I agree this is the way most public systems work, but does it have to remain so ?
In a private company, you can set a target and an indicator to see if you have reached the target. Governments could decide to work that way too... They don't have to be inefficient.
It will always be that way in government, because they are spending somebody else's money. The government will always get paid no matter what it does, it will always have it's tax base. If a corporation screws up one too many times it goes out of business (until just recently).
It's all about incentives. Private business, through risk and competition, has a great incentive to do things efficiently. Government has no such incentive, as it carries no risk and allows no competition.
To quote Milton Friedman:
"You know, over and over again in government policy, good intentions go awry, and the reason good intentions go awry is because you're spending somebody else's money"
Eric, I understand your point. I can't develop my thoughts more without crossing the 'political' line. But to summarize them, I don't think a government has to work that way : how do you properly use democracy to control the government ? But that's a political question, so full stop.
From an economical point of view, I'd like to suggest that the paradigm "greater value (welath) stems from an increased efficiency in the use of resources" needs a healthy questioning on the meaning of "value" and "resources".
If value = GDP and resources = capital, then you're completely right.
I don't quite understand your question. Do you want to talk about how governments calculate their GDP?
You could always argue that governments are in essence a Monopoly. Basic economic theory shows that all monopolies are very inefficient users of resources as they use that as a barrier to entry from possible competitors.
Using that arguement, governments will always be inefficient as its embedded in their genetics to be so!
Yup, that's about right.
[...] When I came home to Ireland a few years ago, we were the self confessed third richest country in the world. Now perhaps I had a unique perspective having just left Switzerland, the richest country in the world, but everything to me was second world, the salaries, the health service, the roads, so I thought this doesn't add up! I was a heretic for a few years, but hey, now I have proven to be spot on, the world is in turmoil, but Ireland is in deep doggy do dah, go figure!
Any plans on returning to Switzerland any time soon?
I second the question.
And also, do you have any inside info regarding the swiss banking system? I heard the big news about one of the banks selling out US clients...whats the general feeling around europe concerning the future of swiss banking? Is the whole thing pretty much finished?
My feeling is that Swiss big international banks (Credit Suisse & UBS) will have major problems, but smaller local banks will be okay.
Yea.
But it seems to me Switzerland's reputation as a tax-haven for investors all around the world has been more or less destroyed in one fell swoop.
The Swiss banks like most others are under pressure at the moment and so are a little easier to coerce than they may have been in the past. After all, the now make most of their profits from global rather than local activities so they have to be a bit more pliant.
But there are other jurisdictions with similar privacy rules and relatively relaxed client procedures that are still open to a bit of secret banking. As long as there is demand, there will always be someone willing to store your cash, very few questions asked ;-)
http://www.upi.com/Business_News/2009/03/14/Swiss_to_end_secret_bank_accounts/UPI-61721237062256/
Oh dear, Switzlerland seems to have sold out afterall.
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