So.....is democracy possible in a market system? How do we deal with the principle-agent problem (crony capitalism?) But.....what would be better than democracy and a market system? (see link)
This article sounds like page straight out of Atlas Shrugged, if only the solutions provided in the novel were at all relevant, probable, or realistic in any way. There just seems to be no way around the PAP, even if some kind of emergency action was put in place to allow easy sorting of moral and immoral public actions, there would be no way to regulate the person or persons making the decisions. There can be a thousand dedicated to proper handling of public goods, but it only takes one or two in a slightly more powerful and therefore slightly more tempting position to destroy that aggregate effort.
Perhaps the best way to control the principal agent problem is to make making good decisions for the government in the interest of politicians. What if instead of getting paid under the table in back room deals for selling the coal fields, why don't the relevant politicians get paid a reasonable dividend from the development and operation of the mine. If political powers are not strong enough to organize auctions through beauracracy, it may be more efficient to simply regulate and tax the transactions and make the deals that they were well equipped to make. For a great enough price any system can be cheated, if this is accepted, it might be easier and more efficient, if somewhat morally questionable, to make politics acknowledge its ties to business.
Democracy is possible in a market system with adjustments to fit modern society, perhaps a “neoclassical market system”. I do not think the pure theoretical definition of a market system can be fully applicable to the world we live in today. With the exception of government assistance programs (which can be seen as the socialistic part of our government) the United States is generally a democracy in a market system. We might not be a pure market system because the government does provide certain checks and balances through regulation and laws that apply to transactions made in market. The problem India is facing is that India’s natural resources are being depleted because the right people are not being put into power. The Coalgate scandal is a case too common for India. I think India should be hiring government auditors to who have faith in India’s economy and cannot be bought into corruption. These people should be assigned to overlook certain areas that can be easily manipulated to make profit, and regulate where need be. India needs people in power who believe in the country and see natural resources as owned by everyone rather than themselves.
How ironic is it that India's single largest hindrance to economic power, is the very same thing present in this corruption controversy. "'Not being able to produce enough power has absolutely been the single biggest bottleneck for economic growth,' said Praveen Chakravarty, chief executive of Mumbai-based Anand Rathi Financial Services." Corruption is almost an inherently human quality as we've seen through history. Some people in positions of power, will always manipulate aspects of any system, once they have a position of control within it. The structure of the current financier-government relationship in India is appallingly ripe for corruptive behavior. If garnering politician support in the energy industry is the "master-key" towards growth, then some immediate restructuring measures need to be taken to amend this. India is a government with respectable transparency. They function democratically and are certainly rising on the global scale. However they have a long way to come in terms of political restructurement if they want any hope of climbing to new highs. The current system is far too dependent on independent politicians.
This article sounds like page straight out of Atlas Shrugged, if only the solutions provided in the novel were at all relevant, probable, or realistic in any way. There just seems to be no way around the PAP, even if some kind of emergency action was put in place to allow easy sorting of moral and immoral public actions, there would be no way to regulate the person or persons making the decisions. There can be a thousand dedicated to proper handling of public goods, but it only takes one or two in a slightly more powerful and therefore slightly more tempting position to destroy that aggregate effort.
ReplyDeletePerhaps the best way to control the principal agent problem is to make making good decisions for the government in the interest of politicians. What if instead of getting paid under the table in back room deals for selling the coal fields, why don't the relevant politicians get paid a reasonable dividend from the development and operation of the mine. If political powers are not strong enough to organize auctions through beauracracy, it may be more efficient to simply regulate and tax the transactions and make the deals that they were well equipped to make. For a great enough price any system can be cheated, if this is accepted, it might be easier and more efficient, if somewhat morally questionable, to make politics acknowledge its ties to business.
ReplyDeleteDemocracy is possible in a market system with adjustments to fit modern society, perhaps a “neoclassical market system”. I do not think the pure theoretical definition of a market system can be fully applicable to the world we live in today. With the exception of government assistance programs (which can be seen as the socialistic part of our government) the United States is generally a democracy in a market system. We might not be a pure market system because the government does provide certain checks and balances through regulation and laws that apply to transactions made in market.
ReplyDeleteThe problem India is facing is that India’s natural resources are being depleted because the right people are not being put into power. The Coalgate scandal is a case too common for India. I think India should be hiring government auditors to who have faith in India’s economy and cannot be bought into corruption. These people should be assigned to overlook certain areas that can be easily manipulated to make profit, and regulate where need be. India needs people in power who believe in the country and see natural resources as owned by everyone rather than themselves.
How ironic is it that India's single largest hindrance to economic power, is the very same thing present in this corruption controversy. "'Not being able to produce enough power has absolutely been the single biggest bottleneck for economic growth,' said Praveen Chakravarty, chief executive of Mumbai-based Anand Rathi Financial Services."
ReplyDeleteCorruption is almost an inherently human quality as we've seen through history. Some people in positions of power, will always manipulate aspects of any system, once they have a position of control within it. The structure of the current financier-government relationship in India is appallingly ripe for corruptive behavior. If garnering politician support in the energy industry is the "master-key" towards growth, then some immediate restructuring measures need to be taken to amend this. India is a government with respectable transparency. They function democratically and are certainly rising on the global scale. However they have a long way to come in terms of political restructurement if they want any hope of climbing to new highs. The current system is far too dependent on independent politicians.