The Fundamental Difference Between Scott Sumner and Me
by Mike Kimel
The Fundamental Difference Between Scott Sumner and Me
So Scott Sumner responded to my latest post. There’s a lot I disagree with, and I was all set to start responding point by point when I had an epiphany: essentially this all comes down to a difference in how we look at a government’s interference in the economic affairs of its citizens. As an example, he views Singapore and Japan as states that interfere less with the economic affairs of its citizens than Argentina (a view shared with organizations like Heritage). I see things the other way. I also think Sumner’s opinion on this matter is not just wrong, but also inconsistent and illogical.
Since Sumner began this with an anecdote, let me go with a little story myself to illustrate my point.
Say its 1980. A doctor decides to open a private clinic where he can ply his trade as he wishes. Perhaps he wants to peddle procedures deemed harmful or immoral, maybe he just wants to charge prices that the government doesn’t approve, perhaps he isn’t licensed to practice medicine, or maybe he has something else in mind. His motives aren’t our business in this little story. So he sets up shop in a quiet street in a suburban neighborhood in the capital. Fast-forward to 2010. The doctor has had a successful 30 year practice doing what he wanted, and he’s now passing on his business to a young associate. Given his entire practice would be deemed illegal in Argentina, Japan, and Singapore, in which of these three states is this story most likely to have occurred. Or put another way…. in which of these countries do you think you can most easily find a doctor practicing for the past three decades outside of all state control?
I would answer, without any doubt, Argentina. I don’t have any data, but I did live long enough in South America to know how easy it is to find such practices in several countries in the region. (I don’t know enough about Chile but I imagine its a bit harder in Chile than in, say, Argentina, Brazil, or Peru.) I imagine Scott Sumner would probably answer Argentina too.
The main reason we probably agree is that we probably have a similar view of what the social structure looks like in those three countries, and what the punishment would be for a doctor who got caught. The Japanese version of the doctor would face jail time, and perhaps worse (from his perspective): social stigma. The Singaporean version of the doctor would face jail time, and perhaps some form of physical punishment such as canings for which Singapore is famous. I’m not going to say its impossible for the Argentine to go to jail, but its almost ludicrously unlikely without some aggravating circumstances, like killing a patient or two. In the unlikely event he was closed down (and a very small bribe should have been enough to fix that, barring extenuating circumstances) he’d probably just re-open in a different location.
And the story doesn’t just apply to doctors. Change the facts slightly to cover a taxi driver, a bar owner, or someone looking to start a construction company. Again, I can easily see such a person operating for 30 years in Argentina. Heck, I’ve seen seen them operating. (And operating is the key word – if the taxi driver was the guy who decided to open the clinic and start doing surgery, medical education or not, who exactly is going to stop him in Argentina?) In almost every field of endeavor its easier to get around what the government wants from its citizens in Argentina than it is Japan and Singapore. Simply put, the only thing I can think of off the top of my head that the Argentine government seems to be able to do every so often that the Japanese or Singaporean government haven’t been in the habit of doing is placing restrictions on what one can do with one’s bank accounts. Having lived through that (albeit in Brazil) I can tell you its a pain in the behind, but everyone gets around the rules.
There’s also the flip-side. In Japan, a mid-level employee of one or another ministry can tell Sony and Toshiba and Toyota where to allocate their R&D funds… and the company would do it. In Argentina the government can tell people whatever it wants, but everyone knows it won’t happen. Singapore’s government still owns a sizable piece of the country’s productive output. Argentina’s used to, but no longer does.
And that’s the other point of contention. Not only do I feel that Argentina has far less control over the economic (and non-economic, for that matter, though that’s another post) life of its citizens than Japan and Singapore, but that difference increased over the length of the 1980 to 2008 period to which Sumner alludes. (Bear in mind, Sumner’s original post dealt with liberalization, that is to say, a process of getting the government out of its citizen’s hair.) I can tell you from personal experience – if you went to Argentina in 1980, your bags would be searched for electronic contraband. Thoroughly. See, they were trying to get an electronic industry off the ground. They’ve long since given up on that protectionist policy (some time in the 80s) and while I’ve been there a few times since 2000, I’ve haven’t so much as had to crack my suitcase a single time in the last decade. Also gone is state ownership of things like railroads, airlines, and all sorts of services. And then there’s the military dictatorship.
Exactly what have the governments of Japan or Singapore divested themselves of during this period? What changed? Ditto Hong Kong. Or the US for that matter. Do you really think deregulation of airlines, telecom, and financial services begins to compare to what happened in Argentina since 1980?
So there’s the difference. Sumner and Heritage and the like have a certain belief in freedom. That belief essentially is of a non-messy freedom. They view Singapore as relative free because it produces outcomes they like – Singapore is clean, efficient, and functional. I, on the other hand, think Argentina is relatively free, not because I like the outcome necessarily, but because the government has less ability to meddle in the lives of its citizens.
