La securitización como mecanismo de legitimación Un mundo globalizado e interdependiente implica que las amenazas ya no solo involucran

Production and payment Good is produced by:

Consumer-Purchaser Taxpayer or other Third Party

(1) (2)

Private enterprises

Examples: apples; oranges;television- sSets; food; hous- ing Most other goods

Examples:health- care; food pur- chased with food stamps.

(3) (4)

Government Enterprise or Contracting

Examples: post of- fice;water and elec- tricityin many cities

Examples: public school; national defence

neither buyer nor seller have much incentive to economise, prices will rise much more rapidly than in other sectors of the economy. In turn ex- penditures will soar. This is precisely what has happened in the health- care sector in the United States as government programs have promoted greater reliance on third-party payments during the last four decades.

Category 3 represents the situation where consumers pay for the goods or services, but production is handled through the government.The de- livery of first-class mail by the US postal service and the provision of water and electrical services by many municipal governments provide examples of this structure because they’re spending their own money, consumers will have strong incentives to economise and seek the most value per Dollar of their expenditure on items in this category. Thus, consumer spending will be efficient. However, as we discussed above, there is reason to believe that government-operated firms will generally be less efficient than private enterprises, particularly if the government firms derive most of their revenue from political authorities. Cost consciousness is also likely to be reduced if the government firm is a monopolist — if it is protected from competition with potential private rivals. Thus, production of inef- ficiencies is likely in this category.

Category 4 represents the case where the government both provides the service and covers its cost through taxation.In this case the political process determines what will be produced, how it will be produced, and how it will be allocated among the general populace. Because the providers of the goods do not derive their revenues from customers, they have little incentive to cater to the vies of consumers. Under these cir- cumstances consumers are in an extremely weak position to either dis- cipline inefficient suppliers or exert much impact on the quality and variety of goods produced. Producers will focus on trying to get more money from the granting agency, typically a legislative body, and their incentive to control cost is weak. The excepted result: a disconnection between the good produced and the preferences of consumers, production inef- ficiency, and soaring expenditures. In the United States the provision of

education provides the most vivid example of a good organised along the line of category 4. The US educational system is plugged by the entire expected problem: high cost, rapid growth of expenditure, unhappy “con- sumers”, and a wide spread feeling of helplessness to alter the situation. The incentives in the four categories help explain why some forms of eco- nomic organisation work well and why others work poorly. Category 1 is basically the market sector. When consumers and producers undertake actions that enhance their personal welfare, they are also promoting the general welfare. What is good for the individuals is also good for the economy. This is not the case in the other three categories. In each of those cases there is a conflict between what’s best for the individual mak- ing decisions and what’s best for the economy. These three cases illustrate the problems that arise when government moves beyond its protective functions and begins to subsidise various activities, operate enterprises, direct various sectors, and, in the extreme case, centrally plan the entire economy. In variably such government actions create a situation where individuals pursuing their own interest will simultaneously waste resources, undermine national prosperity, and cause living standards to fall below their potential.

The record of government planning in the United States illustrates this point. It is fraught with conflicts and internal inconsistencies. The federal government increases the pay to tobacco growers and propagandises against smoking. It pays some farmers not to produce grain products and, at the same time, provides others with subsidised irrigation projects so they can grow more of the very same grain products. Government pro- grammes for dairy farmers keep the price of milk high, while government subsidises the school lunch program to make the expensive milk more affordable. Federal regulations mandating strong bumpers make auto- mobiles safer, while corporate average fuel economy (CAFÉ) standards make them lighter and less safe. Both regulations increase the cost of automobiles and reduce the supply of cleaner, safer cars. The federal government sends aid to poor countries with the stated aim of helping

them develop, but then it imposes import restrictions that limit the ability of these countries to help themselves (and to help Americans, too) by supplying US consumers with quality products at attractive prices.

Those who think that central planning, including the planning of sectors like health care and education, will promote economic progress are both, arrogant and naïve. When government officials decide what is bought and sold, are the prices of those times, the first thing that will be bought and sold will be the votes of elected officials. When enterprises get more funds from government and less from consumers, they will spend more time trying to influence politicians and less time trying to reduce costs

What Everyone Should Know About Wealth and Prosperity

Effects of Economic Administration on Corporate Governance

The years of 2000 and 2001 were extremely important for Pakistan's textile industry when Pakistan got entry in free trade regime. The textile sector felt that a huge investment would be required to modernise plant, machinery and equipments in order to produce at competitive price and quality. However, debt financing was not a preferable option for mod- ernising the industry because of several apprehensions in the minds of the business community about the ongoing accountability process at that time. The expansion in equities by offering new shares was not pos- sible because of the recession and a bearish trend in the stock market. The only option available to profitable companies was retaining the profits for reinvestment. Obviously, this option leads to a lower dividend or to no dividend to the investors. Stock market regulatory authorities did not allow this option. It was the time when many profitable companies in textile sector decided to go private. They applied for the conversion of their status from public limited to private limited companies. From the transparency, financial system, and justice distribution’s point of view it was not a good option. ‘Public Limited’ is always a good and preferable status from the economic and financial development point of view. Here, effects of public policies affected the corporate sector negatively by changing their organisational and legal set up.

and please customers. Predictably the substitution of politics for markets will lead to economic regression and, in the words of Adam Smith, “the game will go on miserably, and the society must be at all times in the highest degree of disorder.”

Regulations and Energy Crisis in Pakistan

The determination of energy (electricity) prices is a function constitu- tionally assigned to the National Electric Power Regulatory Authority (NEPRA) which is an organ of the Federal government. According to Pakistani laws, an institution can produce energy but for sale of energy it has to join national grid through WAPDA or KESC. The transfer prices will be decided by the NEPRA. At the same time, the constitution gives rights of the mineral resources to the provinces. Sindh has huge re- sources of coal which can be used to produce energy. However, the price of energy will be determined by NEPRA. NEPRA determined the price of energy which is being produced by the Independent Power Pro- ducers (IPPs) at 9 cents per unit. Before the determination of the price, NEPRA listed the point of view of all the stakeholders including domestic and industrial consumers. NEPRA keeps in consideration what will be the effects of change in energy prices of the stakeholders. After a long hearing, NEPRA determined the price of energy which would be pro- duced by coal in the province of Sindh at 6 cents. This price was not acceptable to those foreign investors who have been showing their will- ingness to invest in the energy production plant in Sindh. This decision made the energy crisis in the country more severe. The issue of energy shortage can be solved by pure market mechanisms; the interference of NEPRA made the issue more complicated.