``But there are many others who are not bashful about using government power to do "good." They truly believe they can make the economy fair through a redistributive tax and spending system; make the people moral by regulating personal behavior and choices; and remake the world in our image using armies. They argue that the use of force to achieve good is legitimate and proper for government - always speaking of the noble goals while ignoring the inevitable failures and evils caused by coercion. Not only do they justify government force, they believe they have a moral obligation to do so.”-Congressman Ron Paul of Texas
Oil prices soared to fresh record nominal levels yet domestic media, as we have it, continues to downplay on its significance, relegating such developments to secondary headlines and opting to give prominence to domestic politics. Media, after all, is about entertainment; it is paid to get your attention rather than to inform.
Because of the penchant for drama, personified by top-grossing tele-drama series, the public’s appetite for partisan politics have been constantly whetted upon by the incessant stream of internecine information. While glossing over the ramifications of rising crude prices, in the coming days, you can expect consumer prices in general to rise alongside, and the typical response by some political groups would be to advance on protest rallies using this as cover. As if the toppling of the incumbent government would be able to resolve the imbalances in the heavily politically dictated global oil economics. It never ends.
And because the voting public’s interests are mostly fickle and short-term oriented, the classic response of any democratic governments or its underlying institutions would also be that of immediate-term gratification or appeasement, mostly in adopting policies tilted towards the “appearances” of having significant bearings on “social” dimensions.
Think minimum wage. Most economists are cognizant to the fact that pricing labor costs above what the market can afford to pay have been generally baneful or deleterious to the business climate and contribute more to the unemployment figures rather than solving them, yet because of short-term political demands, such as the Catholic Bishop’s Conference of the Philippines’ (CBCP) adaptation of the ‘Marxist’ view of “priority of labor over capital”, these policies have been commonly accommodated for by policy makers.
Flawed short term policies applied over and over again engenders arrant wedges of inequalities. In short, the glaring conflict of interests between short term political gains for the stark purpose of power preservation and meaningful long-term reforms has been a stirring vacuum in most instances as history have shown are unlikely to be filled. Political players, like anywhere else or for that matter in any form of government, are likely to be subordinate and beholden to the short-term interest of their subjects or interest groups that sustain their existence.
Just ponder, how can long-term structural economic disequilibrium be resolved when political expediencies dictate the appeasement, through the “band-aid” approach, of the public’s divergent immediate term interests?
Today, most governments, be it developed economies and/or developing third world states or taxonomically “emerging market economies” have instead relied on economic growth to resolve such deeply-rooted imbalances borne out of collective policy failures in almost all aspects of governance. They are all in the hope that the present asymmetries will be offset by continuing economic growth. Yet, evidences show that such imbalances get to be accentuated, not diminished.
As testament, money and credit growth, instruments by which collective governments have control over nationally (for US- internationally), has grown tremendously over the years far surpassing the growth in real economic activities. Naturally, such tidal wave of liquidity has percolated into the private sector too. Present inflationary manifestations have been an inevitable product of these. In other words, the offshoot to these state induced interventionists inefficiencies and incompetence are the macro imbalances present in the financial and economic system in the world today. What is unsustainable simply won’t last. But as to when this imbalances would unravel is something I can’t predict. As an example, think of the entitlement programs set to implode in the coming years even among industrialized nations (US, Europe, Japan et.al.), due to the colliding impacts from a myriad cocktail of rigid labor and immigration policies, asymmetric capital flows, evolving demographic trends and scientific and technological breakthroughs (converging trends of nanotechnology and biotechnology-which may expand the average lifespan of the population). Nonetheless, such strains would eventually be evinced or transmitted to the financial markets and the global economies.
Despite the cognizance of such variability, most politicians and bureaucrats have largely turned a blind eye on these. Why? Because it requires painful UNPOPULAR structural adjustments, such as hefty cuts in welfare benefits or massive increases in taxation or extended working age requirements or a combination of, something of which they hope would simply go away.
While the gullible public would naturally be enchanted by ‘motherhood’ rhetoric premised on a corporeal “utopia”, who would elect a political actor who would subscribe to worldly pain, e.g. work-saving-investing ethics, as to attain such lofty goals?
My point is simple; voters like the average market investors are after short-term gains and would mainly espouse panaceas in whatever form in pursuit of these. Being personally responsible and observing a regimented way to uplift one’s life is smirked and disdained upon, simply because governments are there and perceived upon as an ‘easier’ channel to provide the short-circuited goals by manner of coercive unproductive redistribution. For an individual, why work or save when government “should” provide? For companies, why be efficient, if they can use laws and regulations to subvert competition, keep costs down and enhance profit margins? Yet, the supreme irony is that despite belaboring governments to live up to expectations (whatever that may mean to you or me), we hate (elude) paying taxes and abhor the perpetual corruption arising from the tentacles of bureaucracy. Still, to quote Murphy’s Law, ``Anything that can go wrong will”. Woebegone, the perpetual vicious cycles of personality based politics!
Nonetheless, statist advocates still believe that Big Brother in government knows what’s best for us. However, even the “noblest” of laws generally meant for our supposed wellbeing have turned out to be a miserable, dismal and disastrous failure. Take for example in the US, the national prohibition of alcohol beverages or the Volstead act of 1919. In an attempt to make alcohol consumption as illegal, the law, according to former US Congressman Bob Baubman (emphasis mine), ``was touted by its backers as the solution to reduce crime and corruption, solve social problems, lower the tax burden created by prisons and poorhouses, and improve health and hygiene in America.”
The net result? According to Congressman Bauman (emphasis mine), ``This ambitiously wrongheaded experiment clearly failed miserably on all counts. Alcohol became more dangerous to consume; organized crime was born; the court and prison systems were overloaded; and corruption of police and public officials was rampant.” In addition, many other repercussions emerged, such as the loss of tax revenues, unbridled smuggling and racketeering, and excess violence according to wikepedia.org. The feckless “moralistic” (ha ha ha!) law which even then US President Harding hardly observed (as a proponent of the law as Senator, he kept bootleg liquor at the White House!) was finally repealed in 1933.
In the Philippine context, as in every government diktat, quoting Honesto General of the Inquirer (emphasis mine), ``The culture that it is okay for a government corporation to lose money--it's only taxpayers' money, anyway--prevails to this day. There are now over 300 government corporations losing a total of almost P50 billion a year.”
As a saying goes, ``The road to hell is paved with good intentions.”
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