“We agree to allow ourselves to borrow more money now. In exchange we pinky-promise ourselves to cut spending later.”
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“We agree to allow ourselves to borrow more money now. In exchange we pinky-promise ourselves to cut spending later.” With the doomsday clock showing that America is five days away from the Economic Apocalypse™, I can’t help but wish that Boehner finally grows a pair and stands up against any proposed increases in the federal debt ceiling. I’ve noted multiple times before how an increase in federal debt is a horrible, horrible idea, and generally unsustainable, so at this point it seems that maintaining the current debt ceiling is a good idea. And, there are several possible positive outcomes. First, we could default on our debt. This has the valuable outcome of making it harder for the federal government to borrow money, which should help to keep the budget in check. Of course, the government may find that it would just as well use inflation to bring more into the system in the even that it can’t find lenders, but that’s a risk worth taking. Second, we could actually balance our budget. The beauty of the hitting the debt ceiling is that it makes a balanced budget amendment largely unnecessary. (Although, it should be noted, if one is using GAAP accounting techniques, one’s budget is, by definition, balanced. Of course, the general sentiment of the balanced budget amendment is, hopefully, that revenues equal expenses, and that the government does not take on more debt.) Anyway, the point in all this is that if Boehner really wants a balanced budget, all he has to do is make sure house Republicans vote against increasing the debt ceiling. This way, he no longer has to concern himself with passing an additional piece of legislation then having it ratified by the states. Third, Obama could ignore the law and tell the Treasury to issue more debt. This would be a violation of the law, naturally enough, and should be grounds for impeachment. I almost want to see this happen, just to see what it would look like. Of course, given our luck, the Senate would laud Obama for his bold, decisive action, so all that would happen would be an increase in executive powers, leading America closer to being ruled by a dictator. Finally, it’s possible that the government shuts down at the behest of President Obama in the attempt to play chicken with the Republicans. I sincerely hope this is what eventually happens, but mostly because I have nothing but contempt for the federal government. In fact, I hope that the federal government not only shuts down on August second, but that it stays shut down for all eternity. There is not a single federal function that is either a) necessary or b) can’t be replicated by the state governments. As such, it is time for this behemoth to die, and to that end I say let the debt ceiling stay the same. Let’s starve the beast!
Not only do I question its validity, I deny its validity, at least insofar as it implies any claim that the word “public” obligates me in any way. At no point have I authorized the Congress of the United States to borrow money in my name or on my behalf; nor have I at any time co-signed said loans, guaranteed said loans, or agreed to repay any portion of said loans. If the (occasionally rotating/shifting) group of 537 persons composing the US House of Representatives, the US Senate, the Vice President of the United States and the President of the United States want to repay the debts they’ve incurred, hey, that’s just peachy (as long as they do so from their personal wealth, rather than through some kind of program of organized theft). If they want to default on it instead, that’s between them and their creditors. Maybe they can negotiate some kind of settlement. That, however, is up to them. If Harry Reid, John Boehner et. al borrowed more than they can repay, poor them. If their creditors were naive or too optimistically avaricious in their speculations, tough shit. Not my problem. This is my nth notice to both groups that I’m neither party to, nor do I consent to become party to, the matter (note to those who believe that I have no choice in the matter: Check your premises). There are three types of government spending — waste, fraud and abuse. As Anthony Gregory points out, that first category is the least of our worries. In a sense there is no news at all to comment on in the latest pension episode of the pension soap opera down on the 5th floor. Hard to see how the outcome down at the Pittsburgh Parking Authority board would have been any different than is being reported. Great quote in describing the state of all things pension related for the City of Pittsburgh as “extreme dysfunction”. Points for parsimony. Fun with words aside, there is something to read between the lines. City news junkies follow along with me. It seems clear that no matter what happened on New Year’s Eve, my reading of the news is that there is no intention on the part of the administration to facilitate council’s plan as envisioned. Sanctioned or not by the PERC it may may be. Now realize that it really does not matter what council adds up, the whole plan depends on the city’s own actuary certifying that the pension’s assets, to include the NPV of the dedicated parking tax funding stream, amount to 50% of the calculated liabilities. Realize that there are lots of judgment calls, let alone a lot of city-supplied data, that goes into the actuary’s calculations. Sooo.. If the city really does not want the actuary’s calculation to show 50%, then there is a decent shot that the outcome of the determinative calculation will not be 50%. Won’t that be interesting. Via Yahoo:
This story brings up another reason I dislike democracy. The system encourages political leaders to posture instead of actually solve problems. I do not blame politicians for working within the confines of the system. Rather, I blame the voters who have absolutely no grasp of reality. There will be plenty of people who will make a big fuss over this legislation. Conservatives will use this point out how liberals aren’t serious about addressing government spending; liberals will point out how this measure doesn’t actually address government spending either (because it’s non-binding), and the problem will remain unsolved. Then this cycle will be repeated endlessly for every issue henceforth: politicians will propose meaningless half-measures to solve serious problems, and such measures will fail.