That reminds me of my Jordinian co-worker who said businesses were freeer in Iraq under Sadaham than they are in America. He had businesses in Jordan and in California.
Since you mention Iraq, we might as well remember the words of Don Rumsfeld… something to the effect of freedom being messy. Personally, I prefer a stronger government than they have in Argentina, except that I’d hate for it to be the Argentine government. As corrupt as they are, it would be a nightmare if the Argentine government had the ability to enforce its corruption.
Ahh, I remember when the conservative talking points was that sure the USA is growing slowly but that was do to those evil environmental regulations that liberals forced Nixon to pass. Damn Clinton and his economy making that look stupid!
i am from singapore. when is opening a private clinic illegal??? please get your facts straight!
Well, they will still tell you that cutting taxes matters. (http://www.angrybearblog.com/2009/12/comparing-presidents-real-gdp-per_14.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+blogspot/Hzoh+(Angry+Bear))
Absolutely. Another mistake frequently made in looking at the US is to consider only federal regulation – missing the fact that in e.g. New Jersey the tyranny of small-minded government is at the township level.
The other thing I like to ask when they’re referring to a given locale – are there strip clubs? Can anyone who can vote also legally drink? (Usually some pause here) Why don’t these restrictions count as government interference?
Can we stop pretending that Singapore can be compared logically with a country like Argentina. Singapore is a port city, much like Hong Kong, that calls itself a country. It’s apples and oranges with Argentina. You might as well compare Finland with Iran, or the Cayman’s with Haiti. Stop sticking numbers into a program and allow for some historically complexity.
I didn’t say opening a private clinic is illegal in any of the three countries. However, when coupled with the next sentence, things change:
“Perhaps he wants to peddle procedures deemed harmful or immoral, maybe he just wants to charge prices that the government doesn’t approve, perhaps he isn’t licensed to practice medicine, or maybe he has something else in mind.”
Now, if you want to tell me that a doctor can practice without any sort of a license in Singapore, or that there are no procedures that could possibly be performed by someone in a medical clinic would be deemed in Singapore, I’d be surprised.
Now, I am not advocating no government interference. I am only pointing out that the folks who claim to want less of it seem to dislike to take credit for what happens when there truly is less of it.
Agreed. I’ve made the argument before in a post (about Hong Kong, at least) as I recall. But I wanted to go a different route this time because I think the issue I tackle here is more fundamental. After all, I could have left Singapore out and argued only Japan v. Argentina with no difference in outcome.
Left out a word… make that second to last sentence …. “that would be deemed illegal in Singapore….”
Reminds me of the position I use to take back in the 1970s when I was an economist for a British multinational firm that I was much more optimistic about Italy than the UK because in Italy the government was ineffective and its policy proposals were never really implemented while in the UK if the government said it was going to interfer in the economy it would actually do it in an effective manor.
It like the observation multinational executives sometimes make that France does everything wrong and has horrible policies while Germany does everything right and has great policies, but in the end it does not seem to make much difference because there does is no significant difference in the two countries economic performance.
The other thing you have to remember about libertarians is that their concept of freedom is very different that our concept of freedom. To them freedom means the freedom of capital to do whatever it wants. The idea that government actions could increase someone personal freedom is completely alien to their worldview.
It is like the old saying that the law in its objective manor bans the wealthy as well as the poor from sleeping under bridges.
I don’t think Japan works the way Westerners think it does — and I did live there for a year once upon a time. I don’t pretend to understand the place, but it certainly is not a Libertarian paradise. Libertarian Hell would be a lot closer.
Basically, think of a single extended family — 130 million cousins. Does the government run things? Sort of. As long as it doesn’t annoy folks too much. Well then, it’s the emperor? Of course not. The emperor is a ceremonial figurehead. It’s the keiretsu (business groups). Not really. In fact, Japan is probably closer to the Church of Jesus Christ of the Latter Day Saints than anything else familiar to Americans — but without the theology and without any real chain of command. It works because the Japanese have a lot of unwritten rules and they very much want their society to work.
I don’t know for sure, but I would guess that if the brotherhood of Japanese anarchists decided to start a riot, they would probably notify the police three days in advance so as not to blindside emergency personnel and possibly injure bystanders.
A couple of comments regarding Singapore:
The Singaporean version of the doctor would face jail time, and perhaps some form of physical punishment such as canings for which Singapore is famous.
The “doctor” in such a scenario would receive jail time and be fined a significant amount of money; however, the doctor would not be caned. (As an American citizen who is a PR of Singapore, I find this morbid fascination about caning to be overblown.) Caning is reserved for certain offenses (e.g., violent crimes); white collar/economic crimes rarely, if ever, have caning meted out as part of the punishment. Moreover, if the “doctor” in this scenario is over 50 or has some physical condition that would be jeapordized through caning, then no caning would be given.
