What are the real problems in developing countries (including Pakistan)?

[TOTUU]

【Google Translate - There will be a lot of translation errors, please understand. . . I hope that Pakistan is getting better and better, so I uploaded this article. I personally hope that Pakistan can have a big government and a strong government. Just like a company, there must be a strong leader or founder, and this company can be strong. Of course, there must be no corruption. Of course, corruption has nothing to do with the size or strength of the government.
All powerful countries and developed countries have a strong government . All powerful countries in history, whether they are just or evil, have a strong government . Of course, American propaganda has always been to support small governments model, even though the United States is essentially a very strong big government model.】

The article is right or wrong and judged by everyone.

Source URL：https://user.guancha.cn/main/content?id=157894
Original title: Some non-mainstream economics in the United States, but in China they have been written into textbooks.

The Laffer curve is a concept put forward by the American economist Laver in the 1980s. That is to say, the tax revenue of a country rises first with the increase of the tax rate, because the tax rate increases (tax) income will rise, but it will rise to a certain extent. After the degree, if the tax rate is too high, it will inhibit economic activities and inhibit commercial activities, and the tax received by the government will be reduced. When the tax rate reaches 100%, in theory, no one is going to buy or sell again, then the (tax) income is zero, which he calls the "Laffer curve."

This theory is mentioned in China's economics textbooks and finance textbooks, so Chinese intellectuals like us have this concept in their minds. There is still a joke, I went to the University of Chicago's Department of Economics to give a speech in 2015, and I mentioned the Laffer curve in the middle. After the lecture, an old gentleman from the Department of Economics of the University of Chicago told me that he said that Doctor D is a good speech for you, but I just felt a little surprised when you talked about the Laffer curve. I said something surprised, isn't this your knowledge? It is the knowledge of your American intellectual community. He said that in our serious intellectual world in the United States, no one took the Laffer curve as a scholar.

This sentence surprised me very much. He is actually reminding me that in the speech, in the open and serious academic discussion, do not quote the Laffer curve as an axiom-like discussion. From this time on, I realized that there were some so-called knowledge that did not flow in the United States, and that it might have been written into textbooks in China.

In fact, I later discovered through research that the Laffer curve has never been confirmed, and if we actually look at the US tax cuts, the Laffer curve is basically falsified.

After the Republican Party took office, in the past three or four decades, they liked to engage in large-scale tax cuts. Starting with the Reagan administration, Bush also cut taxes, and now President Trump also cut taxes. Their tax cuts, without exception, have led to short-term economic growth, but the deficit rate has risen sharply. It has not led to economic growth through tax cuts as predicted by the Laffer curve, and then tax revenues have increased.

Trump recently gave Laver an award. In theory, it should be considered a very high honor in the United States, but I would like to say why Trump wants to award this award to Laver? Republicans like to cite such a concept, a concept with a clear ideological color, rather than a truly serious academic concept. Trump is using the concept of the Laffer curve to argue that I want to cut taxes. The US Congress should support us. The American people should support me in reducing taxes. When he wanted to demonstrate this, he emphasized the concept of the Laffer curve.

But actually I just said that we went to see the world and look at the history of the United States. We will find that the concept of the Laffer curve is wrong and does not hold. You can go and see which countries in the world have high tax rates and which countries have low tax rates?

The US government, the American intellectual community, the US Republican Party, and especially the Republican intellectual community have always advocated what is a good government? The smaller the government, the better, and the government is a necessary "evil." Note that he defines the government as evil, which is a common expression of liberal intellectuals.

Is this statement correct? We can use data to verify. Putting together more than one hundred decent economies around the world, economies of a certain size and a certain GDP scale, and seeing the correlation between government size and development performance, we can see the truth. .

Developed countries are basically big governments, and developing countries are small governments. What is the concept of a small government in a developing country? For example, before and after 2015, I once met the then Pakistani finance minister in Washington. He said a few figures in the middle of the discussion. I said that you have more than 200 million people in Pakistan. How many people pay taxes to the central government? He said that I was very surprised that the number is five thousandths, that is, 1% is not.