This bill specifically, though, has nothing to love. It’s non-binding, extremely partisan, and doesn’t do enough to actually solve the problem. This is a farce of a solution.
First, what value is a non-binding solution in the face of such a significant problem? To test the waters? Americans know that the current situation is no longer tenable. Businessmen and economists know the situation is untenable. Even Bernanke, in the back of his brain, knows that we are no longer able to continue the excessive borrowing even though he will never say this publicly. Besides which, everyone already knows that Democrats are only good for the most feckless of proposals anyway. The Republicans should have simply offered a binding proposal and let it play. Go big or go home.
Second, there is no hope for permanent reform if the Democrats aren’t on board, at least at this time (which is of the essence, by the way). The fault for partisanship, in this case, lies not with the Republicans but rather with the Democrats. If the Republicans are unserious about reigning in spending, then the Democrats must think this a new opportunity to practice their stand-up routine. At least the Republicans are making an effort, albeit a futile one. All the Democrats have to offer is refusal and non-solutions. Actually, they don’t even offer the latter. All they can really do is hope that they can wish hard enough to change reality. Good luck with that.
(Note: I do have one minor criticism of the Republican’s political maneuvering in this matter. They should have suggested a considerably more drastic reduction in government spending in order to make $6 trillion look like a reasonable compromise. But that’s just a minor complaint, for it does not seem likely that Democrats would have accepted it or even negotiated in good faith. Still, the Republicans could have at least made the effort.)
Finally, $600 billion dollar budget reduction per year isn’t even forty percent of the projected deficit for 2011. The reality is simply that we can no longer continue to run any deficits. Period.
The projected deficit for 2011 is $1,645 billion, and the projected savings are $600 billion. That means we’re still running a TRILLION DOLLAR DEFICIT. This sort of thing is not sustainable. And, frankly, it’s completely unacceptable. Reality will eventually kick us in the face if we do not stop this immediately. And when it does, we will deserve it.
The time has come to get serious. The time has come to end the half-measures. I sincerely hope both parties are up to it.
It appears that the “slippery slope” does indeed exist:
There’s a reason why some have said that giving power and money to the government is akin to giving whiskey and car keys to a teenager: It’s because the government can be counted on to do wildly irresponsible things when given more power and money. Is it guaranteed to do so? Technically no, but history demonstrates, yet again, that the answer is a resounding yes. As it stands, it is simply best to deprive the government of as much power as possible, for it is certain that the government will abuse it.