Singapore’s government still owns a sizable piece of the country’s productive output.
Yes and no. The government, primarily through its two sovereign wealth funds, does own some significant amounts of equity in some companies, especially those that are of strategic importance to the nation. However, to claim that the government owns “a sizable piece” of the country’s productive output is making a claim that’s out of proportion with reality here. This country depends very heavily upon the private sector for its economic growth, not upon the government or the government-linked companies.
That belief essentially is of a non-messy freedom. They view Singapore as relative free because it produces outcomes they like – Singapore is clean, efficient, and functional.
Singapore is clean, efficient, and functional, but those are not the reasons why Singapore enjoys economic freedom; cleanliness, efficiency and functionality are merely the side benefits. Singapore is economically free because its people have a strong entrepreneurial bent, with much of the population either involved now or in the past in trading. The government encourages the growth of businesses, large and small, in a number of different ways (low taxes, ease of paperwork, financing for businesses, etc.). There is a strong adherence to the rule of law here, with almost no corruption. Organized crime is virtually non-existant (compared with, say, Hong Kong). And the infrastructure here is mostly complete.
There’s nothing wrong, per se, with “messy” freedom, but Singapore’s “non-messy” variety works very well.
I’ll just respond here this time. I see your point, but would distinguish between small and big business. Small business in Latin America can operate ok in the underground economy, but as soon as it gets bigger the greedy arms of the rent-seeking governments notice the wealth being created, and want a share. In Singapore you can keep 85% of the wealth you create, even if you are big. The laws are more stable and predictable. It is possible that Argentina has more economic freedom for small companes (I don’t know) but this system keeps Argentina from becoming fully devleoped with modern corporations like Sony and Toyota. Also, if if the underground economy thrives lin Latin America, the fact that certain things are technically illegal allows government officials and cops to demand bribes. This can operate like an onerous tax.
cactus (or should I refer to you as Mike now?)
Anyway the big difference in the three countries is government corruption. I would guess, without a shred of evidence, that government corruption at all levels in Japan and Singapore are an insignificant fraction of the levels in Argentina. Dump the corruption and would the interference level be any different? To be honest its hard to handle countries were the governemnt is so corrupt that its not really functional. Your argument seems to go that the reason Argentina is freer (under the definitions presented) is becuase its government is wildly ineffecient and corrupt. You may be right but are you really comparing apples to apples here? How free would Japan be with Argentina levels of corruption?
Islam will change
My comment up thread missed the target, now that I’ve read this. Folks want less government, not corrupt and inefficient government and those are miles apart. I want less government – but the government that is less should still be effective at its job and efficeint. Assumming the less government folks want a bloated, corrupt and ineffective government (like Argentina), that leaves them alone, is silly.
You also make the assumption that all government interference is equally bad. The Feds enforcing the law/policy that all power must conform to the 110 volt standard across the country is a good thing. The Feds telling the power companies that the must all generate that electricty using 10Mw West Virginia Coal fired power plants is not.
Also, Folks want less Federal government with more decision pushed down to the states (or lower). I can move away from the corrupt policies of the Daley-Dem controlled machine politics of Chicago. I can’t get away from the Feds. (See California for how people are fleeing there.)
BTW, most here on AB can’t seem to understand this point. Most of these smaller gov folks want the power out of Washington. Something from your experiences in South America I think you would sympathize with. We need an Education Department, just need 50 and none at the national level, for an example.
Islam will change
Its more than that. Corrupt government is inherently not free. Try getting a perfectly valid permit for doing anything in Greece without some money changing hands under the table. (I know about Greece since I saw it in action). In Germany if it cost $50 bucks to get a permit, you’ll pay your money and effeciently get your permit. In Greece, you pay your $50, slip another $50 to the permit giver, and then maybe get a permit in a few days. If not it could take months, if ever. Cops can be worse since they can throw you in jail if not payed off.
The idea that there is more freedom under a corrupt, inefficeint government is actually fairly funny. I bet Don Correlone was more effective and efficient than Argentina’s government but I wouldn’t call living under his area of control ‘freedom.’
You guys need to start comparing apples to apples.
islam will change
I thought about posting much the same thing. Decided not too as all I really know is that corruption in rare in Japan. Turns out that there is a corruption perception index published
Singapore is ranked as the third least corrupt country in the world (after New Zealand and Denmark) Japan is number 17 just ahead of the UK and US. Argentina is 106 of 180 — between Benin and Zambia.
***We need an Education Department, just need 50 and none at the national level, for an example.***
Exactly. Education is a very good example. AFAICS, the feds bring nothing of substance to the education party. No Child Left Behind, no matter how well intended, is a national embarassment. It’s based on preposterous assumptions about how schools work and how how performance can be assessed, costs money, increases bureacracy, and results in schools devoting energy to increasing test scores instead of educating.
