These twin drivers of allare our touchstone. We must ask ourselves: what has really changed with ? The answer is little unless all aspects are introduced.
Faced with relative poverty amongst the people, the post-revolutionary political elites have two possible paths:
Path 2 takes the seriously and actually organizes for redistribution of power and wealth.
Faced with widespread enfranchisement and a need to redistribute wealth and power, politicians ask: "Whose wealth and whose power is going to be re-distributed?"
While a King or dictator may be removed from power and his wealth confiscated, the existing elite classes (military, officialdom, priesthood) in that regime remain and have little wish to become public benefactors. Their powerful roles, member support, connections, influence, experience, knowledge and riches combine to ensure these elites maintain a significant grip on power and whatever wealth is around.
Democracy and voting give rather little power to the people—especially in a one-party state. Power shifts take time in any culture and depend primarily on:
Emancipation of Women: respect, education, maternity services, suffrage.
Education: from childhood through to university and beyond.
Health-care: health education, prevention, basic health services.
Such redistribution is costly for governments—where does the money come from?
No government produces wealth—politicians spend the wealth generated by ordinary people or inherent in the territory of the society. Politicians have many options to obtain wealth, most of which are varieties of plunder.
Always a staple of governments, recent centuries have seen taxation becoming extensive, automatic and even predatory. Tax affects income, gains in capital-put-at-risk, and consumption. Tax often takes advantage of human weaknesses like addiction (tobacco, alcohol, gambling) and therefore falls disproportionately on the poor and weak. Almost any excuse can be used to tax—remember the infamous window tax.
It is possible to persuade the populace to lend to the government; to compel lending (e.g. via pension arrangements, insurance companies, banks); and to find foreign lenders who feel secure in the government's ability to repay via taxes. Lending to any government, however, is a highly risky game—which is probably why the elites call it «risk-free».
Inflation is the most popular way to confiscate wealth, because of its insidiousness. However, wealth may also be directly stolen from demonised groups; taken from criminals; or generated by nationalizing common goods like natural resources, or local firms, or foreign investments. Forced labour by political prisoners fits here too.
Foreign direct investment (FDI) can be highly productive, but it lends itself to corruption, especially bribery. Foreign aid is also problematic: it typically comes with strings attached and much leaves the country immediately to pay firms in the donor country. It is usually easy for aid to be diverted into the pockets of politicians. So much aid is about: taking money from poor people in rich countries to give to rich people in poor countries.
In the past, resource wars successfully provided additional wealth:
In recent times, resource wars have become internal—either as civil war (Rwanda) or by plundering regions or peripheries of a state to benefit and strengthen the central ruling elites (Nigeria, Sudan, Russia).
People may be encouraged to migrate for work and remit money to their families. Migrant workers are usually poorly educated and unskilled: doing manual work, often in construction; or informal jobs like cleaning. Spain, Italy and Ireland were heavily dependent on remittances in the 19th century. Remittances exceed foreign direct investment and international aid combined e.g.… in 2007-08, India received $26 billion and Philippines received $14 billion.
There is only one way to increase the wealth of a society into which government can dip. The society must come to see that each person has a responsibility to look after themselves and their family and reap the benefits of hard work.
The inability of Stage to do much for the majority of the population must have been a disturbing surprise to committed socialist ideologues in the 20th century. They misunderstood the cravings for wealth and power of the leaders, and underestimated the potential of the citizenry.at this
It's worse if the society allows its political leaders to dither about thetransition over a prolonged period.
In such cases, money will generally be lacking to satisfy genuine grievances, to deal with basic social needs like education and health care, to generate infrastructure essential for commercial development, and to respond to natural disasters. Economic development will concentrate in the capital where the elites live, and regions will suffer.
Remember: Government has no wealth of its own.
Originally posted: July 2009; Last updated: 27 Jan 2010