Rental countries are more corrupt and less wealthy

An important and valuable emphasis in political economy in recent decades has been on “seeking rent,” defining pressure groups as lobbying (and power) for special privileges (given to themselves) and dislikes (imposed on their rivals or enemies). . This is the main theme of “Public Choice” theorists, who prefer free markets and constitutionally restricted states.

But the demand for rent is just a demand for political bias; Less stressed supply direction – call it Rent sale – The real instigator. Only states have the power to create zero-sum political benefits, dissatisfaction and friendship. Chronism is not a brand of capitalism, but a symptom of a hybrid system; The interventionist says that socio-economic outcomes greatly influence those who are most affected and most able (rich and powerful) to actively invite lobbying. But the main problem of bias is not among the bribe takers, but among the suppliers who extort money.

Chronism is measurable today in the well-planned metrics of political corruption. We also have good metrics about capturing economic freedom, the degree of intervention (and the amount of hybridization). The pattern is clear: as a nation becomes less economically free, cronyism grows, and a system moves away with independence. Away From capitalism (towards fascism or socialism).

Political benefits and dissatisfaction can be codified in control, taxes, and / or subsidies. The impact of rental sales is similar to the long-recognized phenomenon of pedaling. Political influence can only pedal (sell) if it first exists. Politicians, policy makers and bureaucrats are the creators and suppliers of political advantages and dislikes. Huge amounts of new money are spent in politics, but the reason is that so much money is invested in making money.

Political advantages and dislikes depend on the erosion and denial of equality under the law. This principle, which for three centuries has preserved and protected legitimate rights, the violation of property rights, and the sanctity of free treaties, is crucial to the maintenance of a free, capitalist system. There should be little doubt that the rule of law in America is deteriorating so far. Crisis and emergency, both real and imaginary, are used as excuses to rule arbitrarily, to issue orders, decrees and orders. It happened after the 9/11 attacks, the financial crisis of 2008 and the Covid-19 epidemic in 2020. Arbitrary, authoritarian political rule is also a bipartisan tendency. For example, both Trump and Biden have called for the Defense Production Act (1950), which gives Washington the power to occupy and control the entire industry, especially during wartime.

Where equality under the law requires equal treatment of all, the opposite, unjust system is institutionally discriminatory, discriminatory (whether legal or financial). That’s the decent thing to do, and it should end there. Moreover, the more influential, powerful and redistributive a government is, the less free its economy will be and the more likely it is to spread political corruption and economic stagnation.

Figure One summarizes data from 181 countries around the world. I collect measurements of their economic independence, political corruption and per capita income. Relationships are clear. The more independent a country’s economy is, the less politically corrupt it will be and the richer it will be. In contrast, the less economically independent a nation is, the more politically corrupt and poorer it is.

Correlation is certainly not causal; The data pattern of Figure One does not spontaneously prove that political corruption (favoring, favoritism) is primarily a supply-side or demand-side event, whether it arises and continues due to market or politics. But it is difficult to imagine why anyone in the for-profit private sector would waste their time, energy or money to influence the public sector, if it had little or no influence to offer in the first place. Run it, deliver it and deliver it in order to “offer effect”.

In my opinion, the causal sequences are as follows: on the contrary, more economic freedom (due to capitalist ideology and hands of public policy) leads to clean governance and further prosperity; On the downside, less economic freedom (due to anti-capitalist ideology and interventionist public policy) leads to political corruption, then less prosperity.

For government policy to undermine economic independence, it must provide control, trust, taxes, spending, and subsidies. The more it does, the more it attracts the attention, advocacy, and funding of those who suffer the most (for good or for bad). Political actors know this, but are not interested in advertising it out loud. They like to pose as selfless public servants, inevitably preyed upon by rich and powerful “fat cats”, hateful “special interests”. Indeed, many low-paid political actors envy the material success and wealth of real (private sector) producers and aim to rob them legally.

Figure two presents the same information but uses 48 of the 181 countries in the two-dimensional exhibition. As in the first picture, the system of freedom and corruption is positively related (upward slope). Notice that the rich countries (nominated by the green dot) are in the north-east quadrant of the exhibition, while the poorer countries (nominated by the red dot) are in the south-west quadrant.

Wealthy countries are rich in large part because they are economically independent, but they are also less politically corrupt. Their property-protection, pro-capitalist public policy prioritizes the quality of wealth, not its division or removal. Poor countries are poor mainly because they are less economically free, and therefore more politically corrupt. Their anti-capitalist, anti-capitalist policy divides and diverts wealth instead of multiplying it.

We can evaluate global metrics by geographic region. Figure three illustrates how the seven largest English-speaking countries enjoy the most economic freedom, the least political corruption, and thus the highest per capita income. It is followed by the best European countries, followed by the Asia-Pacific region

The worst happened in sub-Saharan African countries, known for their decades of brutal, anti-capitalist policies. They have proudly liberated themselves from the colonies of European powers (mainly Britain and France) (from 1960-1970), but for the most part have simply liberated themselves from the rule of law, economic freedom, clean rule, prosperity and humanity. . Countries in the Middle East and North Africa are less free, and somewhat less corrupt than those in Lower Africa. However, the extent to which they are richer than the other three regions is largely due to the fact that the elites occupied oil fields built by the British, French and American oil giants. They have since benefited from the Fed’s devaluation of the dollar (thus appreciating the value of their oil exports).

Today those who claim an increasingly interventionist-authoritarian role for the state are often the same people who condemn “crony capitalism”. But the phrase is worse than an obvious contradiction. It is a ploy to blame capitalism for the consequences of anti-capitalist policies. True friends are those who demand and supply intervention. Despite their demands, they cannot extract money from politics, or reduce corruption, because they are interested in injecting politics into making money.

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