Thursday, 3 August 2017

Corruption and the Regulated Interventionist State

It's surprising what you find when browsing the interweb over the lunchtime sarnie.  This, for example.  I quote (apologies for the length).

A far stronger explanation can be found in the relationship between the level of corruption in society and the degree of government intervention in the marketplace. In a generally free market society, government is limited to the protection of the citizenry’s life, liberty, and honestly acquired property. The rule of law is transparent and assures impartial justice for all. Any other functions taken on by the government are few in number, such as a variety of public works projects.

Under these circumstances, government officials have few regulatory or redistributive responsibilities, and therefore they have few special favors, privileges, benefits, or dispensations to “sell” to some in the private sector at the expense of others in society. The smaller the range of government activities, therefore, the less politicians or bureaucrats have to sell to voters and special interest groups. And the smaller the incentive or need for citizens to have to bribe government officials to allow them to peacefully go about their private business and personal affairs.

On the other hand, the very nature of the regulated economy in the interventionist state is to short-circuit the free market. The interventionist state goes beyond protecting people’s lives and property. Those in power in the interventionist state intervene by using government authority to influence the outcomes of the market through the application of political force.

The government taxes the public and has huge sums of money to disburse to various programs and projects. It imposes licensing and regulatory restrictions on free and open competition. It transfers great amounts of income and wealth to different groups through sundry “redistributive” schemes. It controls how and for what purpose people may use and dispose of their own property. It paternalistically imposes legal standards influencing the ways we may live, learn, associate, and interact with others around us.

Those in the government who wield these powers hold the fate of virtually everyone in their decision-making hands. It is inevitable that those drawn to employment in the political arena [and their bureaucratic Satraps] often will see the potential for personal gain in how and for whose benefit or harm they apply their vast life-determining decrees and decisions. Some will be attracted to such “public service” because they are motivated by ideological visions they dream of imposing for the “good of humanity.”

In short the bureaucratic state is out for personal gain.  Well who'd thunk it?  Incentives matter and bureaucrats incentives are entirely skewed towards doing more bureaucracy. And when like the FCA (for example) they have effectively zero democratic, legal or financial accountability and no skin in the game, they become entirely self serving.

4 comments:

Mark Wadsworth said...

Agreed. Rent seeking.

Mike W said...

Just by pure chance I had already come across this 'Tullock Paradox' and was going to put it up in some form later. If it has been discussed before then my apologies. I find it very surprising!

https://www.mruniversity.com/courses/development-economics/tullock-paradox

Ben Jamin' said...

What the Faux-Libs fail to admit is that their view of property rights makes rent seeking and an interventionist State apparatus inevitable.

Mark Wadsworth said...

Mike, I did see that explanation recently, it makes sense, and no, it's not been mentioned here (I don't think). Do a post.