Actually, my guess (based on my own casual urban anthropology) is that in Argentina the problem is not the government so much as the culture. That the government is ineffective only means that doing business does not require bribing government officials whereas it does require bribing businessmen/women if you want to do business with them or the companies that employ them. (This is a game that foreign corporations play well. I believe you and I had an exchange once about a certain American consulting firm doing a job in South America… and every member of the team somehow “forgot” their laptops – newly acquired for that project, I might add – upon their return. )
The ineptitude of the government simply means that you are free to bribe whoever you choose, whereas my guess is that an outright bribe of a midlevel manager of Sony, say, in exchange for a large contract would get you in serious trouble in Japan. I’m guessing for many but not all libertarians bribing a private sector player should not be a crime, which only goes to illustrate my point again about the relative freedom of Argentina.
As to my name… since I’m uncloseted now, I no longer use cactus.
Yep your correct. I just have only seen this kind of corruption (as oppossed to reading about it) in Greece.
And your right, I think its the culture also. Your mid-level manager at Sony would be appalled at teh thought. Probably feel disgraced that you even thought he could be bribed…
So how do you change a culture?
Islam will change
We seem to be hitting the set of things we agree on pretty regularly right now. Very refreshing.
Islam will change
“Folks want less government, not corrupt and inefficient government and those are miles apart. “
They are the same thing if the corrupt and inefficient government is too inefficient for its corruption to have any effect whatsoever. Unless of course, you want “less government doing more” which is more or less what Bill Clinton’s reinventing government program was supposed to accomplish (and to a limited extent did) but it really doesn’t strike me as some sort of libertarian idea.
“You also make the assumption that all government interference is equally bad.”
Actually, I don’t make the assumption that government interference is bad. I make an assumption that sometimes its bad, and sometimes its good. I think I’ve pointed to enough data over the years that indicates that in some ways we have too little gov’t.
“BTW, most here on AB can’t seem to understand this point. Most of these smaller gov folks want the power out of Washington.”
Often that devolves into a bunch of local poobahs pushing their own silly ideas on everyone nearby. You then have the choice between which silly fiefdom to live in. The idea world where everyone votes with their feet doesn’t seem to work out in the real world.
I’m guessing capital can get away with a heck of a lot more in Argentina than in Japan. As I noted upthread, I’m guessing that bribing someone in the private sector is not legal in Japan, but I have a hard time imagining someone getting stopped for doing that in Argentina.
I’ve never been to Japan, but I understand that the law and the culture of a country often work in tandem. I remember reading a bio about an American guy who spent a few years in Japan. He mentioned he was once bicycling home in a very, very rural area in the middle of the night. The roads were empty.
Long story short – a local villager complained to his employer that he had decided not to wait for one of the red lights to turn green. In the middle of the night. In the middle of nowhere. Thus, as I said in the post, there’s shaming to keep you doing what the government (and to some extent, the rest of society) wants you to do in Japan. Heck, in Buenos Aires you might see someone in a car not stop for a light… at 2 in the afternoon, and if someone decided to try to shame them it wouldn’t work.
Mike said: “The idea world where everyone votes with their feet doesn’t seem to work out in the real world.” Absolutely true, but you seem to have missed Buff’s point of having options (for those who choose to take them) with local versus Federal level policies.
“ Singapore is economically free because its people have a strong entrepreneurial bent, with much of the population either involved now or in the past in trading.“
I disagree. I think you have causality backward. What you wrote is like saying there is an important port in Singapore because people in Singapore engage in trade, whereas the geography was there first.
I’ve heard it said of a number of middle eastern countries that the people have a strong entrepreneurial bent and much of the population is involved in trading. That doesn’t make them free, economically or otherwise. (In some of those countries, the gov’t’s footprint is small enough that even being autocratic it makes little difference, but in others its pretty big.)
The economic freedom that exists (a lot or a little) is there because the government chooses (since it is efficient and effective) to allow it. My understanding is that the government chooses not to allow other freedoms that are taken for granted elsewhere. That is in large part why the streets are clean and there is no organized crime.
What you really mean, I believe, is that the rules everyone has to play by are well known, most people accept those rules, and if you stick to them, you have a reasonable chance of relative success. But that is not freedom. Whether one can say there is freedom there or not depends on what happens to those who do not want to conform.
A follow-up. I’m not in any way saying that Singapore is a bad place. My guess is that if I didn’t have a personal history with Argentina, if given a choice between living in Argentina and Singapore I’d go with Singapore. The reason is, the rules that I understand there are in Singapore are, in general, rules under which I wouldn’t mind living, and the anarchy of Argentina can be difficult for someone who doesn’t know the system.
