Five Scenarios Depicting Government Policies As a Two-Edged Sword! (Part 1)

In these times of economic uncertainty,				economies. Again, on the pessimistic side of this issue
governments under a cowering atmosphere may				are the analysts who see the predisposition by the
develop the phobia of actuating policies and				leaders as protectionism and an inordinate desire to
regulations in a desperate attempt to contain the				influence the economy to the detriment of market
situation. From a global perspective, the use of				efficiency. They also see such tendencies as generally
policies in the form of regulations and tax breaks to				not resonating with stakeholders' interest especially
influence a country's economic position has been rave				when the country concerned is of capitalistic
about by some transformational leaders as a form of				proclivity. Howbeit, government regulations whether
insurance for their economies even though in some				in financial, educational, health and industrial sectors
cases it transcends the rules of the international				suggest a form of influence of globalization and have
trade game or globalization in the bigger context.				several connotations associated with it. Unfortunately,
Whichever policies are made in country, the fact				in a period of economic uncertainty, governments
remains that government policy in terms of reality is				may assume a desultory characteristic which makes
always a two-edged sword. Unfortunately, most in				them more susceptible to enforcement of regulations
the world especially the capitalist countries are				in educational, health, financial and even the industrial
resentful of government regulations and policies.				sectors. For example, the current administration of
They see these policies as a threat to the progress				the United States governments and certain western
of capitalism and also to their freedom. However,				countries are compelled to press for policies and
much as it appears to be a threat in some aspect,				regulations to control some salient sectors of the
there are beneficiation dimensions when its				economy including financial and health center because
economics of social cost and social benefits are				of the current global economic uncertainty which has
evaluated. It is in the light of these fundamental				incapacitated a lot of families and made them liabilities
truths that this article seeks to discuss the				on the government. It is true that times are hard and
convolution surrounding the two-edged nature from				government will want to empathize with the masses
the following scenarios and perspectives: national				by pressing for regulations. However, skeptics are
security versus international trade, nationalization				worried about how far the regulations can go and its
versus de-nationalization, investors and consumer				projected negative impacts on the market and most
protection versus Innovation, monetary and fiscal				importantly factors of production. Again, such pursuits
policies versus Politics and finally environmental				are seen as an inclination towards nationalization as
protection commitment versus Nash equilibrium.				against de-nationalization of the market economy. In
Scenario 1 - National Security Vs International Trade:				America some economists have described the
Interestingly, the trade-off between economic gains,				handling of the GM financial crisis issue as a proclivity
national security and sovereignty presents a very				towards nationalization. Recall when GM filed for
dicey situation especially in this era of terrorism rise				bankruptcy, the government provided more than $50
and threats of rising military prowess of certain				billion (tax payers money) for its redemption besides
countries. Thus, governments in some instances are				taking a stake of 60% ownership of the company
eclipsed between national security defense and their				and the replacement of its CEO with a government
policies governing international trade. A paradigm of				approved one. Coincidentally, further down the road
the case is when a country incapacitated by financial				pockets of nationalization has taken place in the
crisis or debt is torn between fulfilling budget				country. For example the interstate rail service
constraints and national security. Take the case of				takeover to form Amtrak and also Airport Security
United States or United Kingdom. In this epoch of				management take over by the federal government
mounting budget deficit when United States or United				after September 11. All these are forms of
Kingdom has to choose between buying warplanes or				nationalization that has beneficiation. For example, the
national defense equipments from a low-cost country				recent changes in airport security with regards to
such as China or Brazil as against securing such				whole body scanning of travelers infringe on our
gadgets from manufacturers in the United States or				privacy and freedom yet it can be effectual in
the EU at a higher price. Obviously, these countries				preventing terrorist from getting into flights to cause
will pay the higher price of increased budget deficits if				harm. Should we blame the government for
they decide to buy the planes from manufacturers				nationalizing the airport security? No. Must we applaud
on its own soil. Nevertheless, they gain because				the government for instituting the measure of
national security and sovereignty is protected. On the				effective scanning? Yes. What would have happened
other hand, if these countries should buy the defense				if the government had not taken over the
items from manufacturers in China or Brazil, there is				management of airport security after the September
reduced budget deficit but national security is				11, 2001 disaster? In fact, it is quite impossible for a
threatened. Subsequently, the decision on the path to				country to exist without any pockets nationalization.
take will depend on the contribution margin of the				In this period of financial failures and global
cost to be incurred with respect to the budget				uncertainty, at least some pockets of nationalization
deficit versus the highly valued national security.				even in free-capitalist countries is inevitable. A little
Strangely, the scenario of national security and trade				nationalization will not kill even though extreme
is absurd when social cost and social benefit are				nationalization like what is happening in Venezuela and
assessed from the perspective of international trade				certain parts of Africa is unacceptable and vicious.
in Arms. International trade in Arms which used to be				Currently, the question that is being debated is
antipathized is fast becoming an acceptable norm in				whether the domain of nationalization includes turning
globalization. The driving force being threat of invasion				a private sector indirectly into a public good. For
and some countries desire for military prowess. Over				example the allegation currently by some that the
the years the world has witnessed Arms being sold				health sector is being made a public good with the
openly by some developed and developing nations to				presumption of the act being synonymous with
other nations as part of international trade.				nationalization. Others believe that government
Information also has it that technology is being sold				intervention in the health sector may not correct the
secretly to nations to augment their military capability.				failing health system. I am of the view that the
The curiosity surrounding such esoteric trade in Arms				health sector will only become a public good if only all
