Transcript Document

Competing in a Globalized
World
Trends & Strategies
Prosperity
Prosperity is the result of free people using
intellectual talent combined with physical
skill and a superior work ethic to produce
goods and services that are valued and
desired by others
There is a direct relationship between
freedom and prosperity
The most free societies are the most
prosperous
Irrefutable Truths
Governments consume wealth not create it
Globalization is now an irreversible reality
Decisions taken by one nation-state have effects
on other nation-states
Capital Investment precedes job creation
Capital investment precedes prosperity
Capital migrates to the friendliest environment it
can find
Capital and jobs are extremely mobile
Competitiveness
Competitiveness is a measure of whether
one community’s ability to successfully
improve its prosperity is equal to or better
than that of other communities.
Critical Knowledge for Retaining
Competitiveness/Prosperity
Competitiveness is in a state of constant
change
Competitiveness is affected by decisions
of local leaders
Competitiveness is affected by decisions
of remote leaders
Compensating for lost competitiveness
should happen constantly
Capital Attractive Environment
Certainty – that issues of safety, rule of law and
peace exist
Certainty – that contracts are enforceable and
property rights are secure
Certainty – that Government policy will remain
consistent and equitable across all competitors
Certainty – that profits will be allowed to occur at
a rate equal to or better than other environments
Policy Makers’ Strategy
Know before decisions are made the likely
consequences of the decision on:
– The intentions of future capital investors
– The effect on existing businesses’ ability to
compete in the global economy
– The effect on existing jobs
– The effect on the creation of future jobs
Accountability
The more open and transparent
government activities are to public scrutiny
the more confidence the public will have in
government
The greater the transparency of
government processes and procedures
the better the decisions and less possibility
of corrupt practice
Competitiveness & Government
Policy
The decades of the 80’s & 90’s saw
competitiveness focus on technological
superiority
In the 21st century there is a growing
international trend for Government policy to be
at the center of competitiveness decisions.
Governments are learning that changing their
policy mix can have an enormous beneficial or
harmful effect on capital investment
Ireland & New Zealand
Two of the worst performing economies in the
developed world until reform
High unemployment
Low growth
Poor competitiveness
Poor investment
Stagnant job creation
Falling per capita income
High debt & deficits
Goals for Reform in New
Zealand
De-regulate labor markets
De-regulate capital markets
Reduce Governments share of GDP
Remove subsidies
Remove border protection
Attract capital investment
Reform revenue systems
Must improve international competitiveness
New Zealand Results
Tax rates were halved.
Revenue increased 20%.
Eliminated capital gains, death, excise, sales,
payroll taxes & tariffs.
Eliminated double taxation.
Social policy delivered by direct payment.
High growth
Low unemployment
High investment
From 27th to 11th per capita income
Ireland
The only poor developed country
Tax rates in 1985: top 65%, bottom 35%
2000 rates: top 40%, bottom 20%
GDP growth: from 0.4% to 10% pa
Unemployment: from 15.7% to 3.5%
Corporate tax: from 50% to 12.5%
Capital gains tax: from 40% to 27%
Debt: from 118% of GDP to 39%
Ireland Results
Revenue results
Personal income tax revenue up 5-fold
Corporate tax revenue up 600%
Capital gains tax revenue up 40%
Deficit of 14% of GDP
Surplus of 5% of GDP
Unemployment down from 23% to 4%
Second highest per capita income in
Europe
Country Competitiveness
23 countries either adopting or already
have implemented flat taxes. 19 are in
Eastern Europe
Georgia wiped out 85% of its regulations
Eastern Europe dramatically liberalizing
labor markets
Dramatically reduced corporate tax rates
zero to 10%
In the next 2 decades taxing corporations
as a revenue mechanism may disappear
The Knowledge Economy
Fast Adapting States
Places worth watching
Texas
Florida
Virginia
North Carolina
Washington
Catching up
South Carolina
Who else?
Economic Freedom and Income Per
Capita
Source: Economic Freedom of the World: 2007 Annual Report, The
Fraser Institute
Strategic Planning, Performance
Measurement, & Regulatory Analysis
Realistic strategic planning and valid
performance measurement require sound
regulatory analysis
Planning & Measurement
Mission/Goals
– What are you trying to accomplish?
Strategic Plan
– What do you have to do to accomplish it?
Measures
– What will you look at to tell you whether and how
much of your goal you’re accomplishing?
Program Evaluation
– How do we know we accomplished what we hoped
we’d accomplish? How cost-effective was it?
“The Governor has asked that, to the extent
possible, agencies use outcome measures
for their objectives.”
Virginia DPB, Agency Planning Handbook, 2008-10 Biennium, p. 30.
Note: Activities, outputs, expenditures, laws,
programs, and regulations are not outcomes!
Regulatory Analysis
1. Identify the desired outcomes
2. Assess evidence of market failure or
3.
4.
5.
6.
other systemic problem
Identify state government’s unique role
Assess effectiveness of alternative
approaches
Identify costs
Compare costs with outcomes
Regulatory Analysis in Plain English
1.
2.
3.
4.
5.
6.
Figure out what you’re trying to do and how
you’ll know you did it
Figure out why government needs to do it
Figure out what level of government needs to
do it
Think about different ways to do it and find the
most effective one
Figure out what you have to give up to do
whatever you’re trying to do
Weigh the pros and cons
Parallels
Planning/Measurement
Regulatory Analysis
Mission/Goals
Identify desired outcomes
Assess systemic problem
Strategic Plan
Identify govt’s role
Assess alternatives
Establish causality
Parallels
Planning/Measurement
Regulatory Analysis
Measures
Identify outcome measures
Establish causality
Budgeting
Identify prospective costs
Compare costs with outcomes
Program Evaluation
Assess actual achievement
and costs based on proven
causality
When should either be done?
Prospective
– Designing programs or writing regulations
– Based on best evidence of likely effects and costs
Retrospective
– Assessing programs or regulations to determine
whether they should be continued or modified
– Based on evidence of actual effects and costs
Budgeting allocates tax dollars to achieve
outcomes
– Taxes have direct and indirect costs
Regulation allocates citizens’ time and
money to achieve outcomes
– Regulation has direct and indirect costs
Brought to you by the
Mercatus Center's
Government Accountability
Project
www.mercatus.org