INTRODUCTION: ORDER OF BATTLE
If we place the ongoing “purist”-”pragmatist” conflict within the libertarian movement under a metaphorical microscope, it immediately becomes apparent that what we’re looking at is not one conflict, but rather a bundle of conflicts composed of numerous intertwined disputes with overlapping intra-movement constituencies for particular outcomes. While the movement can be reasonably viewed as split between overall “purist” and “pragmatist” camps, the vast “No Man’s Land” between them is a constantly swirling milieu in which it’s not always perfectly clear who is shooting at whom — or why. Various constituencies raise their flags over specific coordinates and give battle, hoping to temporarily claim some patch of territory for their concern of the moment or, perhaps, to extend the lines of some larger alliance to encompass more of the disputed field.
The hill upon which I intend to raise my flag — the banner of the “purist” faction, broadly defined — in this paper encompasses the notion of “incrementalism.” Whoever controls that hill in turn overlooks, and may exploit, a key route across the plain of “realpolitik.” May, I say, or might: The incrementalist high ground has been occupied, for some time and without substantial opposition, by “pragmatist” forces which have declined to actually sally forth versus the state, preferring instead to simply occupy it, hold a few grandiose parades on its slopes, and deny its use to “purists” who might actually use it as a base from which to strike real blows for liberty. However, it’s come to my attention of late that the hill is only weakly occupied: - Its garrison’s composition greatly resembles that of a Confederate “home guard” militia regiment during the Late Unpleasantness, as described by an inspecting general: “3 field officers, 4 staff officers, 10 captains, 30 lieutenants, and 1 private with a misery in his bowels.” To put it bluntly, for all their guff about holding the heights over the plain of realpolitik, the “pragmatists” have thus far proven themselves signally unsuccessful, to an even greater degree than the “purists” they disdain, at achieving political victories. - The “pragmatist” garrison — which had at its disposal the heavy artillery of genuine incrementalism had it cared to use it — chose to mothball that formidable weapon and instead field a lighter piece, of shorter range and minimal power — one more suited to twirling, slapping and shouldering at ceremonies held for the purpose of congratulating themselves on their superior political acumen than for actual use in battle. The popgun I refer to is, of course, “compromise.” The hill is, in other words, ripe for a bayonet charge. It is occupied by troops who are not interested in fighting, and who, if forced to, have at their disposal a weapon guaranteed to fizzle half the time and explode in its firer’s face the other half. It is the “purists” — unabashed and uncompromising libertarians who may differ on how far to go but who know which way they’re going — who have a rightful claim to, and know how best to exploit the advantages of, an incremental approach. Forward, march. THE FIGHT THAT NEVER WAS: INCREMENTALISM VERSUS ABOLITIONISM Things are not always what they seem. For years, “pragmatist” reformers in the libertarian movement have exercised a virtual monopoly on advocacy of incrementalism, caricaturing “purist” abolitionism as its mutually exclusive opposite. Even a cursory examination of the two concepts, however, reveals that this is not necessarily the case. Incrementalism involves setting (and achieving) incremental goals — taking “baby steps” in one’s chosen direction. Incrementalism is a proposed means. Abolitionism is the notion that wrongs should be abolished rather than simply minimized (and, at the abstract anarchist extreme — no insult intended, that happens to be where I live myself — that all wrongs must be abolished in order for the abolitionist to claim victory). Abolition is a proposed end or set of ends. It is certainly possible to conclude (and some “purists” do) that limiting issues advocacy to abolition, and only abolition, is an appropriate means (perhaps even the only appropriate means) to achieve abolitionist ends. “Pragmatists,” in turn, have exploited the possibility of such a reification of abstract end into concrete means. By encouraging the erroneous conclusion that that reification is universal within and necessary to “purism,” they create two useful and reciprocally dependent misimpressions: 1) That incrementalist means are not available to “purists;” and 2) That incrementalist means are therefore only available to “pragmatists.” The theory implied by these misimpressions disintegrates on examination. I could fill a book with the documentary evidence of that disintegration, but I don’t have to: Even