Welcome to Dr Lincoln's blog

Welcome for visiting my blog. Hope you enjoy the visit and always welcome back again. Have a nice day!

2009-08-11

Separate the making and and implementation of fiscal policy for economic interventions

Comments on Michael Stutchbury “Beware rent-seekers”, 11/08/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/beware_rent_seekers

This raises two points. One is that the government should not intervene unless it is clear that its intervention will certainly bring good. The other is that it is better to trust major interventions to organizations independent of the government and get them done at arms’ length, if the government is to intervene.

It is unavoidable that government has to intervene in special circumstances when and if warranted. The financial and economic crises are examples that government needs to get involved and intervene. But that does not mean any government interventions have been necessarily done in the most effective and efficient way, or in a satisfactory manner.

As far as government spending is concerned, it may be a good practice of public policies to separate the government’s policy initiative and its implementation in general, including any significant spending measures contained in its normal annual budget. To have the policy formulation and making separated from their implementation will enable closer scrutiny of the implementation processes and improve their effectiveness, but does not impede in any way government’s policy direction or its ability to take any policy initiatives. It will reduce the potential for political favours and a lot of inefficiency by incompetent bureaucrats with little commercial expertise and experience.

In a sense, some of the government implementation processes can be out sourced and subject to market competition.

No comments:

Post a Comment