Friday, April 17, 2009

The Role of Government

What is the role of the government?

In the most idealistic situation, there should be no need for government - the people simply go about their daily routines and live their lives, worrying only about death and the hereafter for those who choose to do so.

The first real need for government is defence - when marauding tribes roam the earth attacking others in search of economic security (land, crops, animals) and luxury (slaves to do work for them).

The people wish to defend their way of life and they vote a strong and clever leader to fight off intruders.

This is the first element of a social contract where the people agree to listen to the leader when the time comes for defence for the sake of effectiveness - along with it comes the concept of statehood and loyalty to the state.

The initial arrangement is for the leader to work on a volunteer basis. He works his farm but spends his leisure exercising his muscles and strategising to fight off external aggression to the state.

The leader is reluctant to work as chief defender on a long-term basis. He will hold the position for a term, and then willingly resigns from the leadership and handles it to the next most capable person as deemed by the community.

When the stake increases, the leader is requested to focus on the job of defence while the people agree to pay him a stipend to sustain himself and his family. When the stipend is institutionalised, it is called tax. There is no other moral justification for tax except to provide public goods.

When the person creates a dynasty out of his initial appointment as the leader, the concept of royalty is formed.

Like any other family fortune or business, if the inheritance cannot last three generations, then the dynasty will likewise deteriorate and the throne challenged by a new pretender, as can be seen from Chinese history.

In modern politics, the dynasty is not the father-son baton, but the party.

It is very interesting to see how the role of government very quickly turns into politics.

Today, the people of course want defence from external aggression and external intrusion. The issues are security and immigration.

There is the other normal concern over law and order at home - mostly crimes and quarrels. In some countries, this sphere has expanded to punishing people for voicing out their disatisfaction with the leadership.

In the economic climate of today, the leadership should worry about unemployment.

Keynes' idea is that, if the private investment has failed, then the government should invest. This is for short-term stabilisation.

If the problem persists, i.e., if the private has lost its will to invest, then the government should improve the environment for private investment.

The key to private investment is confidence - confidence of the people in the control of their own destiny within the context of the statehood.

This is when the government places itself below the people - and not the people below the government.

The government should know best - and the only sign that it knows best is when the system it has created is running so well that the government can keep to its core functions - rather than crowding out the private sector.

Where the government should not know best is doing business - because that is the purview of the private sector.


walla said...

MikeLing said...

We have GLC that doing construction, trading and plantation where private sector is doing well and fine. What is the need of government setting up bisness to compete with private sector?