Back a few entries where I was discussing democracy, the general assumption is that many people who are able to independently check policy before voting on it will more likely get the right decision than a particular individual or expert could.
The corollary is that the more democracy and the more direct the democracy, the better general decisions will be made.
A counter-example to this corollary is immigration and trade policy. Democracies have a notorious habit of restricting immigration and trade when the economy deteriorates. Even though the concept is that as citizens, we have the right to make bad choices, and pay for them, democracies continue to make the wrong call due to the primacy of perception over facts in the political game. The causal relationship between restricting trade/immigration and a worsening economy is ignored over a very strong human instict to blame externalities over any systemic internal cause.
Thus people continue to promote fallacies such as "reducing immigration helps our unemployment rate" and "restricting imports helps our unemployment rate".
Maybe I am wrong. Maybe democratic countries will leave tariffs and immigration quotas untouched, while autocratic countries will clamp down on trade/immigration during the current downturn. I would be surprised.
Showing posts with label democracy. Show all posts
Showing posts with label democracy. Show all posts
Monday, March 23, 2009
Friday, March 20, 2009
A democratised stimulus
The latest payments as part of the stimulus, which as far as I can tell are indiscriminate cash quantities for just about everyone registered with the Govern-mint, have an appeal to me even as it mindbogglingly blows my mind thinking about future taxes required to pay it back eventually.
Essentially, instead of bailing out whatever, or dictating prices for bread, etc. it empowers the individuals acting independently. If they deposit it in the bank, it strengthens that bank's capital in a way that bailouts couldn't. We will have more that we can decide to donate for disaster relief, improve our individual bottom line such that fear of destitution is allayed, without it being enough to feel that we are rich and can be reckless. Of course fools and their moneys are soon parted, which means the money should eventually concentrate in the hands of the less foolish. Eventually it should filter through to profits or income to someone who will then pay tax.
It neither attempts to save those that have lost everything in the crunch, nor does it punish those that profited from payouts from entities requiring bail-outs. WE decide who is deserving of our measured piece of this stimulus.
As a counter-cyclical plan from a government that has been very conservative through a boom, it is almost masterful. To get the impression that this sort of thing can be done at any other time for any other reason, is foolishness.
Essentially, instead of bailing out whatever, or dictating prices for bread, etc. it empowers the individuals acting independently. If they deposit it in the bank, it strengthens that bank's capital in a way that bailouts couldn't. We will have more that we can decide to donate for disaster relief, improve our individual bottom line such that fear of destitution is allayed, without it being enough to feel that we are rich and can be reckless. Of course fools and their moneys are soon parted, which means the money should eventually concentrate in the hands of the less foolish. Eventually it should filter through to profits or income to someone who will then pay tax.
It neither attempts to save those that have lost everything in the crunch, nor does it punish those that profited from payouts from entities requiring bail-outs. WE decide who is deserving of our measured piece of this stimulus.
As a counter-cyclical plan from a government that has been very conservative through a boom, it is almost masterful. To get the impression that this sort of thing can be done at any other time for any other reason, is foolishness.
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