3. Government intervention is a zero sum game
While trade and technology can become a win-win, government intervention is a zero sum game. More likely than not, government allows somebody to win at the expense of somebody else.
Milton Friedman, a Nobel Prize-winning economist once observed that he would prefer a federal government budget of $1 trillion even with a big deficit than a federal budget of $2 trillion that was balanced.His obvious point is that a bigger government puts more burden into the economy whether it finances its spending via taxation, borrowing or printing money.
When the government gets taxes, it gets the money from consumers who could have spent it, or the businesses who could have invested it. When it borrows, it competes with businesses. When it prints money, it stokes inflation.
When given two choices a.) get from Peter to help Paul b.) allow Peter to help Paul with the proper incentives, then government should do the second.
The unwinding of the Soviet Union, Eastern Europe and China into market economies show that government is not the best agency to create economic growth, manage a business, or even help the people get employed.
The best way to reduce poverty is to put in place policies that deliver sustained, strong economic growth. Simply redistributing wealth will not cut it, not with our current track record. The late Ravjiv Gandhi, former prime minister of india, famously said that only 15 percent of the government funds intended for the poor actually reached them.
My hope is that by taking the steps we are taking today…the government can get out of the way and let the private sector do what it does best — innovate, create jobs, and grow the economy. – US President Barack Obama
May 20th, 2010 at 4:11 am
China government, even if it is called a people’s republic, is not that well to take care of the people, and it is also well known for corruption.
But it is getting the support of the people because it invests in infrastructure, does a pretty good job of gaining the respect of nations, as well as attract investors which provides jobs to all.
May 30th, 2010 at 4:34 am
totally agree..
less government… smaller government…
but with a people not educated as in ours, (as proven with last election)
what we probably need is a benevolent leader to upgrade the education and skills and to generate proper values first and foremost.
July 10th, 2010 at 11:29 am
In lessening government, the intervention must limit itself to those essentials which the private business is not willing to accomplish becuase of the degree of investment and risk not profitable to business. Sub zero intervention courts chaos thus also the need to regulate. Even a prosperous China would even excecute a business executive and a magistrate.
July 13th, 2010 at 8:46 am
Government is not made for business that is a fact. Name me a business that government handles and I will tell you the billions of pesos sunk into it. Land Bank had to commercialize its operations because of the 92% unpaid agrarian loans. NFA is, till today, an unearning corporation, PNOC and all the rest. Simply because at the end of the day, the government is more concerned with its social responsibility to the people rather than on the investments it placed.
The real issue with Philippine Government intervention is not the why or wherefore, but rather the way these interventions are being manipulated to fit to a political agenda. I need not cite the case of the fertilizer fund scam to emphasize mo point.
In the case of the Philippines, there is a need for government to intervene as there are investment fields that the private sector is hesitant to invest in. Case in point are the hundreds of thousands of hectares in Mindanao that investors are un willing to venture into. Here government intervention is needed. And for this to really be effective, the intervention should be something that the beneficiaries can own or at least relate to.
There is just one issue though, if a project emanates from the will of the farmers without the nod of the political leader, chances are the support programs expected from local giovernment units for the project will not be completed in time to ensure the maximum effectivity of the intervention.
December 2nd, 2011 at 5:08 am
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