National 2 (Spotlight Weekly)

Consensus On Economic Freedom

Roles of governments need to be downsized to usher in the economic development

By KESHAB POUDEL in Hong Kong

At a time when the leftists and socialists are trying to pursue the idea of big government, central authority and more government intervention around the world, a group of libertarian economists have urged to reduce the role of the government in economic matters.

Organized by Hong Kong Center for Economic Research, The National Economic Research Institute Beijing and the Unirule Institute of Economics Beijing, the four day symposium on The Role of Government in Asian Economics concluded in Hong Kong last week strongly putting forth the idea that lesser the state intervention on economic matters, better for the interest of large population.

At the program moderated by Indian scholar Mohit Satyanand, experts held the view that the subsidy regimes and government intervention on economic matters are benefiting a small number of population and a large number of poor people are denied their basic rights to improve the economic situation. At the program held in Hong Kong, the only place in the world, where the government does not intervene in the economic matters, the experts from round the world revealed that the government has to move out from the day-to-day economic affairs.

"Our experiments have shown that bigger the size of government and bigger the government expenditure, lesser the possibility of economic growth. We must downsize the government reducing its role in the economic affairs,” said Dr. Andrei Illarionov, advisor for Economic Affairs to the president of the Russian Federation, Moscow. “We experienced sound economic growth when Russia started reducing the role of the government.”

In a world where socialists and leftists as well as some rightists of Western Europe are wooing the voters with the promise that they will take all the responsibility of economic matters, it is very difficult for libertarian groups to prove that the prosperity of the people is impossible through the government intervention.

Experts charged that the socialist and leftist elements were destroying the basic essence of economy spending the government resources in the areas where there is virtually no use of money. Their argument is that the subsidy regime has already done much damage to the efforts to alleviate the poverty.

“After joining the World Trade Organization (WTO), the countries have to ensure that there will be freedom and transparency. This will result in more economic freedom,” said Professor Dr. Mao Yushi, Unirule Institute of Economics, Beijing. “The governments – which are subsidizing - will have difficult time to cover up.”

“Hong Kong’s prosperity and development is the result of its policy to liberate the economy,” said Dr Richard Wong, deputy vice-chairman of the University of Hong Kong. Despite so many benefits of the liberalization of the economic policies, there are few who really have shown courage to implement it.

From Thailand to Malaysia and Russia to Slovakia and European countries, libertarian economists are gradually outnumbered by leftists and socialists who consider the role of government is still important to uplift the life of common people.

“Our recent studies have already shown that those countries which reduced the role of government have done tremendous job to improve the life of people achieving the economic growth,” said Dr. Michael Walker, executive director of Fraser Institute, Vancouver, Canada.

For the countries like India, which has diversity within different states, it is not easy to give up the role of the government. “Some states in India have done unexpectedly good by reducing tariffs and downsizing the government expenditure but some states still manage every affairs,” said Dr. Laveesh Bhandari, Indicus Analyticus, of New Delhi.

Despite the removal of trade barrier and removal of the restriction, Thailand still spends huge amount of money as government expenditure. Many other Asian states still consider energy and other utility sectors need to be under their control.

“There must be reduction in the role of government though reduction of the government consumption, tariffs and improvement in taxing system. All kinds of subsidies need to be done away with,” said Dr. Robert Lawson, Capital University, Ohio, USA. "Economic sector should be fully liberated.”

Earlier at a meet of Asian Resource Bank, experts stressed the need to free the economic activities from the government hold and intervention. At the meet organized by Atlas Economic Research Foundation and Unirule Institute of Economics, the speakers highlighted the importance of economic freedom.

“One of the aims of the meeting is to share and promote the ideas of economic freedom,” said Jo Kwong, Atlas Economic Research Foundation. “People are gradually coming up against the state intervention.”

The participants also discussed roles of NGOs, which are promoting self-interest in the name of poor. “Many NGOs and INGOs are using their resources against the freedom of people. NGOs have done harm by intervening in the freedom of people,” said Mike Nahan, Institute of Public Affairs, Australia.

“We require more like-minded people to push the idea of economic freedom,” said Joseph Lehman, Mackinac Center for Public Policy, USA.

Although the group of people raising the issue of absolute economic freedom is small, their voice is getting louder.

Asia’s giant China is an example how the economic boom can be possible through the less government intervention. Thanks to the opening up of the economic sector during the last two decades, China has achieve double digit growth resulting in the tremendous increase in its per capita income. In the last two decades, Chinese government opened up almost all of its economic sector as per the spirit of the liberalization.

“There is no room for ifs and buts in the process of economic freedom. There is a need to liberate the economic sector from the government intervention,” said Leon Louw, president of the Free Market Foundation, Johannesburg South Africa. “Our research on the economic freedom has already shown that more the economic freedom, better the possibility for higher growth.”