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How a country can win

In our modern world countries compete with each other in a variety of ways, attempting to capture more resources, influence and power. To be more precise, political elites compete with each other. Sometimes the needs of some groups of people align with those of political elites. Sometimes political elites see a great benefit in keeping most of their subjects relatively well off and free - after all, only in places where we have relatively free trade and just enough freedom, governments are stable and elites are not endangered by sudden revolutions or coups. In those cases we have countries that a more or less prosperous and governments are able to generate enough from taxation to cover its promises and to also make themselves rich through corruption (which is masqueraded very well in first world countries).

Sometimes a situation in a given country is very difficult for the political elite: giving more freedom means losing power (and, consequently money and sometimes personal freedom of the elite members), but clamping down on the opposition usually means less economic freedom, which in turn leaves both the elites and the country as a whole starving. Of course, there are notable cases, like Chile or Singapore, where economic freedom was the direct result of authoritarian rule. However, in both cases, the leaders were not gradually progressing towards authoritarianism, but rather started their policies off the blank slate - which really makes all the difference. They didn't fear losing power because they just got it and were prepared to do whatever necessary.

Additionally, the elites in unstable countries are not only pressured by constant fear of coups, but also by elites from other countries, which very often have substantial influence on them: many leaders have bank accounts, property or even family members living in other countries. They have obligations to the elites from other countries, sometimes very conflicting, but they also get support from those outside forces which help them stay in power (1). In such cases, it is usually the forces within that have an advantage, but are not likely to achieve anything until they are powerful enough to fight not only the internal elites, but also outside support.

A different situation occurs when the elite manages to convince the (vocal) majority within the country to support it (2). Then it doesn't need support from the outside forces, which often seek to influence them. While some connections still remain, which prevent both parties from acting randomly and dangerously, there is very little dependency. Typically, a country (or, to be precise once again - the elite of that country) seeks opportunities to influence the other country, often unwisely, which results in more alienation.

It's really important to note here that both cases - (1) and (2) - don't usually serve the interest of the people as a whole. There are always groups of people within a given country, which benefit and then there are groups of people who suffer. Furthermore, the political elite in both of those cases remains dependent, just on different parties: on outside elites in the first cases and on internal clans and forces in the second case. Which one of these dependencies is easier to manage and which one allows for a more lasting reign is, in turn, itself depends on many different factors. The worst part of both of those cases is that any resulting policies will aim to keep the status quo for as long as possible and will not aim to improve economy in any way, as there is no incentive to do this in both cases. The elites personal wealth depends simply on staying in power (because as soon as they lose power, they will, most likely, lose all of their wealth), not improving the economy. Actually improving the economy most often means sudden risky changes, which have good long-term effects, but often disturbing short-term effects (and, additionally, bad PR), so they are not likely to be attempted. While having a good economy is generally good for the ruling elites, transitioning to it is generally very risky.

Thus if a country is to improve its economy, it needs a political elite change, however such change is only possible when the opposition wanting to come to power is supported from the outside. There is next to zero chance, given the grip the ruling elite usually has on power within the country, that such a change can happen with the help of internal forces only. As seen from history, even big countries, such as the US or Russia, experienced a regime change only with some significant help from the outside forces (France helped the US in the war for independence and bolsheviks in Russia were also sponsored by European states seeking their own interests). Not to mention smaller countries which are always influenced by other countries and blocks.

The problem for the country and the new elites is that because they accept such help, they become indebted, at least temporarily, to the helper. And this strips them off the independence in economic policies. Which, again, benefits some, but harms others and while over time a better economic policy coming out of such influence may benefit the country as a whole (as it happened in Chile, for example), it still isn't always ideal and certainly makes it more difficult for countries to make independent decisions which would be much more beneficial for most, and not some, citizens. All countries play this game sooner or later and personal interests of politicians always prevail. It is almost a given that whatever the supporters ask of the new elites will most likely be asked without any regard for the well-being of the country, because they themselves are not in any way dependent on that country: they don't live there, their sponsors and voters are not there either and, consequently, they will not lose power if things go wrong.

