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Lesson 36 |
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The cost of government |
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What's the most important factor, both in government or business, |
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for keeping running costs low? |
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If a nation is essentialy disunited, it is left to the government to hold it together. |
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This increases the expense of government, |
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and reduces correspondingly the amount of economic resources that could be used for developing the country. |
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And it should not be forgotten how small those resources are in a poor and backward country. |
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Where the cost of government is high, resources for development are correspondingly low. |
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This may be illustrated by comparing the position of a nation with that of a private business enterprise. |
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An enterprise has to incur certain costs and expenses in order to stay in business. |
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For our purposes, we are concerned only with one kind of cost--the cost of managing and administering the business. |
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Such administrative overheads in a business are analogous to the cost of government in a nation. |
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The administrative overheads of a business are low to the extent that everyone working in the business can be trusted to behave |
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in a way that best promotes the interests of the firm. |
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If they can each be trusted to take such responsibilities, |
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and to exercise such initiative as falls within their sphere, then administrative overheads will be low. |
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It will be low because it will be necessary to have only one man looking after each job |
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without having another man to check upon what he is doing, keep him in line, and report on him to someone else. |
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But if no one can be trusted to act in a loyal and responsible manner towards his job, |
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then the business will require armies of administrators, checkers and foremen and administrative overheads will rise correspondingly. |
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As administrative overheads rise, |
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so the earnings of the business after meeting the expense of administration, will fall; |
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and the business will have less money to distribute as dividends or invest directly in its future progress and development. |
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It is precisely the same with a nation. |
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To the extent that the people can be relied on to behave in a loyal and responsible manner, |
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the government does not require armies of police and civil servants to keep them in order. |
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But if a nation is disunited, the government cannot be sure |
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that the actions of the people will be in the interests of the nation; |
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and it will have to watch, check, and control the people accordingly. |
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A disunited nation therefore has to incur unduly high costs of government. |