When he said the words, I had a lot of questions that I didn’t understand before, and I wanted to understand. Why can't developing countries develop? It is because their government is too small, they pretend that they are sovereign governments, but in fact they can not effectively control the country, can not effectively control the nationals, can not receive taxes from the nationals, and thus there is not enough resources to provide effective public product. In this sense, Pakistan is only a typical developing country. Many developing country governments are powerless to their own nationals.

So what country in the world is a big government? Europe, the typical big government. When I was working in Europe, my boss, a professor, told me that he paid taxes on 48% of his monthly income. A greater proportion of the entire national wealth in Northern Europe will be taken away by the government. They are truly big governments and do everything. From the cradle to the grave, many things are done by the government.

So what about their economy? Their tax rates are so high, is it that the nationals have no kinetic energy to work hard? Are they not entrepreneurial? In fact, we have seen another fact that surprised us: in the big regions of the world, the highest per capita GDP is in the Nordic region.

Some people say that this is normal, they are old capitalist powers. Another fact is that their tax rate is the highest, but the proportion of billionaires per million people is also the highest. In other words, the high tax rate does not inhibit their per capita GDP, nor does it inhibit the impulse of their entrepreneurship and the probability of success.

Let us look at this study. The horizontal axis is the ratio of government revenues to GDP, and the vertical axis is HDI (Human Development Index). The Human Development Index is a weighted average index introduced by the United Nations that includes infant mortality, per capita GDP, life expectancy, etc. The higher the index, the more people live like human beings; the lower the index, the less people live. People. The data on the horizontal axis is the data of the World Bank, and the data on the vertical axis is the data of the United Nations. Based on the availability of the data, we use the data for 2012.

With more than one hundred decent economies in the world, we can see the important correlations here by returning more than one hundred points. Generally speaking, the bigger the government, the more decent the people live; the smaller the government, the less live the people are.

Such a picture falsifies the Republican Party and liberal economics—whether it is traditional liberalism or the ideological prejudice that neoliberalism has long publicized. They think the government is evil. But from the picture just now, we can see that the government is a kind of good. I admit that there are many governments in the world that are very disrespectful. They have not fulfilled their obligations to the people, but even if they take these governments into consideration, they will generally It is said that governments around the world play the role of a public product supplier. In general, the more adequate the supply of public goods, such as the Nordic, Japan, Northeast Asia and other countries, the better the income of the people, the longer the life of the people, the more decent people live.

Where are the real problems in developing countries? They are often weak governments first, because they have acquired so-called liberation after the colonial period, but that liberation lacks the necessary social revolution, no strong government can be established without a social revolution, and no effective public goods can be provided without a strong government. Without these effective public goods, people will be difficult to develop and business will not be able to do so.

chinese Original text
拉弗曲线是美国经济学家拉弗在80年代提出来的一个概念，就是说一个国家的税收收入随着税率的上涨先是上升，因为税率涨了(税收)收入就会上升，但是涨到一定程度之后，税率太高了就会抑制经济活动、抑制商业活动，就会导致政府收到的税反而减少。当税率达到100%的时候，理论上来讲，没有人再去做买卖了，那么（税收）收入就是零，他称之为“拉弗曲线”。

拉弗曲线

这个理论在中国的经济学教科书、金融学教科书里边都会提到，所以像我们这样的中国知识分子，大家脑子里边都有这个概念。说起来还有一个笑话，我2015年到芝加哥大学经济系去演讲，中间就提到了拉弗曲线。讲完之后，芝大经济系的一位老先生跟我说，他说Doctor D你这个演讲挺好，只不过你刚才讲到拉弗曲线，我觉得有点惊讶。我说有什么惊讶的，这不是你们的学问吗？是你们美国知识界的学问。他说在我们美国严肃的知识界，没有人拿拉弗曲线当个学问。