“ I see your point, but would distinguish between small and big business. Small business in Latin America can operate ok in the underground economy, but as soon as it gets bigger the greedy arms of the rent-seeking governments notice the wealth being created, and want a share. “
I believe (and on this cultural issues, there really isn’t reliable data that I know of so I’m basing this on having grown up in South America and having been there a lot of times in my adult life) you are wrong about the big companies. My observations of this sphere are limited – I’ve observed some bribery directly (see comments to Buff upthread) a few times, but its not an area with which I have much acquaintance. Still, it seems to me that the bribing that occurs is not for the purpose of getting an operating license to operate at all or a periodic shakedown from the authorities. My impression is that its more in line with an operation flouting a rule that most people would deem sensible, such as a nightclub in a residential neighborhood flouting noise ordnances, or a toxic waste dump setting up shop less than a stone’s throw from a popular beach. Think tipping the scales on Coase’s law.
“but this system keeps Argentina from becoming fully devleoped with modern corporations like Sony and Toyota. “
I disagree with this. Its the fact that Argentina’s culture is what it is that you have both the government that exists there, and the lack of a Sony or Toyota. As I noted upthread, from what I can tell, its more important to bribe people in business than it is to bribe the government if you want to operate in Argentina, but there’d be a problem for all involved if someone was caught bribing a mid-level manager at Sony in Japan.
“ technically illegal allows government officials and cops to demand bribes. This can operate like an onerous tax.”
OK. This I’ve actually seen up close and personal. Its not an onerous tax. its pocket change. Literally. Having to bribe people at the company you want to do business with is orders of magnitude more onerous from what I’ve observed.
“The idea that there is more freedom under a corrupt, inefficeint government is actually fairly funny.”
It depends what the government wants to do and tries to do and manages to do. The fact that some government official would steal if he could, but he has neither the power nor the get-up-and-go to do it, and everyone knows it, just means you don’t have to worry about him stealing. From experience, they’re pretty slow about getting documents lined up in most South American countries, but there’s no point in paying a bribe because in most cases nobody cares if you have the documents or not.
You pretty much need everything signed and stamped in order to take a child out of the country, but that’s about the document I can recall any government official ever looking at and I lived in the continent for 14 years. Well, that and your passport when you enter the country. (OK, one exception beyond that – back in the days when they were trying to promote their electronics industry, if they found so much as a calculator in your luggage you had to have a receipt showing you bought it in the country. But that’s 25 years ago.)
One more addition… Argentina may not have any home grown world class companies but Brazil, next door, has a handful of ’em. And it is free in more or less the same way (there are differences) as Argentina. Interestingly enough, of the major Brazilian companies that are among the best in their field, I think just about all of them were started by the government. (The exception that comes to mind is Vale, but they’d never have survived if the government hadn’t been hell bent on building steel plants all over the place.)
I note one other thing – and I’ve had a post on this – the reason you could buy a car in Sao Paulo today that will run on any of three fuels (nat gas, oil, or alcohol) depending on whatever is cheapest can be traced back to the fact that the Brazilian gov’t owned a chain of gas stations. So they got ethanol off the ground…. by offering it. And now they have a technology (same car, 3 fuels) we won’t be seeing here for decades.
Cultures change, slowly. I can tell you that the Brazil and the Argentina I remember from 1970s and 1980s are completely different today. Here in the US, the Civil Rights era was before my time, but its clear the country is very different than it was then.
That said, some parts of the culture will never change. I am very sad to say it, but there are a few countries in South America (Argentina among them) that I doubt will stop shooting themselves in the foot in my lifetime.
I didn’t miss the point. I just think in practice it seems that in any group, you end up with winners winning in a way that makes it tough for the losers to move. A lot of Black people stayed in South during the Jim Crow era… because moving was very difficult. Those who are mobile tend to be young and reasonably well educated. And they tend to be the winners so they don’t have to move.
That said, I do agree that the Federal gov’t is not the best decision maker on a lot of issues. But if you want to see real buffoonery and corruption in action, local government is often the best game in town.
Ah…. two more examples of world class Brazilian company that started privately (I believe) come to mind: Copersucar and Globo, the media network. But then again, the former is where it is due to some almost company specific subsidies, and the latter is where it is because the dictatorship ran interference for it. (It really helps when you’re an early supporter of the guys with guns.)
Which is my point entirely… the reason Brazil has a few successes is actually government meddling.
The geography is important, of course, with Singapore being at the Southeastern-most tip of the Asian continent and the point where ships begin their journeys to either the Pacific or Indian oceans. But land masses and oceans don’t trade; people do. And it is largely because the Chinese (and, to a lesser extent, the Indians) who came here for the purpose of trading, especially with their countrymen back home, that has built up the Singapore economy, especially since the mid-60s. (There is a British legacy here, of course, but the country really began to boom after the British left.)
