A friend, Prof. Bong Mendoza of UP Political Science Department, posted yesterday about his favorite passion -- why more state, more government is good. He wrote,
Wrong on a number of points, of course.
(1) "can free market players themselves truly enforce
and protect property rights absent a competent state? Can they settle disputes
among themselves...?"
(2) " Private economic actors can protect property rights, settle disputes... at a far greater cost than if these clearly public goods will be provided by a public actor--the state."
No. We see many big infrastructures (tollroads, skyways, airports, seaports, universities, hospitals, etc.) built, operated and maintained by private enterprises, providing public service to many people and still making money, the government simply collects royalties and taxes. We see capitalist markets prospering despite the laziness and stationary banditry of government.
Bong asked if I am arguing that the state is superfluous, and what will minimal state do or not do.
It is truly ironic to some observers that market-friendly
reforms in the global South are largely the result of state dirigisme….
To illustrate, can free market players themselves truly
enforce and protect property rights absent a competent state? Can they settle
disputes among themselves re contractual obligations to each other? Can they
even agree to measures of value, weight, and other variables needed to define
their commercial obligations? The answer to these questions is a yes, a
qualified yes. Private economic actors can protect property rights, settle
disputes, and agree to measures of value and others but at a far greater cost
than if these clearly public goods will be provided by a public actor--the
state.
Adam Smith's state was not merely a night-watchman state.
It was a robust state that provided public goods needed so private
entrepreneurs can confidently enter into contracts, lend money, and establish
partnerships and corporations even with strangers and foreigners
(non-citizens). If a given state cannot provide such public goods, then
capitalist markets will not prosper or even get off the ground…
Yes. There are endless examples. NBA, PBA, FIFA, Tour de France, etc. -- the referees to settle disputes are private, not government politicians,
bureaucrats or consultants. In private villages, disputes among neighbors
(noisy karaoke, noisy dogs, etc) are settled by the homeowners association and
enforced by private security guards as hired by the association. Protection of
restos, bars, banks inside malls are not done by government police but again, by private
security agencies.
No. What happens is that private households and enterprises are doubly taxed by the govt – direct taxation to pay for govt police
and other personnel, and indirect taxation of paying big monthly dues to
village association, mall locators association, etc. to pay for private security
because govt police is unreliable to stop criminals, in some cases they
themselves are the criminals. The number of private security people is directly
proportional to the distrust of people of the govt’s capacity to ensure peace
and order.
(3) "If a given state cannot provide such public goods, then capitalist markets will not prosper or even get off the ground."
Yes, in most cases, the state is superfluous. The main role of
the state will be as ultimate referee or judge in case civil society and
private dispute settlement system fails. Like if one team in PBA will question
the ruling and decision of PBA board, it can go to the government court. This seldom happens of course. People and households do not want to involve politicians and bureaucrats as much as possible because they tend to complicate otherwise simple cases. That is why governments tend to legislate and legislate, to coerce their "bright ideas" into the people.
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See also:
Pol. Ideology 71, Georgism and the geolibertarians, June 22, 2017
Pol Ideology 72, You love capitalism, January 14, 2018
Pol Ideology 73, On BIG powerful government, March 14, 2018
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