这句话让我非常惊讶。他其实是在提醒我以后在演讲中，在公开的、严肃的学术探讨中，不要引述拉弗曲线作为一个公理一样的讨论。从这个时候开始，我才意识到原来有一些在美国不入流的所谓的知识，在中国可能被写进了教科书。

事实上后来我通过研究的确发现拉弗曲线从来没有被证实过，并且如果我们实实在在去看美国历次的减税，拉弗曲线基本上都是都是被证伪的。

共和党上台之后，最近三四十年里边都喜欢搞大规模减税，从里根政府开始，之后小布什也减税，现在特朗普总统也减税。他们的减税无一例外，都是导致了短期经济增长，但是赤字率大幅上升，并没有像拉弗曲线所预测的那样，通过减税导致经济增长，然后导致税收收入反而增加了。

特朗普最近刚刚给拉弗颁了个奖，理论上来讲在美国也应该算非常高的荣誉，但我要说一下为什么特朗普要给拉弗颁这个奖？共和党人喜欢引用这样一个概念，这是一个带有明显意识形态色彩的概念，而不是一个真正严肃的学术性的概念。特朗普是用拉弗曲线这样的概念论证我要减税是对的，美国国会你应该支持我们，美国的民众你应该支持我减税。他要论证这个事的时候，就强调了拉弗曲线这样一个概念。

但实际上刚才我讲过了，我们去看看全世界、看看美国的历史，会发现拉弗曲线的这个概念是错的，并不成立。大家可以去看看全世界哪些国家税率高，哪些国家税率低？

美国政府、美国知识界、美国共和党，尤其共和党知识界一直鼓吹说什么是好政府？越小的政府就越好，政府是必要的“恶”。注意他把政府定义成恶，这是自由主义知识分子一个常见的表述。

这个表述对不对？我们可以用数据去验证。把全世界一百多个像样的经济体，有一定规模，有一定人口规模、一定GDP规模的经济体放在一起，看一看政府大小和发展绩效之间的相关性，就看出真相了。

发达国家基本上都是大政府，发展中国家才是小政府。发展中国家小政府什么概念呢？比如说，也是2015年前后，我有一回在华盛顿见到当时的巴基斯坦财长，他在座谈中间说到了几个数字。我说你们巴基斯坦两亿多人口，有多少人给中央政府交税？他说了个数字让我非常惊讶，这个数字是千分之五，也就是1%都不到。

他那句话一说的时候，我此前很多想不明白的问题，一下就想明白了。发展中国家为什么发展不起来？就是因为他们的政府太小，他们假装自己是主权政府，但实际上他们根本无法有效控制国土、无法有效控制国民、无法从国民身上收到税，从而也就没有足够的资源去向本国提供有效的公共产品。从这个意义上来讲，巴基斯坦只是一个典型的发展中国家而已，很多发展中国家的政府都是对本国国民无能为力的。

那么这个世界上什么国家是大政府呢？欧洲，典型的大政府。我在欧洲工作的时候，我的老板——一位教授跟我讲，他每个月的收入48%都交了税。到了北欧整个国民财富的更大比例就会被政府拿走，他们是真正大政府，包办一切。从摇篮到坟墓，许多事情都是政府来办。

那么他们的经济怎么样呢？他们的税率那么高，是不是国民就没有动能去努力奋斗了呢？是不是他们就没有企业家精神呢？实际上我们看到另外一个令我们惊讶的事实：全世界就大的地区而言，人均GDP最高的就是在北欧地区。

有人说这个很正常，他们是老牌的资本主义强国。另外一个事实是他们的税率是最高的，可是每百万人口中间亿万富翁的比例也是最高的。换言之，高税率并没有抑制他们的人均GDP，也没有抑制他们创业的冲动和创业的成功概率。

我们来看这个研究，横轴是政府的收支占GDP的比例，纵轴是HDI（人类发展指数）。人类发展指数是联合国推出的、包含了婴儿死亡率、人均GDP、人均寿命等等的一个加权平均指数，这个指数越高，人活得越像人样；指数越低，人活得越不像人样。横轴的数据是世界银行的数据，纵轴的数据是联合国的数据，根据数据可得性，我们采用2012年的数据。

