[00:01.49]Lesson 36
[00:03.47]The cost of government
[00:11.31]What's the most important factor, both in government or business,
[00:16.09]for keeping running costs low?
[00:21.11]If a nation is essentialy disunited, it is left to the government to hold it together.
[00:27.54]This increases the expense of government,
[00:30.39]and reduces correspondingly the amount of economic resources that could be used for developing the country.
[00:38.13]And it should not be forgotten how small those resources are in a poor and backward country.
[00:44.84]Where the cost of government is high, resources for development are correspondingly low.
[00:51.79]This may be illustrated by comparing the position of a nation with that of a private business enterprise.
[00:59.32]An enterprise has to incur certain costs and expenses in order to stay in business.
[01:05.98]For our purposes, we are concerned only with one kind of cost--the cost of managing and administering the business.
[01:15.75]Such administrative overheads in a business are analogous to the cost of government in a nation.
[01:23.13]The administrative overheads of a business are low to the extent that everyone working in the business can be trusted to behave
[01:31.01]in a way that best promotes the interests of the firm.
[01:35.69]If they can each be trusted to take such responsibilities,
[01:39.38]and to exercise such initiative as falls within their sphere, then administrative overheads will be low.
[01:48.23]It will be low because it will be necessary to have only one man looking after each job
[01:54.16]without having another man to check upon what he is doing, keep him in line, and report on him to someone else.
[02:02.36]But if no one can be trusted to act in a loyal and responsible manner towards his job,
[02:09.14]then the business will require armies of administrators, checkers and foremen and administrative overheads will rise correspondingly.
[02:20.02]As administrative overheads rise,
[02:22.91]so the earnings of the business after meeting the expense of administration, will fall;
[02:28.71]and the business will have less money to distribute as dividends or invest directly in its future progress and development.
[02:37.54]It is precisely the same with a nation.
[02:40.44]To the extent that the people can be relied on to behave in a loyal and responsible manner,
[02:46.63]the government does not require armies of police and civil servants to keep them in order.
[02:52.36]But if a nation is disunited, the government cannot be sure
[02:56.90]that the actions of the people will be in the interests of the nation;
[03:00.98]and it will have to watch, check, and control the people accordingly.
[03:06.39]A disunited nation therefore has to incur unduly high costs of government.