How many steps would you have to go through if you wanted to open a new business in the United States? How about India? Venezuela? The difference might be important to more than just you…And that’s what this episode of EconTalk, filmed before a live audience as part of the Atlas Network’s Liberty Forum, was all about.
Host Russ Roberts welcomed the founder of the World Bank’s Doing Business Report, Simeon Djankov (who also took a turn as the Minister of Finance for Bulgaria) and Atlas Network COO Matt Warner. Djankov’s work in measuring the regulatory burden on business across the world’s countries was the focus of much of the conversation, though an interesting turn toward the role of think tanks occurred toward the end.
1. Naturally, Roberts is skeptical of the reliability of the Doing Business Report (DBR) measurement practices. What does he mean when he says he fears that some nations might “teach to the test?” To what extent is this concern valid?
2. Why do you think it’s important to make a distinction between being pro-business and pro-capitalist? Where does Roberts’s notion of “pro-consumer” fit in here?
3. How can regulation create a sort of “fiefdom system” in a nation? How might the rankings within DBR mitigate this tendency?
4. After describing some inspiring advocacy success stories (such as in India and Argentina), Warner describes the advocacy model employed by the Atlas Network. How effective do you find their model? What should be the role of think tanks in the economy?
5. BONUS: How should Roberts measure the success of EconTalk (beyond number of downloads)?
READER COMMENTS
SaveyourSelf
Dec 12 2017 at 6:57pm
2. Why do you think it’s important to make a distinction between being pro-business and pro-capitalist? Where does Roberts’s notion of “pro-consumer” fit in here?
Russ Roberts said, “being pro-business and pro-capitalist are not the same thing. Being pro-business is favoring one sector of the economy, often at the expense of consumers. The well-being of a country is measured best not by how easy it is to start a business, but how easy it is for someone to start a business and thereby benefit other people.”
I think Dr. Roberts concern is deep and important, but also confusing. Clearly he worries that measuring the ease of starting a business does not capture all the nuances of detail that predict how well the markets function. In particular he mentioned competition. It seems intuitive that the easier it is to start a business, the greater the quantity of competition in the market. I have difficulty imagining how it could be otherwise. But then again, if it was easy to start a business but then government set price controls, then competition would be impossible, regardless of the number of businesses. So, I guess, Russ is pointing out that coercive obstacles to starting a business is only one expression of the coercion that can interfere with the full functioning of markets, and it is the full function that we care most about. This makes sense, and I agree.
What, then, is the best measure of market conditions?
Perhaps in the same way profit is the single best measure of business health, relative standard of living is the best single measure of market health. Though there are a lot of caveats buried in that term ‘relative’. I think a pair of measurements might be a better predictors of market health: Freedom and Justice. By Justice I mean the abscence of violence and coercion. By freedom I mean the absence of violence and coercion except to enforce Justice, given an expectation that original property rights go to the creator. The caveat about property rights is important because it means taxing property is a violation of Justice, which I do not believe is well understood in modern economic conversations.
SaveyourSelf
Dec 12 2017 at 7:35pm
In fact. It is possible to define Justice and Freedom,both, entirely by relationships to property rights. Perhaps, then, the single best measure of market health is who controls property rights.
Justice – withholding violence and coercion except in defense of property rights.
Freedom – the absence of coercion and violence toward property rights except for that required for the maintenance of justice.
Property rights – who has Just decision capacity over exercise of property.
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