(Note: this is my article for www.thelobbyist.biz, June 27, 2010)
When the housing bubble burst started in the US in 2007 and later spread out as a global financial turmoil, many people blamed “market failure” and called for greater government regulations and bigger intervention in the economy. When public debt woes are surfacing, especially in Greece, Spain and UK, we do not hear the term “government failure” from those people.
Below are some data on the budget balance (deficit or surplus) as percent of GDP of selected countries, 2010
Deficit, N.America, Asia
* Philippines, -3.6
Saudi Arabia, 4.3
Hong Kong, 0.6
Source: The Economist, June 17th 2010,
We are no longer talking about “maximum -3.5 percent of GDP” as the “warning bell”. We are now talking about -6 percent, -10, -19 percent. And this is one of the economic backgrounds when leaders of the G20 member-economies will meet this weekend in Canada.
Government failure is much worse than market failure. There are lots of market solutions to market failure, but there are just few “government solutions” to government failure.
This coming September 28 to 30, 2010, the 4th Pacific Rim Policy Exchange to be held in Sydney, Australia, promises to have lots of discussions how to limit the actual and potential damages to the global economy by ever-expanding governments around the world in general, and the Pacific Rim countries in particular.
Among the topics and panels to be discussed are the following.
One, obstacles to investment. The seemingly endless government taxation, intervention and regulations are inconsistent with the realities. How come that the institution that does not have the discipline to live within its means and sustains its profligacy only by endless borrowings, can impose lots of regulations supposedly to instill discipline to private individuals and enterprises?
Two, free trade. The freedom to trade, to buy and/or sell to anyone and from anyone from anywhere, is among the major characteristics of a free and dynamic society. But as the financial turmoil dragged last year, more governments turned protectionist, which prevented their economies from recovering fast.
Three, digital liberty. Individual liberty is better respected via revolutions in the information technology and the digital world. People now have more options other than tuning in to major and traditional media outlets. But there are attempts by governments for more regulations and implicit censorship of content by both traditional and alternative media outlets like blogs.
Four, intellectual property (IP), jobs, and the economy. Societies develop and modernize because of continuing innovation by different economic actors and players, individuals and corporations. Innovation in more expensive undertakings like health need some protection, if only to give incentives to innovators and inventors to continue what they are doing.
The event will be co-sponsored by 4 independent think tanks: the Americans for Tax Reforms (ATR, www.atr.org), the Property Rights Alliance (PRA, www.propertyrightsalliance.org), the Institute of Public Affairs (IPA, www.ipa.org.au) and the Heartland Institute (www.heartland.org). More details about the event can be found at http://pacrimpolicyexchange.com/agenda.
Freeing markets means freeing individuals. Because markets are composed of individuals, both buyers and sellers, producers and consumers, rich and poor, young and old, male and female. The economy, culture and arts, science and sports, they all become more modern and more useful to society when individuals are freed from the shackles of various restrictions and prohibition by governments.