My understanding is that the government chooses not to allow other freedoms that are taken for granted elsewhere.
The freedom to become involved in organized crime? That’s a rather perverse thought, don’t you think? The thing is, and I didn’t differentiate this explicitly in my comment, is that there’s a difference between economic freedoms and political freedoms. And what most non-Singaporeans (especially Westerners) don’t like is the degree of political freedoms in the Singapore political system. But political freedoms don’t necessarily determine the degree of economic freedoms within a society. A country like Vietnam may not have much in the way of political freedoms, especially those a Westerner would be comfortable with, yet still have a strong positive growth rate in the country’s GDP year after year. But economically, Singapore is very free, which is why, only a week ago, the AP announced that Singapore and Hong Kong are the most competitive economies in the world, beating even the US, which came in third.
Listen… most competitive and most free are two different things. Singapore is competitive because it is orderly and well run.
Supposedly Mussolini made the trains run on time, a feature for which Italy was never before known. That means Italy was orderly and well run (relative to before) and probably more competitive to boot. The government was also running everything for the benefit for the big corporations.
Again… none of this is criticism of Singapore. I like orderly and well run. I’m not the one looking for the libertarian ideal. I’m merely pointing out…. functionally, it is not libertarian at all. If libertarians claim it as their own, its only because it works, not because it is at all libertarian.
“The freedom to become involved in organized crime”
Um…. didn’t you say in an earlier comment that Hong Kong has an organized crime problem. And yet it too is on the top of the list of competitive economies.
***Supposedly Mussolini made the trains run on time, a feature for which Italy was never before known. That means Italy was orderly and well run (relative to before) and probably more competitive to boot.***
Pure coincidence but by wife got back from three weeks in Italy last night. She assures me that the Italians have fixed that trains running on time thing. She found that the standard for Italian trains nowadays seems to be ‘late if at all’. (Could be Amtrak’s motto as well BTW although Amtrak’s problem appears to be mostly sharing a deteriorating rail network with freight traffic)
The world is falling apart:
It is interesting that Buff, CoRev, Scott Sumner, etc., all neo-Liberals or Libertarians find Singapore and Hong Kong as models when both places are essentially authoritarian city-states where one does not quarrel to loudly with the powers that be. They also provide a rather ample social welfare safety net and free education for the entire populace of their city states.
One significant part of the economy that Singapore appears to have a firm control on is the media, as the following excerpted from Wikipedia’s article on Singapore illustrates: “State-owned MediaCorp operates all seven free-to-air terrestrial local television channels licensed to broadcast in Singapore, as well as 14 radio channels. Radio and television stations are all government-owned entities. The radio stations are mainly operated by MediaCorp with the exception of four stations, which are operated by SAFRA Radio and SPH UnionWorks respectively. The Cable and IPTV Pay-TV Service are owned by StarHub and SingTel. Private ownership of satellite dish receivers capable of viewing uncensored televised content from abroad is illegal.”
And there is of course the long struggle between Singapore authorities and the late, lamented, “Far Eastern Economic Review.” Yep, lot of freedom there, as long as you kow tow to the authorities. And as for corruption, well, I will be careful on this point as I don’t want Mike and Angry Bear brought to heel before Singapore’s high court, but Andy Xie and others have a different opinion on that question. http://singaporedissident.blogspot.com/2010/03/singapore-least-corrupt-nation-really.html
Finally, on a more philosphical level, those of us who are now called “Liberals” or even “social democrats” have actually drifted into a Burkean skepticism of dogma and social engineering govern by human reason. We are also skeptical of the social engineering done by “the market” and the large corporations which, by the necessity of Milton Freidman’s dictum must operate as nihilistic profit maximizers for the benefit of their investors.
My citing of Burke may be surprising, since he has long been claimed by the modern conservative movement, but in the context of his time, Burke was a man of the Left, whose primary compass was a moral one and capable of outrage and the recongnition of the buccaneering qualtities of the early capitalism of his day. http://www.fordham.edu/halsall/mod/1783Burke-india.html and http://en.wikipedia.org/wiki/Edmund_Burke#India_and_the_impeachment_of_Warren_Hastings. His turn against the Revolution in France was a powerful as it was because of his position, and was based on his moral vision.
