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Link: Why trying to help poor countries might actually hurt them

is4junk          14 October 2015 06:17 PM


I am interested in this bit: "Think of it this way: In order to have the funding to run a country, a government needs to collect taxes from its people. Since the people ultimately hold the purse strings, they have a certain amount of control over their government. If leaders don't deliver the basic services they promise, the people have the power to cut them off." My take is that he is confirming the Tax Farmer worldview. https://www.youtube.com/watch?v=Xbp6umQT58A (I am on the fence wrt the Tax Farmer worldview - for what its worth.)



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melian 16 October 2015 05:33 AM
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“In order to have the funding to run a country, a government needs to collect taxes from its people. Since the people ultimately hold the purse strings, they have a certain amount of control over their government.”

During the medieval period this used to be true for Western European countries where central governments were relatively weak. It does not work like that for modern autocracies. However, regimes whose income depends on taxes more than on natural resources have much stronger incentives for sensible economic policies.


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is4junk 16 October 2015 09:22 AM
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I probably didn't do a good job of linking this article to the tax farmers. Let me compare it with the other thread: The cultural explanation of the difficulty of development

WV1: That (simplified) worldview is that governments job is to get enough tax to fund government (ie fund infrastructure roads, hospitals, ect)

WV2: The (simplified) Tax Farmer worldview is that governments job is to maximize profits.

So in the case of Dalrymple take on Zimbabwe, the British gave over control of a working government to that nation - WV1 mission accomplished. It got enough tax money to fund itself but still failed due to family-cultural issues which caused them to stop funding the infrastructure.

WV2 would look at the events and say what really happened was that more profits could be made by going corrupt and not funding the infrastructure. Mission Accomplished for WV2 would be that the British don't give control over to that nation until it got enough tax money profits to make the corruption option relatively unprofitable.

To tie it to the Nobel work - to me it support WV2 since having resources or getting aid doesn't lead to more infrastructure - in fact the opposite.

I am on the fence for WV2 for modern democratic states - I think there is more going on then a pure profit motive. Maybe a symbiotic parasitism.


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melian 16 October 2015 11:14 AM
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I think one should distinguish between “government job” (which is whatever people with power to “fire” the government expect it to do) from government officials’ personal interests (which includes but not limited to maximizing profits).

British gave over control of a working government to that nation - WV1 mission accomplished.

The real reason British resigned control was that they had no more interest in controlling Rhodesia, whether it was ready for self-government or not.
Mission Accomplished for WV2 would be that the British don't give control over to that nation until it got enough tax money profits to make the corruption option relatively unprofitable.

Corruption does not become unprofitable with increased tax revenue.


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Fwiffo 17 October 2015 03:03 PM
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If you give a teenager a big allowance does it train them to handle money better?

If you have a hungry person they insist that you must give money so they can buy fish. however the more proper way is to teach them to fish. One could argue that if you give them some money and they get a taste of fish they migth better understand why learning to fish would be worth it. However if they are habituated to buy their fish that gets them nowhere.

An economy in the sense that goods are produced and such needs to be able to respond to need and means available. If you just blanket it in money it can erode this detail spesificity.

There is also a signifcant effect that rich countries partly fund poor countries that the rich countries companies have targets to import their products into. If they give X amount of money and the target country uses it to buy X worth of services from that country the effect is like putting money into your own pockets.


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