The New Rules for a Functioning Market: Guardians of Transparency
Along with private property rights and an effective bureaucracy, transparency is paramount for the functioning of any economy. No matter how intelligent or well-intentioned a country’s policies, laws, and regulations are, they cannot work if people can evade the law by paying off corrupt officials.
The same principles apply to governance. No matter what system of government, it will never fulfil its intended goals if outside interests pay off lawmakers. If sound policy research determines a certain amount of spending is necessary, and large portions of that spending are siphoned off in corruption, then the policy is rendered ineffective.In addition to a whole host of transparency laws, a fully independent, directly elected agency must be created to investigate corruption and to ensure the consistent application of law. This agency should have its own powers to arrest and prosecute, and should be modelled on successful anti-corruption agencies elsewhere (Romania and Singapore, for example). Guatemala has gone as far as to outsource the operation of their anticorruption agency to an international team, to ensure its independence. Considering the importance of transparency, it is not a surprise that a country to go this route. The New Physiocrats stipulate that such a highly independent and effective anticorruption agency must be in place before any other policy.
Unions in the public sector must be either outlawed or severely curtailed, as impediments to the democratic process. When the public wants an effective and efficient bureaucracy, free of corruption, the public must also be free to remove and replace employees. Public sector employees are already a voting bloc able to vote on their employment interests, which acts as a second layer of protection (in addition to unionization), which private sector employees to not have to the same extent. Unionized public sector employees also encourage governments to outsource public works to the private sector (as unionization tend to inflate costs), and these public-private partnerships can be more conducive to corruption.
Transparency should extend to the government’s treatment of tax administration as well. Receipts for goods and services where taxes are applied should include a basic breakdown as to where those tax revenues are going. This can be applied to paystubs as well, where it can be shown that all income tax revenues are returned to income earners, via the NIS.