And so, the question to be answered is: can this be avoided?

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The solution consists of three crucial parts: 1) Who is going to provide the support for the initial elites change? 2) What are the economic policies that will allow the elites to stay in power and country's economy to flourish, preserving independence in decision making and foreign policy? 3) What laws should exist to prevent a rollback of everything achieved?

Providing support for the initial campaign

This is a less important question, albeit perhaps not less complicated to answer. So we'll start with it.

As I mentioned above, foreign elites sponsoring the opposition do not have much at stake, since they are not dependent in any way. Thus, a person who is interested in building a successful future for his country (and consequently, for himself) shall not seek such sponsoring. But where else would it come from?

The only option left is, of course, the business. But why on earth would a profitable legitimate business fund a campaign of a politician, unless it is forced to or unless it is promised something very luring? Well, as it turns out, indeed any source of funding must be lured to give money. By what then? To understand it, we must look at how businesses make profit.

There are two types of businesses: those whose business model is based on monopoly/regulations/favors a government grants them and those who are on their own. Naturally, the first type has more money, but the latter are more numerous. And this is where the funding should come from. Smaller businesses would readily fund a campaign of a candidate who promises them something very attractive - but it can't be some exclusive monopoly rights, as there are too many of those small businesses. Rather, it should be simpler rules, more attractive taxation, absence or regulations, transparency. That is a deal breaker for most businesses. Should a chocolate manufacturer decide it'd be more profitable to produce chocolate in a country where it has to pay a much smaller tax (or possibly no tax at all) with none of the bureaucracy and red tape, it would choose that path and move its headquarters there in an instant - provided, of course, it has reasons to believe the situation is going to be stable.

Obviously, there's an accountability problem, where a candidate should be able to deliver what he promised - and by all means it is much easier to forget about small contributors than a single large one. However, there's also an upside to the situation: when everybody knows money comes from so many sources, it is much easier to understand what the objectives are. When something is funded by a single entity, this entity will be very good at obscuring its objectives. But coming back to the accountability problem, it is conceivable that a combination of future benefits + fallout from breaking the promises would be enough to restrain the candidate from making any sudden moves. Of course, as time passes, this becomes more of a problem - nobody owes anyone forever, especially not in politics. And this problem should be solved by answering the third question (see below).

Economic policies

To understand economic policies we must first define the objectives of those policies, which are in fact, numerous:

  • Allow the potential candidate to stay in power longer and/or preserve his personal wealth.
  • Improve the country's economy.
  • Improve the well being of most of the people in the country.
  • Decrease or remove the dependency of the country from foreign elites.
  • Decrease the dependency of the country from market fluctuations.

I intentionally made the first objective to be about personal interests of a political candidate. While it is the desire and conviction of most people that a political candidate must be pure and have no selfish objectives, I believe this is simply not possible. Even if possible, such a candidate might potentially present a lot more danger to the society, because his own convictions are not in check with economic incentives and he is free to do as he pleases, without regard to the actual feedback the economy gives him.

But is it possible to combine those objectives and achieve them together? What kind of economic policy would fit the bill?

Let's start with the funding. Obviously, since we got our funding from business, the policies should be pro-business and less about socialism. Various tax breaks should be implemented, perhaps even 0% tax policies at first for those who donated to the campaign. However, it is also important to understand it won't be politically possible to tax foreign businesses less than private citizens of the country. So, perhaps, there's an even better deal to be implemented. And here comes the most important part of the economic policy which I will succinctly list below:

  • 0% tax on private citizens of the country.
  • 13% tax on foreigners working and/or investing in the country.
  • No-visa stay with work permit for 1 year with the possibility of indefinite extension.