one example of a theory’s failure invalidates the theory. I’ll provide two: - I consider the claim that Alan R. Weiss is a “purist” and an “abolitionist” to be indisputable. He describes himself as an “anarcho-libertarian,” he writes for “purist” publications including Rational Review and The Libertarian Enterprise, and he has a long record of continuous association with “purist” associations and projects. In 2002, Weiss was elected to the Northwest Austin (Texas) #1 Municipal Utility Board. During his tenure on that board, he led a successful effort to reduce taxes associated with its operations by 50%, and then resigned. In other words, he used incremental means (seeking and gaining electoral office) to accomplish an incremental objective (cutting a particular tax rather than eliminating that tax or all all taxation), even though his strong preference would have been, and his ultimate goal is, the elimination of both the board to which he was elected and the retention by government of that board’s powers. - If you don’t think I’m a “purist” and an “abolitionist,” then you haven’t been paying attention. I have personally engaged in incremental political action numerous times. I’d like to eliminate the US government. Having so far been unable to figure out a way to do so, I serve as an appointed member of a federal board so that I can affect its operations in a pro-freedom way. I’d like to eliminate my city’s government. Having so far been unable to figure out a way to do so, I have personally managed two (winning) campaigns to keep one of its public offices (city marshal) elected rather than appointed, and another (winning) campaign to elect a person (Tamara Millay) to serve in that office who discharged the duties of that office in a more liberty-friendly way than others might have been expected to. QED, incrementalist means are not only available to “purists” and “abolitionists,” but used by them, and are therefore not available only to “pragmatists.” Sadly, this issue should never have required the current argument. The de facto “pragmatist” monopoly on incrementalism, and their use of it as an anti-”purist” cudgel, has been made possible only by an inexplicable “purist” reticence toward contesting the matter. Nearly 30 years ago (at the latest!), “purist” icon Murray N. Rothbard — the bogeyman of the “pragmatists” — was already explicitly endorsing incrementalism:
Not only do “purists” have a rightful claim to incrementalist means but, as we shall see next, “pragmatists” have severely undermined their own claim to those means by attempting to smuggle other, unsupportable, means into play under the rubric of incrementalism. COMPROMISE: THE POVERTY OF PRAGMATISM As we’ve previously seen, there is no real, defensible “pragmatist” monopoly on incrementalism. That the “pragmatists” have postured as the possessors of such a monopoly raises the question of why they are so interested in controlling the term and denying its use to “purists.” The obvious answer is that incrementalism is a visibly worthy political tool. Insofar as the “pragmatist”-”purist” feud manifests itself in demonstrations (or at least protestations) of efficacy and success with the intent of recruiting libertarian newcomers to one side or the other, the side which can (even falsely) claim sole possession of such a tool benefits. That there are less obvious answers is, well, less obvious. However, there’s good reason to believe that less obvious answers exist. Assertion of a monopoly on incrementalism is simply not strictly necessary for the purpose of demonstrating efficacy and success. Such a purpose could be more effectively fulfilled by using incrementalism to build a record of electing public officials, winning referendum votes, etc., and then stacking up the results versus those achieved by the allegedly incrementalism-deprived “purists” for comparison. The “pragmatists” have avoided any such comparison — not only because it would explode their pretensions to a monopoly on incrementalism but because it would explode their implicit claim that they use incrementalism effectively, or for that matter at all. The “pragmatists” have effectively used incrementalism as an advocacy cudgel in intra-movement disputes, but evidence that they’ve used it in, um, “real politics” is sorely lacking. The “pragmatist” case for primacy in the libertarian movement is a hodge-podge of horror stories about “purist” failure and grandiose projects of future victories which can be achieved only after the “purists” have been swept aside. What’s missing from that case is a portfolio of “pragmatist” successes: “We did this, and it worked.” Why would a movement faction assert a (fake) monopoly on a tool it doesn’t even use? Why would it insist, contrary to fact and evidence, that its opponents don’t have that tool in their kit, even