Systems Competition

Jinco Inc.
Newsletter
Systems Competition
Today I would like to talk about a term used in political science called "systems competition." As the Nobel Laureate Gary Becker has written it is when the "Competition among nations tends to produce a race to the top rather than to the bottom by limiting the ability of powerful and voracious groups and politicians in each nation to impose their will at the expense of the interests of the vast majority of their populations." The development of Western Europe is a perfect example of how this work. The division of Europe into a number of independent states was one of the most beneficial consequences to the development of mankind. The competition between these states led to the freedoms we have today. If one tyrant was too oppressive Europeans were able to move to the state that benefited them the most, so kings needed to reduce their government as much as possible in order to have a successful economy. Systems competition was eventually therefore responsible for the creation of the United States of America. Although the United States is a fine example of the benefits of systems competition it needs to be careful as the federal government expands. We must not turn into a nation that is prepared to sacrifice prosperity for the sake of uniformity. A state can raise taxes only up to a certain point before capital begins to flow into overseas jurisdictions which is exactly what is happening now. Obama can offer our workers generous social entitlements only up to a certain point before our corporations start to relocate to more attractive regimes. The bigger we let our government get the more dim the future is for the American economy. Read my blog on over-regulation and taxes to get more of a clear picture on some of these burdens American businessmen are dealing with.

Justin Jinorio