Wednesday, 9 January 2019

All countries are developing countries - the core functions of the state

I have been blogging - and thinking about stuff - for so long, that I can contrast my current thinking with my own post of nearly eleven years ago. Back in the day, I took the narrow/small government view on which few areas truly are core functions of a state. Now I'm not so sure.

First, think about the policies you would recommend to a newly formed/newly independent poor/developing country.

Well, in no particular order, here's a possible and non-exhaustive top ten...

1. Make sure you can defend your external borders (Ukraine messed up badly there a few years ago, they were so busy bickering over who should be in charge that the Russians just marched in and occupied the eastern half).

2. Eliminate corruption and have stable financial and legal systems, meaning private/contract law as well as public order (defence against internal enemies and protection of minorities, fire brigade). Separation of religion and state (OK, that's most of the Middle East buggered).

3. Try and instil a sense of democracy, which only works if there is some sort of single national identity - democracy doesn't work if a country is divided on tribal lines. You only have to look as far as Northern Ireland to see that, let alone the third world, which is why the Japanese took to democracy like a duck to water after 1945.

4. Get the infrastructure (roads, railways, airports, telephones, electricity and water supply) up and running.

5. Universal education up to a certain age, making sure that girls get equal treatment.

6. Public health - immunisation programmes, clean water and functioning sewage/refuse collection, pregnancy and natal care, free condoms. Cap prices that doctors and drugs companies can charge patients (it's largely rent).

7. Make country open for foreign investment and trade but DO NOT let multinational corporations come in and rape the place. Tariffs and protectionism where absolutely necessary but they are to be phased out ASAP.

8. Decent housing for the poorest - meaning slum clearances and building state-owned affordable housing with electricity and running water etc.

9. Don't let income inequality get out of hand. A stable society won't thrive if a small business and political 'elite' are multi millionaires and the masses are struggling by on a dollar a day. Earned income is always the best kind of income, but having universal welfare/a basic income to patch up the survivors has always worked far better than expected.

10. As far as possible, fund government out of taxes on land values, natural resources and other monopolies. Whenever and wherever it's been tried it has doubled the rate of progress.
Now, having nodded along to all of that, where is the dividing line between developing and developed countries?

There isn't one, it's just that some are a few centuries ahead of others. If we were to come back in another millennium, most African countries will be miles ahead of where European countries are today (hopefully), and equally hopefully, European countries will be far ahead of where they are now.

All of which means, a country doesn't just need to do steps 1 to 10 for a few decades until it is up and running and then decide to 'leave everything to the markets'. It is a constant process that will go on forever. Take your eye off the ball for a few years and you can lose decades of progress.

For sure, the government/state-controlled bodies don't necessarily need to do all the day-to-day stuff, a lot of it can be done by private businesses under state oversight/regulation, or by private providers competing for people to spend their health, education or housing vouchers with them, that's details.


James Higham said...

The elephant in the room is Them - the global would be politburo. Curb Them and there is some chance for sometime.

Mark Wadsworth said...

JH, that's covered in 2, 7 and 9.

Lola said...

I have made a post of my comments...:-)

Mike W said...

Very interesting post. 10 years on - your key ideals are still there, but this idea of using developmental economics to think about the role of the Democratic state v 'rentier', 'finance' and 'supra national' control of our country will be interesting.I think it is pragmatic. I mostly agree with 1 to 10. Although I would also want this linked to MMT/ Keynesian full employment ideas. British Citizens are turned into grudge ridden Serfs, by state organised under/unemployment, not Soviet Marxists with a plan.

RE (1) 'limited', national defence, my ideal is similar to your original'libertarian' postion, if I should pick the first topic on your list to discuss. The two main topics it seems to me arise: Carriers and 'World Order' and Trident and our state's ability to kick off Armagedon.

I admire the engineering that has gone into the two carriers,(fine ships) but really 'defense'! Hostage us to the next American Empire adventure. Will be used to support and cover US Marine assualt units. Google, USS America to see where our Navy wants to be slotted next. And we have to buy into the most expensive US built airwing ever designed for the next 25 years!

I should think that six 'hunter killer'subs that can be fitted with nuke cruise missles, if and only if,necessary, would secure our part of the world to a Defence' Chief's satisfaction. Politically, put the missles in the 'bottom draw' the rest of the time as a unilateral stablity measure.So that's 'Nuke Blackmail' taken care of, back to conventional. Four Mech/Infantry brigades, two on rail heads ready to move into EU should we be asked by France or Germany. Air defense mix. RAF that could maintain air superiority over these islands and support Nato in Europe if necessary. So,in short, withdrawing from 'Imperial Police' mode requires cutting the Navy down to size.Perhaps having the capacity to put a cheap 'patrol frigate' into the English Channnel for a week or two, might still be nice though :)

Derek said...

Some fields are core government. And some are obvious private enterprise. But there are a few rentier-infested parts of the economy where the government should get involved, not because it is necessarily any good at doing whatever the activity is, but rather so that it can provide some competition to the rentiers. Housing is one of these. I don't think that council housing needs to be luxurious or subsidised but it should be cheap and should provide a basic alternative to the private offering. That way the private rentiers need to keep their prices down and their quality up in order to compete.

A similar situation exists for banking, healthcare and insurance. The government doesn't need to provide Rolls-Royce quality for Ford prices. But if it provides a reasonable basic product at cost or a bit more, that will ensure that the private entities need to provide something better.

Lola said...

"A similar situation exists for banking, healthcare and insurance. The government doesn't need to provide Rolls-Royce quality for Ford prices. But if it provides a reasonable basic product at cost or a bit more, that will ensure that the private entities need to provide something better.
These things are today the province of rentiers because of state cronyism and special privileges.

ontheotherhand said...

"It is a constant process that will go on forever. Take your eye off the ball for a few years and you can lose decades of progress."

So what happens when society not only takes its eye off the ball, but actively engages in rapidly breaking with the past and tearing down the customs and norms that were the intricate walls built up over millenia around our civility to one another? All history is dismissed as oppressors vs. oppressed. Children born outside stable family become the norm in 1 generation. Fragile protected coddled children have the right to never experience or deal with being offended, so ideas can no longer be expressed. London transformed to a Minority-is-the-majority without comment or plan in the hope that it just works out by itself without any plan.

Mark Wadsworth said...

L, I have commented on your version.

MW, thanks for input. I pretty much agree with all of that. But full employment is a private sector thing, the govt just has to leave well alone, reduces taxes on employees/employers and generally ensure a level playing field, full employment then happens of its own accord.

D, agreed re public/private split. One way of dealing with rent seeking in private sector is for government to offer a low cost alternative.

L, that depends on how you define state privilege. Private schools are rent seeking enterprises, but have no special state privileges. (Business Rates discount and pay little corporation tax, so what).

OTOH, I agree that that is an equally shit trajectory. But this relates to my point 3, you have to have social cohesion and some sort of sense of national identity (entirely artificial, but necessary). If you go full on diversity and multi-ethnic etc then social cohesion breaks down.

Bayard said...

Point 3: Try to have some actual democracy, that is rule by the people. What we have here is not democracy - indeed Aristotle specifically counted it out, saying that states where the rulers were elected by ballot were oligarchies*. The only democratic element is the referendum and I doubt we will be having any more of those for the forseeable, unless TPTB think that the people can be trusted to give the right answer in a second Brexit referendum, in which case that one will be the last. So try having a certain amount of decisions put to the ballot.

*democracies, he said, are states where the rulers are chosen by lot (like jury service in the UK), but that's a bit radical for an emerging state to try, perhaps.