though those opponents have visibly and successfully used the tool numerous times? And why would it refuse to take that tool out of its own kit and visibly use it to tighten some bolts or drive some nails? The answer is that the “pragmatist” version of incrementalism is a counterfeit tool. Its dark silhouette against the bottom of the toolbox drawer looks, in form, like the genuine article. But when pulled out and examined closely, it turns out to be a “drop-forged in Pakistan” fake. Deep down inside (in their pockets, next to the receipt for $4.95), the “pragmatists” know that their tool — compromise — won’t turn a bolt. And they know that if they pull out their shoddy instrument and hold it up next to the “purist” version, nobody who wants to turn a bolt will select theirs. As defined above, incrementalism involves setting (and achieving) incremental goals — taking “baby steps” in the right direction. Compromise, on the other hand, involves trading steps in the wrong direction for other steps in the right direction. When pressed, many “pragmatists” argue that incrementalism and compromise are not only not mutually exclusive, but that they are actually indispensable one to the other. Suspicion on this point is natural, however, given the lengths of obfuscation to which the “pragmatists” have gone in order to avoid reaching the issue. That suspicion is well-founded — for, as I shall demonstrate below, compromise destroys, rather than augments, the utility of incrementalism. To put a finer point on it, the inclusion of compromise as a means in libertarian strategy requires a radical and un-quantifiable re-definition of ends. COMPROMISE’S CALCULATION PROBLEM In the larger libertarian movement, the difficult question of end-states is a constant topic of discussion. Anarchist and minarchist factions do daily battle over the propriety of particular and general long-term goals. As a practical matter, however, the discussion has been framed in terms of “how to deal with a problem we’ll have to deal with later.” The anarchist who wants to abolish the state entirely may disagree with the minarchist who wants to retain an ultra-minimal “night watchman” state, but they are able to co-exist beneath the “libertarian umbrella” because their goals are, for the most part, commensurable. While the minarchist might only cut government’s size, scope or power in a particular area by 80%, where the anarchist would cut it by 100%, both agree that pretty much every function of government should be slashed significantly. Even if we posit a bigger “libertarian umbrella” under which other, additional groups might cluster, that commensurability is present. The geolibertarian and the constitutionalist may make exceptions in that which they subject to “libertarian measurement,” but those exceptions are defined exceptions. The constitutionalist may advocate a specific level of taxation for the specific purpose of “providing for the common defense.” The geolibertarian may argue that a community “ground rent” is not taxation as normally defined. And so on, and so forth. These kinds of exceptions may be problematic, and they may raise questions as to which groups truly belong under the metaphorical umbrella or just exactly which piece of ground falls or should fall under that umbrella’s shade. What they don’t do, however, is make it impossible to answer those questions. When compromise is introduced into a libertarian strategy, however, the quality of commensurability disappears, and with it the ability to define any particular end, let alone any end-state, as compatible or incompatible with libertarianism per se. More specifically, the “pragmatist” justification for compromise relies on the adoption of non-measurable or non-quantifiable goals. While pro-compromise “pragmatists” are understandably shy about explaining their reasons for advocating something they don’t want to admit they are advocating, some cues and clues are available. Ditto when Carl Milsted, head of the Libertarian Reform Caucus, asks “Why should I never endorse an action that employing [sic] aggression even it results in a substantial net reduction in aggression?” Mr. Holtz, Dr. Milsted, meet Dr. Mises:
