Moderate, Regulate or Deregulate Greed?

Moderation, in the Buddhist sense, is the imperative to always seek for the middle path. Put another way, it commands to avoid excesses.

Used as the norm of an economic policy, moderation has proven to be effective in Thailand were King Bhumibol Adulyadei has institutionalized "sufficiency economy" as the middle path approach to human development, poverty reduction and conserving the environment in the country.

In this context, moderation makes economic policy a moral issue. I find this problematic because moral incentives are not effective incentive mechanisms for development.

In the case of the Philippines where about 90% of the Filipinos are Christians who regularly receive sermons that greed is evil, the moral incentive to do good and avoid evil has obviously failed because the country has been consistently one of the most corrupt in the world at the cost of its development drive.

While Buddhism's success as a moral incentive can be attributed to its orientation as a personal commitment to perfection, Christianity's failure could be its propensity to condone imperfection as implied by forgiveness and mercy as recognized virtues.

Instead of moderating greed through ineffective moral incentives, since human beings are by nature self-interested, put bluntly, human beings are greedy, the practical policy response would be to decide on whether to regulate or deregulate greed.

Regulation is premised on the idea that greed is evil. Thus, it requires a strong interventionist state to punish the greedy using coercive laws and repressive taxes as apparatuses of its police power to maintain a status quo of authoritarian political order based on the rule of law. While this works in states with Buddhist population like Thailand and other developing countries in east Asia, regulation breeds corruption in countries like the Philippines where moral incentives fail to curb the natural urge of greed that tempts people, even government officials, to circumvent the laws to create opportunities to convert public goods into private gain.

Deregulation, on the other hand, is premised on the idea that greed is good. In contrast, it merely requires a weak minimal state that allows the market to take advantage of greed by letting the greedy compete among themselves. In the process, competition lowers the cost of commodities and services, improves their quality and increases efficiency. The role of the state is reduced into a night watchman who intervenes only to guarantee that the natural urges of greed produces the greatest happiness of the greatest number of people by dismantling monopolies and ensuring fair competition.

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Diego A. Odchimar, III is a graduate student at the National College
of Public Administration and Governance, UP Diliman.

Friday, February 29, 2008

NOTE: This is a handout from a professor back in college. All credit goes to the original author. Posting this to promote redundancy. Go, technology!