全球一百多个像样的经济体，我们把这一百多个点回归一下，就能看到这里边的重要的相关性。总体上来讲，政府越大，国民活得越像样；政府越小，国民活得越不像人样。

那么这样一个图就证伪了美国共和党和自由主义经济学——无论是传统自由主义还是新自由主义长期以来宣传的这种意识形态偏见，他们认为政府是恶。但从刚才那个图里边可以看出政府是一种善，我承认这个世界上有很多政府非常不像话，他们对老百姓根本没有尽到应尽的义务，但即便把这些政府考虑在内，总体上来讲，全世界的政府扮演的是一个公共产品供给者的角色。而且总体上来讲，公共产品供给越充分的，比如说北欧、日本、东北亚等国家地区，国民的收入越好，人的寿命越长，人生活越体面。

发展中国家真正的问题在哪里？它们首先经常都是弱政府，因为它们经历了殖民地时期之后，获得了所谓的解放，但那个解放缺乏必要的社会革命，没有社会革命就无法建立强政府，没有强政府就无法提供有效公共产品，没有这些有效公共产品，人们就难以发展，生意也做不成。

 

[litman]

the biggest problem of all the developing countries is corruption.

 

[Baburfromsarmarkand]

Nope. Big govt invites more corruption and tyranny. Communist govts are 100% of the economy. Yet they always fail. It's the qualities of the people themselves and the habitations and other innate traits they have ingrained through millenia of natural selection to adapt to their respective environments that makes the difference. Jews no matter where they were. We're never the gun toting thugs robbing convenient stores. No matter how poor they were. The culture is a microcosm of the nation. Put Japanese ppl anywhere and they will build a Japan. Put us on Japan and we would blame the lack of resources, earthquakes, nuclear fallout as reasons for our failure.

 

[niaz]

Having seen Pakistan decline from one of the upcoming & forward-looking & relatively prosperous developing countries of the region, I have witnessed her decline into an intolerant retrogressive country from the 1990s onwards. Admittedly, there were some serious external factors such as the Afghan wars & 9/11, nevertheless the real culpability of Pakistan’ economic retrogression rests primarily with the Pakistanis themselves.

Being in my twilight years I have often wondered as to what went wrong and where did we lose our way. What was that other countries such as India were doing right and we were doing wrong? I note below my personal thoughts & musings for whatever these are worth. I do not claim my views to be all correct and /or anyone else to agree with me.

If one were to put a gun on my head and asks me to name one person, I would say Mr ZA Bhutto and his nationalization and that he permitted the workers to take over industries even after the same had already been taken over by the GOP.

However, to be fair, IMO there are quite a few key factors that have impeded /adversely affected Pakistan’s path to economic well-being.

Most important of these being the effect of the culture, social & family connections. These give rise to suppressing of merit & promotion of nepotism & cronyism which leads to the spread of economic as well as moral corruption and accumulation of wealth in the hands of the few. Hence Pakistan is one of the most corrupt countries of the world coupled with gross human rights violation with a dysfunctional judiciary & police. All direct or indirect result of cronyism & corruption.

The only way to reduce this would be through social integration. To this day voting is based on ‘Braderi’ & ethnicity and even after more than 70 years most marriages still occur within the ‘ Barderi. For example, a Kashmiri would still largely marry among the Kashmiris & an ‘Arain’ among the Arains. This not only results in nepotism but also poor health among the offspring. This is also the reason for the prevailing provincialism; our society needs to be more plural to achieve national harmony.

Another important factor is the continuous decline in education standards. Until the 1960s’ private run schools were unheard of. I remember that Gov’t High School of Sargodha had a good reputation and some NGO run schools were excellent. Mr. Bhutto nationalized all schools giving rise to the mushrooming of private schools and the creation of ‘Ghost’ schools with ‘Ghost’ teachers and a fall in the standard of education in state schools.