becomes more stronger when the investors from				in America including illegals benefit from it and there is
one country choose to export technology to another				no way to prevent anyone unqualified from
country as part of selling services to the country or				benefiting from it. Also there is immense additional
customers or partners in that country. Regrettably,				cost to be incurred here if checks and balances are
trading in Arms and secret technology puts the				not in place. Unfortunately, after much publicized and
national security of the seller country and recipient				heated debate in congress, a consensus has still not
country all at risk. On one hand, the technological				been reached on the reform proposals. There is an
secrets of seller country may be exposed to the				argument of an increased role by government in the
recipient (buyer) country. On the other hand and in				sector affecting efficiency in the sector. Another
the long term, the seller country may become a				contention is that employers will be burdened with
threat to the recipient country because of an				huge healthcare costs. Whatever the healthcare
inherent access to its security intelligence.				reforms package will entail, it must be judged based
Undoubtedly, the security of the world is being				on the economic principle of social cost and social
marred by sale in Arms and secret technology both				benefit and not on the economics of externalities.
of which implicitly associates with the much dreaded				Globally, the predilection by some countries for
activity "terrorism". In fact, the world cannot be a				international regulations for banks has been fueled by
safe place until the esoteric sale in Arms and secret				the recent developments of bad debts at Dubai Bank
technology is constrained and strongly repudiated by				and also the huge national debts or financial crisis of
United Nations prompting every nation to come clean				some European countries with Iceland and Greece at
on any nefarious trade in Arms and nuclear				the front. Though, the debt belongs to the individual
technology. People are of the view that such an				countries yet it is turning to be a pervasive problem
agenda is too ambitious and inconceivable judging				with consequences likely to affect Europe and the
from the fact that some nations have resisted similar				rest of the world. The coming of the EU to the aid
attempts by the UN in the past. Nations cryptically				of Greece will go a long way to reveal the strength
trading in nuclear technology tend to be the most				of the relationship between the EU countries and the
perpetrators of this kind of trade. I am an advocate				authenticity of the cordiality governing them.
of nuclear technology application in nuclear reactors				Meanwhile, Greece in order to win the approbation of
for production of energy for social beneficiation				the EU and satisfy the European Stability Pact that
purposes and will always identify with governments				enjoins all members to maintain a debt level of 3%
policies that promote that. However, any policy that				of GDP has decided to take some austerity
circumvents energy production for beneficiation but				measures including but not limited to VAT increases,
promotes usage for antagonistic purposes is				freeze on pension funds and working rights
absolutely unacceptable and deleterious. Enriching				limitations, reduction in healthcare benefits. Though
Uranium by centrifuging for production of nuclear				this is going to create hardships for the people of
bombs is detestable and the world must boldly speak				Greece with upsurge in social unrest in the coming
against it. United States is doing well by speaking				days, authorities emphasized the measures as being
against it but it needs the massive support of the				the heady way for the country to deal with its
whole world to deal with this growing menace. It is				mounting debt and refinance its 17 billion debt bond.
possible those countries that fall into the domain of				In addition to the Stability Pact, the EU may argue
nuclear technology abusers may feel isolated because				that there is too huge a price to pay to remedy
of UN sanctions against them. They will try to placate				Greece from its predicaments. Perhaps, the EU has
their anger by pursuing policies that might enrage the				decided to follow the footsteps of the United States
world. But the world should not be perturbed by such				where generally the rescue of states in financial crisis
tendencies and must still maintain the sanctions. Some				by the federal government is not popular because
contend that sanctions are not working but I am of				the tax payer prefers not to bear the cost of a
the view that sanctions backed by constructive				state's mismanagement. On few occasions the
criticism and dialogue will immobilize these autocratic				federal government may come to the aid of a state
regimes and bring their unpopular pursuits to an end. I				only if there is a justification for that. Sorry to say,
also believe the spread of democracy will definitely				EU is not considering the effect their inaction will
catch up on the whole world and help eradicate the				have on the confidence of the member countries.
bad "nuts" in the system. Only time will prove this				But the facts are clear. There are a number of EU
assertion right. We are the world and we must not				countries hanging in an imbalance with regards to
let a few dictate our future and freedom. Freedom is				debts and economic problems. So if the EU cannot
a gift from God and we must enjoy it.				extend some minimal level of credit to Greece to
Generally, sale in Arms and technological secrets has				help ease the country's debt burden then it
made the world unsafe and implicitly exacerbated				presupposes in future any EU country that finds itself
terrorism in the world. Additionally, international trade				in a similar situation will be allowed to go bankrupt and
restrictions have broken down because of some				collapse. In fact, some level of credit should have
nation's policies of self-centeredness and indifference				been extended by the EU to Greece to show to the
to safety and freedom of the world. Sadly, some				world the strength of the Union and the care for its
nations policies of neo-colonialism or economic				members. Indeed, this is a testing time for the EU
imperialism for solidification of their national security				and the Union's ability to deal with such problems will
pose a threat not only to international trade but also				go a long way to substantiate the competency of
to the spread of democracy in the world.				their unity and to brighten the way forward.
Scenario 2 - Nationalization Vs De-nationalization:				Perchance any EU intervention to remedy the Greece
Presently, there is the conglomerate effort by				situation is being categorized as nationalization by the
governments of some major economies to				Union.
propagate global regulations for the financial markets				Finally, it is feared globally that more of such bad
and banks so as to prevent a repetition of the global				debts and financial failures will occur in the near future
financial meltdown. To some analyst this is called				with repercussions of consumer and investor
nationalization and an infringement on the current				confidence reduction if nothing is done. Watch out
supposed de-nationalization existing in the capitalist				for part 2 of this article which discusses this phobia.

Global Trade

Five Scenarios Depicting Government Policies As a Two-Edged Sword! (Part 1)