Battlepanda: When authoritarian rule meets free-market economics


Always trying to figure things out with the minimum of bullshit and the maximum of belligerence.

Friday, July 29, 2005

When authoritarian rule meets free-market economics

Tyler Cowen ponders the curious case of Singapore. I tried to approach the same question with China (but less coherently) not long ago. The question: Can authoritarian governments ultimately become better hosts for free-market economies than democracies? Here's Tyler:

Yes Singapore has developed rapidly through the use of market incentives, but there is much government planning here as well. Every food stall gets a letter grade for its cleanliness, which must be displayed prominently. More significantly, land planning has been extensive, and yes the government decides where the food stalls (and just about everything else) will go.

But why do we call this government? Let us say that way back when, former Prime Minister Lee Kuan Yew had homesteaded the territory of Singapore in proper Lockean fashion. He then wrote a contract welcoming people (all subsequent migrants, but not everyone) to live there, provided they agree to various rules and regulations, including of course Singaporean land planning, not to mention the ban on oral sex. This would then count as "the market," presumably.

Should we then think that such planning is more (or perhaps less) efficient, because it is now "the market" instead of "government"? But why should our evaluation depend on the murky details of past history? What is really the difference between market and government anyway? Can we in any case think of Singapore as a very well planned corporation, albeit with some uptight morals at times?

When we do public choice theory, is it really the government we are criticizing? Or is our true target something like "excessively large land parcels," regardless of their historical origin?

It's like a bad romantic comedy, this curious dance between authoritarian governments and free-market economics. When they first met, they hated each other! One is a control freak, while the other needed room to grow. For years proponents on both sides traded barbs and insults. Yet they say that opposites attract, and before long a whirlwind courtship resulted in beautiful children like Singapore (and more controversially China) with a whipped and docile citizenry AND meteoric economic performance.

The Authoritarian Capitalist Paradise -- It's a happy ending that those of us who would prefer to think that political freedom is inextricably tied to economic success does not like at all.