A review of episodes in economic and intellectual history indicates the superiority of a limited government market economy over the alternative models of economic organization. The siren calls of pundits, politicians, and even some economists in favor of communist central planning during the Great Depression; market socialism after World War II; and, more recently, massive welfare states and/or extensive government micromanagement of markets each ran afoul of their own problems and comparisons to the limited government (based on sound criteria) capitalist model. The limited government capitalist model, once again under attack from those who would greatly expand the role of government, needs its defenders, as the alternative models have proven historically, intellectually, and practically bankrupt.
This essay discusses the inflation of the 1970s and the disinflations of the 1980s and 1990s. It provides historical and intellectual history perspectives on these events. It argues that the consensus view of economists on inflation and its costs has changed more than on any other subject in the past thirty years. As late as 1980, many economists argued that the cost of inflation was low and that the cost of disinflation so great that it was better to live with 10 or 12 percent inflation than bear the temporarily higher unemployment and lost output that would accompany a disinflation.
Fortunately, Federal Reserve Board chairmen Paul Volcker and Alan Greenspan engineered two rounds of disinflation, first from 12.0 percent to 4.5 percent and then to 2.5 percent. Although there were costs--a severe recession in 1981–82 and a not-so-soft landing in 1990–91--the low and relatively stable inflation of the 1980s and 1990s has been a major factor in a long boom in the United States, two long expansions interrupted by a short, mild recession. And economists' thinking about the costs and consequences of high inflation has shifted to the view that stable low inflation, like the lowest possible tax rates and minimum necessary regulation, is a fundamental pillar of maximizing sustained long-run growth.
If there is one really serious intellectual and cultural problem with capitalism, it stems from the lack of a sustained and widely known, let alone accepted, moral defense of the institution of private property rights.
Few doubt, in today’s world, that a society with a legal infrastructure that lacks this institution is in serious economic trouble. The failure to respect and legally protect the institution of private property—and its corollaries, such as freedom of contract and of setting the terms by the parties to the trade—has produced economic weakness across the globe. But many also believe that this institution is not founded on anything more solid than the arbitrary will of the government to grant privileges of ownership (for the latest statement of this position, see Liam Murphy and Thomas Nagel, The Myth of Ownership [Oxford University Press, 2002]).
Without a moral, prelegal defense, the institution of private property, which is the source of a great many benefits to us all, will forever remain vulnerable to the critics, starting with Karl Marx, who said that “the right of man to property is the right to enjoy his possessions and dispose of the same arbitrarily, without regard for other men, independently from society, the right of selfishness.” This essay argues that, contrary to widespread academic sentiments and impressions, the institution of private property rights fully accords with a sensible conception of human morality, indeed, rests on a solid moral foundation.
Undermining the Foundations of Organized Crime and Public Sector Corruption: An Essay on Best International Practices
Corruption and organized crime are serious criminal phenomena, but they are also much more than that. Not only is organized crime an impediment to national development and globalization, but with its links to terrorist groups worldwide, it is also a threat to the national security of the United States and other open and opening societies. The recent histories of Pakistan and Colombia demonstrate clearly how organized criminal groups support the expansion of transnational terrorism and even how misconceived domestic and international policies can simply make matters worse (Buscaglia 1999; Buscaglia and Ratliff 2001). The threat that these activities of organized crime presents is compounded because transnational criminal organizations often act with the tacit or explicit support of state authorities, as in the illegal traf?cking of radioactive, biological, and chemical materials and in the more conventional transport of military and other equipment (Buscaglia and Gonzalez-Ruiz 2002). That is, criminal groups frequently expand their activities worldwide by capturing the public policies of states with the support of corrupt public of?cials, who then do not work conscientiously for the good of their own nations or of the international community. Just one example is the transnational criminal organizations in Russia that engage in the traf?cking and supplying of weapons to terrorist groups inside and outside the Fed-eration's borders, which they do by corrupting local public of?cials and of?cials in the military establishment (Buscaglia 1997).
Organized crime, corruption, and links to terrorism are possible because of weaknesses in the control mechanisms of state and civil society, as demonstrated by conditions in Colombia (Buscaglia and Ratliff 2001) and by large-scale terrorist involvement in organized crime, including money laundering, as has been the case with the Irish Republican Army in Northern Ireland (Economist 2005). Theory and applied research suggest that there are interdependent links along the entire spectrum of political, socioeconomic, legal, and criminal justice domains (Shelley 1995; Buscaglia and Gonzalez-Ruiz 2002; Buscaglia and Ratliff 2000). For example, the analytical results found in Buscaglia and van Dijk (2003), from a sample of more than ?ve dozen countries worldwide, attest to the deep ties between the growth of organized crime and the growth of public sector corruption. Many believe incorrectly that in a large range of societies the links between organized crime and terrorists resemble the popular perceptions of a formal and structured "Ma?a" type (Buscaglia and Gonzalez-Ruiz 2002). But on the contrary, these criminal enterprises are dynamic and relatively loose structures, making the task of both law enforcement and intelligence analysis much more dif?cult (Williams 2001).
There is ample evidence of organized crime's involvement in some major piratical attacks in the Malacca Strait, for example, with the threats those attacks posed to persons, to property, and to the delivery of, among other things, 80 percent of the oil shipped to Asia's booming economies. Indeed, organized crime may be involved in the setting up of "phantom ships" that intelligence sources say are under the control of al-Qaeda (Ratliff 2005a, 2005b; Burnett 2002). What is more, evidence suggests that these links between terrorism and organized crime are on the rise. For example, since 1990 the transnational organized crime linked to speci?c terrorist operations has increased at an average rate of 8, 19, and 21 percent yearly in Latin America, Africa, and Eurasia, respectively (Buscaglia and Gonzalez-Ruiz 2002). Thus the links between organized crime and states with weak or corrupt governance constitute an important threat to international peace and security as well as to national development and well-being. They demand a response that will both improve national governance and development and reduce links that threaten national and international security. The composite indices of organized crime and corruption in Buscaglia and van Dijk (2003) were used to identify the institutional factors linked to reductions in complex crime. This policy essay goes one step further by delineating best practices in counteracting organized crime and public sector corruption.
This essay is in three parts: (1) focus and background, (2) methodology and empirical analysis, and (3) policy recommendations taken from the study of best international practices in counteracting organized crime and public sector corruption.