Raison d ‘Etre of Government

and its Intervention

Paper #1 presented at Dr. Alvin Ang’s

graduate class on Public Finance

Ateneo de Manila University, Quezon City

28 January 2015

Economic

Freedom

Network

Asia

Bienvenido “Nonoy” Oplas Jr.

Minimal Government Thinkers, Inc.

• This subject is contained as

Chapter 4 of my 2nd book, an e-

book, published by the Friedrich

Naumann Foundation for

Freedom (FNF) Philippine Office,

2014, http://fnf.org.ph/epub/

• Raison d’etre = reason for

existence.

• Should governments and their

public spending become so big

to subsidize many things and in

the process, is big and coercive

enough to take away many

things from the people?

• Let point A be anarchy, zero

authority and government, and

point E be socialism/

communism, government owns

and provides almost everything,

and takes away almost

everything.

• Should governments provide

only services B or C, or expand

to services D and E?

• What/where is the raison d’etre

of government?

Chart from James Buchanan’s book, “The Calculus of

Consent” (1962).

“The man of system…is apt to be very wise

in his own conceit; and is often so

enamoured with the supposed beauty of his

own ideal plan of government, that he cannot

suffer the smallest deviation from any part of

it… He seems to imagine that he can arrange

the different members of a great society with

as much ease as the hand arranges the

different pieces upon a chess-board. He does

not consider that in the great chess-board of

human society, every single piece has a

principle of motion of its own, altogether

different from that which the legislature might

choose to impress upon it.”

-- TMS (1759), Part VI, Section II, Chapter II.

Adam Smith on the evil of central planning and BIG government:

“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.” -- TWN, Book I Chapter II “In the midst of all the exactions of government, capital has been silently and gradually accumulated by the private frugality and good conduct of individuals, by their universal, continual, and uninterrupted effort to better their own condition. It is this effort, protected by law and allowed by liberty to exert itself....“

“Every individual...generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it…. he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.” –TWN (1776), Book IV Chapter II

The whole, or almost the whole public revenue, is in most countries

employed in maintaining unproductive hands... Such people, as they

themselves produce nothing, are all maintained by the produce of other

men's labour... Those unproductive hands, who should be maintained by a

part only of the spare revenue of the people, may consume so great a

share of their whole revenue… all the frugality and good conduct of

individuals may not be able to compensate the waste and degradation of

produce occasioned by this violent and forced encroachment.

-- TWN, Book II, Chapter III

It is the highest impertinence and presumption,

therefore, in kings and ministers, to pretend to

watch over the economy of private people, and to

restrain their expense... They are themselves

always, and without any exception, the greatest

spendthrifts in the society. Let them look well after

their own expense, and they may safely trust

private people with theirs. If their own

extravagance does not ruin the state, that of their

subjects never will. -- TWN, Book II, Chapter III

The wastes of BIG governments

First row: G. Washington, Tacitus, Einstein. Second row: P.J. O'Rourke, Doug Casey, Ludwig von Mises. Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master. – George Washington The more numerous the laws, the more corrupt the society. - Tacitus "Never do anything against conscience even if the State demands it." – Albert Einstein

A little government and a little luck are necessary in life, but only a fool trusts either of them. -- P. J. O'Rourke. Foreign aid might be defined as a transfer of money from poor people in rich countries to rich people in poor countries.- Doug Casey

"The characteristic feature of modern capitalism

is mass production of goods destined for

consumption by the masses. The result is a

tendency towards a continuous improvement in

the average standard of living, a progressing

enrichment of the many. Capitalism

deproletarianizes the 'common man' and

elevates him to the rank of a 'bourgeois'.

"On the market of a capitalistic society the common man is the sovereign

consumer whose buying or abstention from buying ultimately determines

what should be produced and in what quantity and quality...

Wealth can be acquired only by serving the consumers. The capitalists

lose their funds as soon as they fail to invest them in those lines in which

they satisfy best the demands of the public.”

Capitalism, not statism, creates value,

wealth and welfare in society.

T. Hobbes In the beginning, there was no state, no law, nothing is right or wrong. Everyone is free to do as he pleases. Life was nasty, short and brutish. Civilization was not possible in this “state of nature.” Submission to authority, have laws, will result in a life better than that J.Locke: Contract between people and government, latter should protect the life and property of citizens. Failure to do so is breach of contract. Sovereign people have the right to rebel against abusive "servant.” Jean Jacques Rousseau People are "forced to be free”, but also concerned that individual freedom can be incompatible with rising authority of the state.

Why was government invented? The “ocial contract" theoreticians,, from left: : Thomas Hobbes, John Locke, Jean Jacques Rousseau.

Now the worst part of the punishment is that

he who refuses to rule is liable to be ruled

by one who is worse than himself. And the

fear of this, as I conceive, induces the good

to take office, not because they would, but

because they cannot help --not under the

idea that they are going to have any benefit

or enjoyment themselves, but as a

necessity, and because they are not able to

commit the task of ruling to any one who is

better than themselves, or indeed as

good."

-- Socrates - Glaucon, Book 1, The Republic

(~ 380 BC)

The danger of government and rulers

How big or how limited Government should be?

“We want a society where

people are free to make

choices, to make mistakes, to

be generous and

compassionate. This is what

we mean by a moral society;

not a society where the state is

responsible for everything, and

no one is responsible for the

state.”

“I came to office with one deliberate intent: to change Britain from a

dependent to a self-reliant society -- from a give-it-to-me, to a do-it-

yourself nation. A get-up-and-go, instead of a sit-back-and-wait-for-

it Britain.” (February 1984)

A liberating, not nanny state

To help the poor, government

should NOT do many things to the

people -- do not impose many

prohibitions and regulations,

licenses and permits, taxes and

bureaucracies.

Government should focus on its

main function, enforce the rule of

law, apply certain laws equally to

all. Thieves in government is one

clear example of government

failure. Government cannot

effectively catch thieves outside if

the thieves are already inside the

institution.

Populism and

Welfarism:

Promise (above) vs

Reality (below)

"Every time the

government attempts to

handle our affairs, it costs

more and the results are

worse than if we had

handled them ourselves."

-- Benjamin Constant

(1767-1830), Swiss-born

French politician