Forget the corporate tax. Actual people work at corporations, so any taxes imposed on the company are actually paid by the shareholders (or worse: by the employees) anyway. Tax the private persons and only tax foreigners. This kind of policy is both moral and easy to sell to all groups: the citizens will love 0% tax, the foreigners will love a much lower tax than in their respective countries and they will also agree to it voluntarily (by coming to live and work into the country), which makes it more of a contractual agreement than a tax. And so implementing this scheme would basically allow financing of government spending - such as law enforcement, limited healthcare, basic education and many other things - at the expense of the foreigners.

There are many problems with this plan indeed and I can't go into details here as it would take a lot of time and space. However, the reader must not think I don't foresee these problems. One of my favorite ones is how would a foreign workforce donor react to the fact that the productive members of their country are all emigrating to another place?. Or, for example, what would the transition period look like, when there are not enough foreigners working in the country, but the tax rate for citizens is 0%? All of those questions, I'm sure, have at least 2-3 different solutions of various degree of applicability. However I'm convinced those solutions should be discussed and the plan itself should eventually be considered by some countries, not avoided and discarded as something that's not possible.

Eventually, as the economy grows and is more stable, government should be giving up more functions to the private sector: functions such as law enforcement, public education, healthcare and even law. However this is beyond the scope of this article, although I do believe those things are possible. The only question is, why would a government want to give up those functions and I will try to answer it in the next section.

Legislation

The United States founding fathers understood that a government, however small, has a tendency to grow, rather than shrink. They tried to limit this tendency in the constitution, however the end result was that numerous amendments were passed (some of them were good for the liberty, but the fact remains) and, most importantly, words written on a piece of paper never prevented people from finding loopholes and excuses to abuse power. Over 300 years this has grown into a government monster, which consumes half of the wealth produced in the economy.

Now, how would a plan proposed above prevent this? The answer is that there's no sure way. But we can learn from the past mistakes and have a goal which is to be recognized (albeit not immediately) by all members of society. That goal is a society with absolute liberty and without government. Whether it's actually possible to achieve or how soon, I don't know. Until then, we should see very clearly, which way do we go. If we recognize that goal, the following policies make sense:

  • No new law shall be passed after the transition period is over (perhaps a year).
  • Every year a number of older laws shall be amended.
  • No law limiting government power shall ever be amended.

One must recognize that, even with such strict rules that do not allow to create new laws, loopholes may be found. A government agency may act lawlessly, calling something emergency powers, or special executive order or whatever else that allows to bypass legislation. This abuse must be recognized universally and not be tolerated. For that to happen, a propaganda campaign must be run, explaining possible power abuses and how to recognize them (and of course, those campaigns, are very unlikely to be run by the government!). However, this topic is beyond the scope of this article.

Another quite important thing to legislate and, more importantly, to design correctly, is a system which will detach policies from specific individuals, so that whatever happens to the person currently in power, it is impossible or very difficult to change the political course. Make no mistake, many entities (especially on the outside) will be very unhappy with such policies, but they should be sent a signal that it is much easier to compete openly by providing better economic policies for their own subjects, incentivizing them to stay, rather than relocate.

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The reader has probably noticed that approaches suggested in this article are very pro free market. That doesn't mean there's no place for compassion or responsibility in this world. It would be both morally and politically wrong, for example, to devoid pensioners of their pensions because the government decided to not tax the productive citizens anymore - older people are not guilty they lived under different political elites who promised them free money. While it might not be possible to keep all the promises other irresponsible rulers gave, the new elite should strive to keep most of them for as long as necessary. For instance, the foreign workforce coming into the country and paying taxes, effectively funding such government obligations, seems like one reasonable solution. However the objective here is to not do it forever, but to grow a new generation of people, capable of saving up for themselves, capable of taking important life decisions and responsibility of their own and not implicitly and mindlessly delegating it to the government, which will rob them and lie to them. Maybe the presented plan is one way to achieve this goal.