The notion of “reduced overall net aggression” requires a system for classifying all of aggression’s varying forms into commensurable units. It’s relatively non-controversial to assert that picking a pocket is less onerous than assault, which is in turn less onerous than murder, but unitizing these forms of aggression for bulk comparison is a different story entirely. Does it take 2.5 armed robberies to equal a rape, or 3.1? Is the prevention of two murders a fair trade for 100 unreasonable searches? Even when aggression is nominally measurable in known units, it’s not necessarily true that the factor of aggression itself will be perceived or valued in terms of those units. The value of a dollar may be uniform for certain purposes, but it is highly subjective for most. Most people would agree that stealing a piece of 18 holes on the golf course is less onerous than stealing a baby’s bottle of milk, even if the dollar values of the two say otherwise. Even leaving such questions aside, precisely why should Person A accept an obligation to be aggressed against more, so that Person B will be aggressed against less, specious “overall net” claims notwithstanding? Under what moral calculus should anyone be considered fair game for aggression in any amount? The unitization problem only grows worse on a political scale: For not only is it impossible to quantify the “amount” of Aggression X versus that of Aggression Y on an individual basis, but American polity deals with wholesale decisions which affect a population of 300 million individuals (excluding those outside US borders, who may also be affected). The idea that some central “Pragmatic Libertarian Planning Board” could accurately forecast aggregate increases and reductions in the various forms of aggression spawned by particular policy compromises and compare them to reveal which actions would produce “reduced overall net aggression” is pure … well … I was going to say “science fiction,” but no science fiction author I know would touch the idea with a ten-foot pole. Sapient space-faring beer-drinking anarchist squid are one thing, but there’s a limit to the suspension of disbelief. The commensurable characteristic which unifies libertarianism, however narrowly or broadly defined, is opposition to — not redistribution of — aggression. Assuming the burden of aggression redistribution would rip the fabric of the “libertarian umbrella.” Treating aggression as a commensurable, tradeable commodity would mean that some factions would be required to accept increased aggression on issues dear to them in order to “pay for” decreased aggression in areas held dear by other factions. No libertarian coalition could hold together under such stresses — it would fall to pieces as soon as the compromisers “traded” an increase in the top tax rate for legalization of marijuana, or vice versa, or whatever. A single focus on institutionalized aggression, i.e. the aggression of the state, and a proposed solution of reducing — never in any case increasing — the ability of the state to aggress, are indispensable to the success (nay, the survival) of any broad-based libertarian political movement. “Pragmatism” is popularly defined as an emphasis on that which “works.” Compromise does not, and cannot, work in the context of a libertarian political movement. Ever heard the one about “a tale told by an idiot, full of sound and fury, signifying nothing?” The congressional earmarks saga is a tale told by charlatans trying to distract you from the Really Bad Stuff. For those who don’t follow this stuff closely, here’s a simple version of how earmarks work: 1) Congress appropriates $130 billion for “Agriculture” (yes, that number is close to the current figure). 2) The Honorable Gentleman from Iowa puts an item — an “earmark” — in that appropriation requiring that the US Department of Agriculture $10 million of that $130 billion to fund the [the Honorable Gentleman from Iowa's name] Corn Research Center in Ames (I just made that up, but I wouldn’t be surprised if it resembles a real earmark). The case against earmarks is that they: - Are “pork” used by incumbents to buy re-election (”I earmarked $50 million in the Defense budget to ensure that the little dials on the Army’s radios would be manufactured right here in Secaucus”). - Promote corruption (Acme Guide Missile Systems, Inc. gives a congresscritter a big campaign donation or a brown paper sack full of cash; said congresscritter earmarks an even bigger amount in a way that forces it to be spent with Acme Guided Missile Systems, Inc.). - Result in silly/extraneous spending just to bring home the bacon (I seem to recall reading that the late US Senator Robert Byrd [D-WVa] once earmarked money to restore an old store as an “historic landmark” because it was the second location in the US to sell Chanel No. 5 perfume). All of these things may be true, but here’s the case for earmarks: - They generally constitute less than 1% of the federal government’s total budget. If that rate holds true for Agriculture, call it $1.3 billion total in that particular area. All the rearing and pitching about them is mostly just a way to distract from the fact that Congress is spending $128.7 billion in non-earmarked funds on Agriculture. Think maybe there’s a little fat in that bigger piece of the budget puzzle? But that doesn’t get talked about, because everyone’s throwing a fit about the Corn Research Center or whatever. - They limit the power of