Governance and growth of economy

No state can ever produce wealth. At most the state can create jobs by subtracting fiscally earned incomes from industrial corporations and professionals to fund those unearned salaries hoping that that operation could result sustainable by the taxed wealth producing protagonists.

The net result of that ‘job creation’ process is the redistribution of the wealth already produced among end consumers deserving their income in a different degree of dignity; the earned incomes vs. the unearned ones.

This process of top-down flattening of incomes is a scope attributed to the state institutions by the ‘welfare state’ promoted by the paradigm of Nation-States governments to collect political consensus and legitimacy to rule their countries in a top-down spirit of ‘governance’. Among the first examples of welfare state in the modern history can be recalled the ‘social housing’ offered by King Christian II to his sailors or the ‘social security’ concept enacted as Imperial Chancellor by Prinz Otto von Bismarck. Both examples of ‘enlightened’ top-down rule upon ‘subjects’ whose earnings were ‘governed’ by the wisdom of the Emperor’s Government. Besides the fundamental illiberal nature that type of top-down governance has an overall cost upon the overall economy in terms of depleting the rate of growth of the gross national product. It namely discourages the most enterprising protagonists and lacks to stimulate the laziest ones. In addition the ‘overhead’ costs assumed improperly by the state institutions in charge of that redistribution process hit the gross national product with a parasitic additional, non required handicap. The state institutions are often absorbing well above the 50% of the fiscally collected resources aimed to the purpose.

A healthy industrial system requires that the available resources should be restricted to feeding wealth growth initiatives. That demands the state institutions to shrink down to a minimum the cost of ‘governance’.

Governance is a task performed by state and industrial institutions in the benefit of the general interest. A sort of subject easily distorted for demagogical reasons by their ideological definitions of a ‘politically correct’ rating against the fierce one inspired by the ‘natural human avidity’. That entitles any sort of illiberal top-down governance of economy against the ‘natural’ bubble-up style of free market economy; the only winning asset in a competitive arena like un-protectionist globalized market where ‘planning economy’ is impossible.

Most of the institutions devoted to the ‘governance’ of the industry-state system are state ruled because of the past illiberal top-down spirit of the welfare states. A few among them though are ruled by industrial corporations with a minimal relation to the state. The USA Federal Reserve is a good example of similar currency controlling agencies where the industry sector of finance has a major role.

The wealth and welfare growth instead are mostly performed by industrial corporations ruled in a spirit of private ‘governance’

The state doesn’t produce wealth it just collects shares of produced industrial earnings by means of legal but arbitrary principles and delivers those resources to the layers of less producing people whose income will rarely turn into an earned one. A global impoverishment of the total national product results from this illiberal operation.

I therefore agree that NO USA President would have refused funds to the major banks and to the Corporations in trouble for the resulting impacts upon THEIR constituencies. That’s the shit of POLITICS. Any NORMAL politician would have acted like Margie Thatcher or Ronnie Reagan did by kicking of the debate the UNIONS’ arrogance. The miners’ in the UK and the air-controllers’ in the USA. I agree too that, letting a few major financial corporation bankrupt, would lead Obama to fail the second mandate. That’s why I’d rather prefer extending the mandate duration to 7 years but restrict the mandates for each President to just the first and unique one (something alike the ‘elect dictatorship’ of both ancient Greece and ancient Rome). If we don’t let the major financial groups (Salomon Bros but Fannie Mae and Chrysler too) bankrupt like Lehman Brothers the only result of the state delivered funds is just to distort the FREE MARKET, let the industrial Corporations enjoy their successes while discharging upon ALL the taxpayers their errors.

STATESMEN inspired by a free-market governance should allow bankrupting. There would always be an healthy Ford willing to purchase the bankrupted competitors’ clients and expand on the market. Else, tanks to TRADE UNIONS and to PORKBARRELHOOD POLITICIANS (Presidents too), the result would be funding any moneyless foreign group – e.g. Fiat in the USA - to enter the USA market billing the American taxpayers’ the cost of that funding.

By far less jobs are globally lost and a much larger overall growth of the economy results by letting the less competitive companies to bankrupt as opposed to what happens by feeding the less competitive companies in a troubled agony or slow, inadequate recovering paths. We shall accept that the associated occupational losses (though minor and balanced by higher wealth growth), could hit our own - hitherto ‘privileged’ - workers rather than continuing to bill our privileges to the disadvantaged poorers’ cost. It’s a rule that strange enough is rejected especially by the bleeding hearted liberal-humanitarians who flaunt social doctrines of an internationalist spirit of solidarity both on the secular or the religious level.

The national Debt problem isn’t negative if it has been accumulated by free market choices by massive risk-assumption WITHOUT anyone to compensate those risks at any level. China has been funded by USA ‘common’ consumers who abused of the credit cards and of the real estate financing for over thirty years. The net result has been the launch of the greatest industrial growth at the planetary level and the associated growth of any GNP in any Country. The ‘local distresses’ are just caused by the inevitable effort to OPTIMIZE the industrial employment of the scarce resources available globally (money, manpower, commodities). That exceptional result has led to China to accumulate the largest share of USA-debt and to experience internally the turmoil injected by new ‘democratic expectations’: trade unions, ethnical stains, etc.. Wonderful results of the ‘normal politics’ carried by the healthy, firm capitalist approach to bear INDIVIDUAL RISKS. Else everyone can easily afford to assume risks funded at anyone-else’s risk. Like Obama is doing now by negotiating with the Taliban (the useless ‘carrot’) while withdrawing Petraeus, (the only effective stick USA have installed at the cost of the ‘normal’ Marines’ blood). A true Republican like Teddy Roosevelt would never have abandoned the ancient romans’ wisdom synthesized by ‘si vis pacem, para bellum’.

Anyway industrial economies flourish better under an enforced set of rules named ‘governance’.

Governance is traditionally the duty committed to state institutions though it can be ensured by industrial corporations as well. London Lloyds and the East India Companies or the Hanseatic League are excellent historical examples.

The main if not only task ensuring an effective ‘governance’ of economy is to give evidence of a firm enforcement of the basic principles ruling the industrial transactions.

The visibility of those principles and the credibility granted by their effective enforcement are the only guidance upon which ‘governance’ is rooted. The institutions in charge of enforcing global governance compliance shall only show their firm, steady steering the rudder of their assigned commitment. Credibility results from unique, comprehensible, coherent values and the prompt and effective capacity to enforce them.

That’s why several industrial corporations are more influential upon ‘governance’ than most of the state agencies can. Due to the less comprehensible mix of political goals committed to state agencies a mix that confuses and hampers the effective, constant, coherent and credible capacity to enforce a clear-headed, self-evident set of governance criteria.