1. Which governments “succeed”?
Poor or Rich?

2. Background – The Miracle of Poverty
Government Success?
Background –
The Miracle of Poverty
Widely published article
Prosperity is automatic
Poverty is miraculous
Greatest accomplishment of modern government.

3. How do you measure government success?

4. Assumptions
People want consequences they get repeatedly
Government is people
Government people are self-serving
Government is coercive
Government isn’t inevitable
“Success” is Darwinian – triumph over alternatives.

5. Indicators of (government) success
Same as other organisations -
Companies
Churches
Clubs
NGOs, etc
“Success” from perspective of those who constitute “government”.

6. Indicators of (government) success
Endurance
Popularity
Power
Size -
Wealth (budget / income / assets)
Employees
Beneficiaries (“shareholders”)
Omnipresence.

7. Non-indicators of success
Economic growth
People’s welfare
Peace / stability
Safety / security
Liberty / justice
Equality / fairness
Permanence in office.

8. Government succeeds for them

9. Distinguish from permanence of institution
Permanence in office
Distinguish from permanence of institution
Threatened by -
Liberty
Democratic checks and balances
Prosperity (O’Dowd thesis / perestroika)
Poverty (coups / insurrection)
Optimal balance = maximal success

10. Government Success vs Liberty
Endurance
Popularity
Power
Size
Omnipresence -
? /  X
 Policing, justice
? - Ambig.
X - Bad
- Good 

11. Government size and Growth Govt consumption - % of GDP
(OECD)
SA Budget
2003/4-2006/7
4% growth
Growth
There is much dispute in the growth literature about why economic growth takes place and we look at a few slides to test the empirical facts.
Firstly, there is a theory that says rich countries will grow faster than poor countries. That is, if growth is a function of capital then the more capital you have to start with, the higher the growth rate attainable. There is some evidence to suggest this is partially true, but what is more likely (and as can be seen from the graph) is that poor countries have a wider variance of growth rates than do rich countries (from –5.5% to +8.2% for the bottom half of the world, and from –0.9% to +6.1% for the top half), yet the absolute rates are higher. As incomes go up, these rates tend to converge around the 2% mark.
From the slide we can see some kind of funnel effect at work, though it would be impossible to say if this would be maintained if all the countries were equally wealthy. Perhaps the scatter we see at the left-hand side of the scale would be maintained as relative incomes rose.
@ 0% growth
Govt consumption - % of GDP

12. Equality and Freedom Unfree Free
We now ask the question whether liberalising an economy would increase or decrease the disparities in income levels across society. This slide uses a quintile representation of economic freedom across the world (ie. Splitting the countries into 5 x 20% groups of ever increasing freedom) correlated against the 2001 World Bank GINI coefficient. The results show that there is not a great deal of difference across freedom levels, indicating that other factors may determine income disparities. However, if a conclusion must be drawn, those economies with higher levels of economic freedom are the ones exhibiting higher levels of equality.
Unfree
Free

13. Equality and Freedom Unfree Free
We now ask the question whether liberalising an economy would increase or decrease the disparities in income levels across society. This slide uses a quintile representation of economic freedom across the world (ie. Splitting the countries into 5 x 20% groups of ever increasing freedom) correlated against the 2001 World Bank GINI coefficient. The results show that there is not a great deal of difference across freedom levels, indicating that other factors may determine income disparities. However, if a conclusion must be drawn, those economies with higher levels of economic freedom are the ones exhibiting higher levels of equality.
Unfree
Free

14. Conclusions
Governments are-
one of the most efficent organisations ever conceived
spectacularly efficient at serving the ends of those who constitute “government”
out-perform corporations etc in all indicators of success

15.
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