Me and my fellow study group members of the Monetary Policy class wrote our term paper on the monetary policies of China and India. In trying to find out why India was experiencing high rate of inflation while its counterpart in East Asia – China was (then) doing reasonably well, we compared and contrasted the two countries’ economic conditions, demographic trends, political climates, social structure…etc.
After close examination, it occurred to us that the Chinese central bankers’ jobs were a lot easier than that of their Indian comrades. Well, there was the “Impossible Trinity” problem. But we couldn’t ignore the comment the Chief of the Indian central bank made when asked why they were – allow me to paraphrase – doing a shitty job curbing inflation: “What we have here is a democratic society. Unlike China, we have to meet more demands”. Translate: we need to please more than one boss. That made us thinking.
I agree with Prof. Cheung: if the government could do a better job than any other private entity in the market, the government should absolutely go for it. This doesn’t sound very libertarian, I know. But Wallace made a sound point: the government can be like a firm as well, provided that the constitution is well-established so that the government does not have absolute monopoly power in the market. Absolute power corrupts absolutely, we all agree on that. But if that power can be checked and balanced, why not let government join the party? Competition is a beautiful thing.