So we liberals, as John Holbo on Crooked Timber, points out that we believe we have to reconcile “freedom” and “equality” and the other moral goods and the sometimes complex necessity of commiting “evil,” such as war, to prevent greater evils. Hence, enforcing Civil Rights law in public accommodations is correcting a moral evil, whereby in taking a small amount of freedom from members of the strongest social group to oppress the weaker social group we see […]
Well said. One wonders what our right wing friends and their occassionally liberal compatriots are thinking when they claim to want “less government.” Undoubtedly they only want less of the restrictions set by government that they happen to disagree with. Should we give up the courts that adjudicate contractual differences? Should we give up the schools that teach the children who may some day sit on those court seats to assist in such determinations? Should we give up the civil and criminal prosecutorial systems that enforce the decisions made by those courts? Should we give up the legislative processes by which the laws of contract are determined? And what of the protection of their precious property? Is it too much government that keeps the lists the rightful owners of property and then enforces the rights of those rightful owners of such property? Just what is it that is too much government? The government that prevents us from taking what is not rightfully ours? The government that coordinates air traffic so that we can be relatively safe when we travel? The governments that provide schools? The governments that sees to the construction of roads and bridges? Even those bridges to no where in Alaska?
There is no government that is too much in a complex and diverse political organization we call our country. We choose the government through our elected representatives. We often do a damned lousy job of it. Don’t blame too much government for our foolish choices of representatives. And before you begin again to complain abouot too much government be glad that there is that government that keeps someone from coming to your house and kicking your sorry ass out into the street. Instead start complaining about the government that only seems to represent the interests of the rich to the disadvantage of the rfest of us.
Part of the issue is how we define big and small. I could probably think of a real good regulatory system for the financial markets that wouldnt require very many people but would cost a lot of money.
When regulators can make more by being captured by the businesses they are supposed to be regulating they will do a poor job. Pay your regulators real well and you’ll probably have some EFFECTIVE regulators.
I think when buffpilot and Corev talk about a small govt mostly they are looking at how much it COSTS taxpayers (part of the problem with our erroneous conception that taxpayers PAY for their govt). Now i know you’ll come back and point out that you are also interested in the reach of govt. Where and what roles do govts play, and I know that is important to you as well (important to me too believe it or not, I’ve been known to complain about stupid rules too) but mostly you want the govt to SPEND LESS on itself. Efficiency is the buzzword and I’ll argue that our focus on efficiency has cost us EFFICACY. We need to decide what we want/need and PAY WELL for it. After all if we NEED it cost should not be a barrier. Too many people fixate on the “govt as a business” model, which is the wrong model. Businesses have different goals than govts, they must work to stay solvent financially. A sovereign govt never has its solvency at stake. Its political reputation yes, solvency no.
Listen… most competitive and most free are two different things. Singapore is competitive because it is orderly and well run.
That’s what I said, there’s political freedom and then there’s economic freedom. Look, if you think Singapore’s competitiveness is simply because it is “orderly and well run,” then you need to look at the case of Hong Kong, which is not nearly as “orderly” or “well run” as Singapore is.
I largely agree with you. I think the key is to decide on what services we want the government to provide first, and then go about getting it done (whatever it happens to be) as effectively as possible. That requires professionals.
Hong Kong is a special case even when we’re including Singapore. The entire world could, conceivably, be a Denmark. It cannot be a Hong Kong, whose prosperity depends more on the fact that for over a century, it was about the only way to trade with China. The entire world cannot be a tollbooth.
Well I would broaden Spencer’s claim by substituting ‘property’ for ‘capital’ where ‘property’ does not even entail ownership. Even the medieval peasant or the more modern sharecropper believed they should have control over their ‘household’ which like ‘familia’ included both the premises, its contents, and the residents therein including not just what would be would call family but also servants and retainers. That is the ‘hus-bund’ had near total control over the ‘hus’ or ‘house’.
Certainly at the time that conservatism and libertarianism started taking modern form their was a belief that ‘property’ extended beyond land, cash capital, and moveables to include various rights, privileges and what were tellingly called ‘liberties’. For example the ‘advowson’ or right to appoint the parish priest was a valuable and alienable bit of property that doesn’t easily fit into our definition of ‘capital’.
If you look at all this through the lens of the ‘familia’ the intersection of social and economic conservatism becomes clear, as does the reason social conservatives are so seemingly willing to sell out straight economic class interests, because while the banker/capitalist may cheat you out of your money, he is not likely to tell you how to run your household. Which after all at the time was the unit of political franchise, servants, apprentices, children of any age and certainly wives not having any right to vote in Britain until the twentieth century. Not everyone who had a household had a vote, but everyone who could vote had a household.
Well I would just add that in Burke’s day the fundamental political struggle was in economic terms between agriculture and trade which latter ultimately subsumed manufacturing.
That is the Corn Laws were profoundly anti-Capitalist, being as they were extreme protectionism.
These laws brought what would later be the Free Trade Liberals in alignment with Labor Radicals as against the land owning Whigs. Liberals had an economic interest in selling imported agricultural products even as Labor had an interest in being able to buy them at a lower price than the Corn Laws allowed. I would say that it was only after repeal in 1849 that Liberal Free Traders and Manufacturers began the economic and political amalgamation that marks modern Conservatism. With of course some lingering tension from Libertarians who still cling to theoretical notions of personal freedom quite alien to traditional patriarchal Conservatism
The way you describe it actually sounds very libertarian. No chain of command, unwritten rules, social stigma as a deterrent rather than jack booted thugs………. where’s the hell? Other than its NOT America.
