereas the economic hardship argument on part of the striking doctors is very relevant, the government too is in economic hardship. Its collected internal and external revenues are much less than the needed amounts to finance various public expenditures including paying the doctors.

A developmental government should be able to finance at least the basic public goods and services. Health services expenses in general related to the doctors in the context of this article in particular are among such basic public goods and services.

Revenue collection
It can be understood that the government is not liquid enough to fund all the public expenditure posts including those triggering and fuelling the doctors’ strike. The reason for this inadequate liquidity on part of the government is poor revenue collection and arguably huge expenditures in some areas. Unless the fundamentals in this regard are fixed and solved in a sustainable way, we are likely to see more similar strikes, unfortunately.

To be fixed in this context is the inadequate collection of domestic revenues. Unless all potential and actual taxes and other none-tax revenues find their way to the government coffers, liquidity will remain a major problem. In a country whose tax is just about 17 per cent of the Gross Domestic Product (GDP), the need to widen the tax base is more than obvious. This also applies for the need to block all loopholes in revenue collections. The loopholes include but are not limited to various techniques of tax evasion and tax avoidance.

When and if taxes and other revenues are properly collected, the expenditure part of the equation too has to be controlled through very prudent expenditures.

Production function
There have been some arguments from various angles that the striking doctors can be sacked from their public services. Those who belong to this wrong school of thought do argue that the striking doctors can be replaced by others! A free advice to this school of thought would be drawn from the economic theory and practice of production function. To ‘produce’ qualified, competent and experienced medical doctors – as is the case for many other professions – is a long term issue. It needs a non-linear long term production function, as opposed to a short term one.

Labour economists would correctly argue that the supply of such doctors is much short of demand for the same in the market.

There is therefore a deficit not a surplus. Therefore, the striking doctors – from production function point of view - cannot just be substituted in the short term. The Government should not think that it can just produce other qualified, competent and experienced doctors through, say a crush program as has been the case in ‘manufacturing’ some teachers.

Pareto optimality
There have been arguments that doctors would be brought from elsewhere including from the military, to make up for the positions of the striking doctors. Scholars in microeconomic theory would criticize this based on, among other things, Pareto optimality concept. Pareto optimality is about making one person better-off without at the same time making others worse-off.

With the already very limited doctors in general and specialists in particular, there is no way doctors can be taken from other hospitals to rescue the situation at MNH and MOI without at the same time affecting those other hospitals negatively. For example, the one orthopaedic surgeon in Mbeya, one in Iringa, two in Bugando and four in KCMC cannot in any imaginable way replace their 16 colleagues at MOI without at the same time causing havoc in their current places of work.

Price of doctors’ services
The services provided by doctors cannot be counted in pecuniary (monetary) terms. Their services count a lot but not everything that counts can be counted. No price tag can be good enough for lives saved. This means that there may not be amount of money that is enough for their services. However one does not expect them to use this argument to demand unrealistic amounts of money.

On the other side, one does not expect them to be paid extremely low either. As the government demands value for money in its various goods and services, it should extend a similar gesture by paying money that somehow reflects the value of doctors (and other professionals) service..

The author is a senior lecturer, researcher and consultant in Economics and Business at Mzumbe University Dar es Salaam Business School

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