the executive. Instead of handing Barack Obama $700 billion for “defense” and turning him loose to buy lollipops for the Russians and bombard Baghdad with packages of mail-order Swiss Colony cheese logs, Congress tells him that at least some of that money has to be spent in very particular ways. Granted, it pretty much amounts to those cheese logs going to Boeing workers in St. Louis instead, but any leash on the president, even one held by that bunch of reprobates down the street at the Capitol, is better than no leash at all. So the two-case for earmarks is a) they’re not a big deal in the scheme of things and b) they may have at least one mildly positive feature. I agree that that’s not a very strong case, but it’s a case, at least. The important thing to remember is that all the caterwauling over it is intended to distract your attention from the 99% of the federal budget that isn’t earmarked. It’s pretty much a more boring version of “teh gays are gonna GETTT YEWWW!” or “Osama bin Laden may be under your bed right now — take off your shoes and stand in front of the porno scanner, please” or “the brown people who speak Spanish are going to take your job if you don’t give us another $10 billion to fight them off.” Watch the birdie. The resource curseFor many years, economists have been puzzled at the way things have gone wrong in countries where natural resources were discovered. In 1993, the economist Richard M. Auty coined the phrase `Resource curse’ to convey the extent to which natural resource finds are a curse and not a blessing. But the idea had been kicking around well before that. I suppose it was an obvious conjecture after watching the failures of the Middle East, where trillions of dollars of oil revenues were squandered by not one but many countries. In the 1970s, when oil was discovered in Venezuela, former Oil Minister and OPEC co-founder Juan Pablo Perez Alfonzo said: “Ten years from now, 20 years from now, you will see, oil will bring us ruin.” His phrase for oil was: “the devil’s excrement.”Why are resources a curse? In a country blessed with no natural resources (think Japan), the only way forward for the ruling elite is the slow hard work of building public goods, so that GDP builds up, which then feeds back into the power and importance and utility of the ruling elite. When the ruling elite gets their wealth for free, without having to do the hard work of building public goods and thus GDP of the country, the rulers emphasise the wrong issues. That’s how Venezuela ended up with Hugo Chavez. On one hand, rulers get focused on finding ways to maximise their rent from the underlying resource flow, without developing the knowledge about how to build a State that delivers public goods. In parallel, competition between politicians becomes an unpleasant process of trying to grab the riches by means fair or foul, rather than a process of competing in doing better on public goods. If there are XX billion dollars to be grabbed by becoming head of state, fairly unpleasant tactics get used by rivals aiming for that job. Bombay’s resource curseI just read Maharashtra’s Audacious Chief Ministers by Ashok Malik and it is a chilling story. It made me think: Why did governance in Bombay go wrong so comprehensively? Maybe the story runs like this. Winning elections in Maharashtra does not require serving the citizens of Bombay. A party can do various things in trying to win seats in the legislature across Maharashtra. Once this is done, the ruling party gets the rents that come from control of Bombay. The wealth and prosperity of Bombay is like an oil well which is In (say) Jaipur, the Chief Minister and his ilk do not have an oil well gushing cash at them. Their incentives are to worry about public goods, and grow the GDP of Rajasthan. The importance and rental cashflow of the leadership in Rajasthan are primarily about the GDP of Rajasthan. Their hard work in improving public goods in Rajasthan feeds back to them as a higher rental cashflow. People often compare the problems with Bombay with the decline of Calcutta after the Left took charge. The two stories are similar in that parties which won rural votes got to run a great city into the ground. But the Left did not take rents from Calcutta on this scale. That was an age where the GDP of Calcutta, while impressive by Indian standards, was still small change. Bombay of the last 20 years is in a different league altogether. This connects with the middle income trap meme: when capitalism first bloomed in India, some governance problems got worse and not better. ImplicationsI think this suggests that the right to govern a prosperous city should not be based on elections taking place somewhere else. If Bombay were a full fledged state, as Delhi is and as the four |
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