Only increasing the number of schools & students alone is not enough; unless Pakistan improves the standard of the primer & secondary education, Pakistan cannot progress economically. Unfortunately, no government appears to be serious about it.

Pakistan’s political system has also been one of the main culprits. There has been a cycle of Martial Laws & return to democracy with the successive governments blaming the previous government for all the ills to hide their incompetence. This results in a lack of cohesive & consistent economic policies. ZA Bhutto era was probably the main cause of Pakistan’s economic stagnation when the wholesale nationalization killed the entrepreneurship in Pakistan and caused loss of wealth when the machinery costing millions were sold off for pittance after being destroyed by the workers of the nationalized units.

In Pakistan election are won & lost on the popularity of the leader but never on the issues. For example, no one really thinks that PTI would survive without Imran Khan at its head. Consequently popularly elected leaders are in effect ‘Dictators’ and do not share power. Since no one knows best about every aspect of the government unless ‘Divinely’ inspired; the result is a hotchpotch of economic policies and incompetent ministers. Often the priority is given to the mega projects such as the ‘Metro’ or the Tree tsunami instead of providing basic amenities such as potable drinking water and basic health facilities.

A narrow interpretation of religion, as well as deliberate political exploitation of religion, is another major impeding factor in achieving economic progress. Every religion has its own values & norms which have a great influence on society and individuals. One of the problems is that many tribal culture values are considered Islamic. Often anything not invented during the early Middle Ages is considered un-Islamic and thus banned.

Mullahs preach that this life is nothing and the whole objective of the living is to go ‘Heaven’. History tells us that during the Islamic’ golden age this was not so. Muslims progressed by doing well in this world along with following the righteous path laid down by Islam. We never stop declaring that Muslims were at the pinnacle of knowledge & Science when Europe was immersed in darkness. True, however, do we realize that the reason for this progress was the after the conquest of Syria and most of the Anatolia; works of Plato, Aristotle & Galens were translated into Arabic? Successive Muslim scholars then did original research and produced notables such as Avicenna, Ibne Rushd & Omar Khayyam.

I am a Muslim and would never advocate ignoring religion. However, I firmly believe in following the Hadith ‘Go to China if needed in order to acquire knowledge’. This is the age of Technology and Pakistan needs at least a couple of Universities of the standard to qualify among the top 100, else we are not going anywhere, Additionally, sectarianism & intolerance must be rooted out from the society, who would want to invest in a country where even the Cricket players are not safe from the extremists fighting in the name of Islam?

None of the above can be achieved with adequate monetary resources. Pakistan has one of the highest indirect taxation in the world. Since no one wants to pay tax; the gov’t is forced to impose a high tax rate on the imported and manufactured goods. This leads directly to malpractices like over-invoicing or under-invoicing and revenue theft with the active help of the employees of revenue collecting departments. Hence jobs in the Income Tax and Customs have been much sought after. Additionally, it reduces the disposable income of the poor which are paying as much tax on the goods they purchase as the rich.

PTI is on the right path to increase the number of Taxpayers. However, PTI has not yet attempted to tax the agricultural income.

In conclusion, I would say that the reasons for Pakistan stagnating on the economic front were: nepotism & corruption culture of the society; the low standard of primary & secondary education, nationalization policies of ZA Bhutto and lack of continuation of even good economic policy of the previous gov’t, autocratic political culture, exploitation of religion for political purposes, abysmal law& order situation & religious intolerance and the revenue/tax theft.

In addition to the resolution of the problems listed above, there is a ‘Vision Deficit’ in the society at large including among the highly educated which must be addressed. We need to set attainable targets which should not change with the change of gov’t.

Blaming our woes on the international the conspiracy theories are rife. Instead of achieving success and economic gains due to our efforts, we dream of windfall wealth such as finding more oil than Kuwait! The national psyche must change to self-reliance and living within our means.

 

[EpiiC]

the biggest problem of all the developing countries is corruption.

Pakistan also has a low literacy rate problem.... half the women are illiterate....the numbers are embarrassing.