And there’s another thing…. Singapore is famous for some curtailments of freedom (e.g., chewing gum) that are hard to view as political.
And some of the political curtailments (e.g., involving the media) have a huge economic effect. You cannot entirely separate out the two.
***The way you describe it actually sounds very libertarian. No chain of command, unwritten rules, social stigma as a deterrent rather than jack booted thugs***
“The nail that sticks up gets hammered down.” — japanese proverb.
You may think that conformity via social stigma is preferable to a conformity enforced by law, If you had to live in a society that worked via social pressure, I imagine that you’d change your point of view pretty quickly. You can change laws.
Criminal conviction rates in Japan are extremely high … why? Because Japanese think that the police wouldn’t arrest anyone who wasn’t guilty. Trial by jury? Eliminated in 1943 although they just started augmenting their judicial panels with citizen representatives last year. On the plus side, Japan has very few lawyers since there isn’t much need for them.
Excellent post. I think it is clear that the economic freedom index defines good outcomes as freedom. Notably it is complicated and composed with knowledge of relative Singaporean and Argentine growth.
Part of the index is “freedom from corruption.” When the index was created, it was known that there is a negative association of corruption and economic growth. You argue that there is more economic freedom in corrupt countries. Notably, market enthusiasts used to agree with you. Someone said “the only thing worse that an oppressive intrusive corrupt bureacracy is an oppressive intrusive honest bureaucracy,” but I forget who. One regression (by Paolo Mauro) later and corruption is not a means to protect economic freedom from bureaucrats, but a form of economic non-freedom. I am poaching from this brilliant post by Statsguy at the baseline Scenario. Statsguy also has good taste as indicated by the fact that he links to your post.
By the way, about Sumner, not only did he fail to comprehend Krugman’s plain English, he also is re-inventing the wheel. There are thousands of papers about growth in a panel of countries. This literature had notoriously low standards for publication. It was definitely not allowed to choose countries based on anything but data availability and, sometimes, initial GDP per capita and region.
“You may think that conformity via social stigma is preferable to a conformity enforced by law, If you had to live in a society that worked via social pressure, I imagine that you’d change your point of view pretty quickly. You can change laws. “
I dont think that at all, I’m simply pointing out how libertarian it sounds. I do think that a degree of social stigma is quite effective but I certainly do not believe in libertarian paradises where no govt third party is around to be a nanny state.
“Criminal conviction rates in Japan are extremely high … why? Because Japanese think that the police wouldn’t arrest anyone who wasn’t guilty. Trial by jury? Eliminated in 1943 although they just started augmenting their judicial panels with citizen representatives last year. On the plus side, Japan has very few lawyers since there isn’t much need for them.”
Again, this SOUNDS like a libertarian paradise (or American conservative). NO LAWYERS??!! I think you are making my point for me. You claimed Japan was no libertarian paradise and have proceeded to point out how EXTREMELY libertarian it is in some of its approaches to society.
Somehow there was confusion in our communications because I would think YOU know how much disdain I have for the libertarian purists.
I think I found MY source of confusion from your original post I was responding to. You claimed Japan was not a libertarian paradise rather a libertarian hell. I understood this to mean if it was hell for libertarians it must NOT be libertarian. You then pointed out how many libertarian aspects to the society there were. You were actually pointing out how those libertarian ideas have created a hell.
My bad. I agree with you
Greg and mike,
What I’m saying, and many others, is we want the POWER out of Washington. Centralized power leads to centralized corruption. I can’t get away from the Feds. I can avoid the Daelys’ with ease.
Cost should be a function of what we need at the fed level for an efficient and effective Government. But those roles should be as minimum as possible at the Federal Central Government.
And ANYONE can move. Even adults with 3 kids. No problems. I have done it many times as have many of my friends.
I can’t avoid the Feds though.
Islam will change
If you reduce the role of feds and transfer it to states, the power of states will increase and they will become the new feds. The Daelys will become harder to avoid. 50 Feds is not better than one.
What things do you think the feds are currently involved in that should ONLY be addressed at the state level?
I cant think of many things that as a Georgian I shouldnt be able to expect even if I move to Colorado. I think gun laws should be national, drinking and driving ages should be national, minimum standards that insurance companies must meet should be national and whether or not you can legally get an abortion should be national. Further I think labor laws should be national. These are just a few but I do not want 50 governors who think they are running a different country, treating their citizens at a level far different from some other state.
Your idea that anyone can move is silly. So what that they CAN move. They shouldnt HAVE TO move just because some state legislature decides to take away something they previously had. We are Americans first and Georgians second.