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Government Distrust


The next section of the OECD webpage is titled "Managing Conflict of Interest". It states:

Defining an effective policy approach to dealing with conflict of interest is essential to the political, administrative and legal structure of a country’s public life.

Which is, again, a very strange way to put it. In the first section they talk about corruption and now they seem to re-define corruption as "conflict of interest". Let's be clear, they are completely different things.

Conflict of interest is when personal financial gain clashes with public financial gain.

Corruption is simply accepting financial gain because of greed. A conflict of interest may not even be present. Corrupt people are so because they are in a position of being so, not because of some inherent conflict of interest. Although it is true that many conflicts of interest lead to corruption, the reverse is not true.

This whole concept of "conflict of interest" does not address the main issue which is that governments naturally lead to corruption. This is so because of Government Morality which invariably leads to bribery as the only mechanism to restore order in the markets (see Bribery The Universal Equalizer). Strange as it may seem, as Libertarians we are all for bribery because it removes artificially imposed government monopolies and lets free market operates.

Going back to the OECD, it points out that this topic of "conflict of interest" was extensively developed in a document called "OECD Guidelines for Managing Conflict of Interest in the Public Sector". This is a very long document which we don't have the time (nor the inclination) to analyze in detail. However, it is possible to analyse a few of its key topics, or more precisely, major failures.

Public property

All conflicts of interest originate in the flawed concept of "public property" because if all properties would be private, there would be no conflicts of interest between private and public properties. The fact that both exist is what creates such conflicts.

However, strangely enough, this term is never defined and it is taken for granted. This term translates in practice as "government property" and not "public property". Of course the notion of "public" is used for political reasons, but in reality there is no such animal. If a property would indeed be "public" this means that people would actually have some sort of ownership over it and this creates a problem because even under the tyranny of current governments, property owners do have some rights. Yet, for some strange reason "public property" is a type of property which belongs to all of us yet you have no rights whatsoever! To understand this strange situation we must revert to the previously stated translation: "government property". This is so because if a property belongs to the government then it is not private and as such conflicts may exist. The issue is then shifted towards defining what exactly is "government property".

Government property is not public property (because effectively you have no rights to it) and it is not private property (because it belongs to the government). Which leads us to the inevitable conclusion that governments are independent entities from you or us. But somebody must control these entities who own property and these somebody are bureaucrats and politicians. And so we come to the inevitable conclusion that "government property" is property belonging to bureaucrats and politicians!

Now, how these groups manage such property and which rules are in play is a matter of debate. It is obvious that their rights to such properties are limited and shared but it is also obvious that such right are distributed on a hierarchical basis. The higher in the political or bureaucratic hierarchy a person operates, the larger the rights over this property they will have. Consider the following.

Regular bureaucrats dealing with people in a low level capacity such as managing parking permits, have almost no rights to government properties. They cannot purchase nor dispense of such property with the possible exception of office supplies. Managers at much higher levels, on the other hand, they can purchase, rent or sell entire buildings. They profit from these operations through their salaries and their privileges. They have much larger rights over these properties. This very same hierarchical structure is valid for politicians.

Now that we have defined the target of the conflict, we can proceed to analyze what kinds of conflict there may exist. They can be classified in two.

Personal conflict of interest

This first kind is a conflict arising when a government right-holder (i.e. a bureaucrat or politician) artificially extends the boundaries of their personal rights over government property. For example, a low level government employee generating parking permits does not own parking spots. But, it is in the best interest of this person to get extra money. And so this person disposes of parking spots as if they were his or hers… all for an "extra fee". Such people may do so in agreement or disagreement with current government regulations but this is not the point. The point is that they have extended their property rights over government property beyond what their hierarchy allows.

Institutional conflict of interest

The second case arises when a government right-holder is also a private right holder. For example a government employee who also owns a taxi service. This employee is in the position to requisition taxi cab services for other government employees. Those requisitions are not his to dispose as he sees fit. They belong to the government. Yet, this employee favours his taxi cab company over others. And so this person disposes of taxi requisitions as if they were his or hers… assigning them to his company. Such people may do so in agreement or disagreement with current government regulations but this is not the point. The point is, again, that they have extended their property rights over government property beyond what their hierarchy allows.

The real conflict of interest

These two scenarios lead us to the real conflict of interest. The origins of this conflict is not private versus public interests, but the rights over government property. The problem is not that government property gets used as or assigned to private hands; this is just the side effect. The problem is that government "officials" overstep their rights on government property (as assigned by their level in the hierarchy). The traditional view of conflicts of interest can be seen in the following picture:

Conflict of Interest - Traditional View

Our view regarding conflicts of interest can be seen in this one:

Conflict of Interest - Our View

As you can see, the final effect is the same but the root cause of the problem is vastly different. And why is this important? Because every single guideline, law or regulation is trying to solve the problem through curbing the side effect and not the problem itself. OECD's guideline is no different. It is full of ethical principles, penalties, rules of behaviour, and ways of working addressing the side effect and not a squeak about addressing the real issue. This is, of course, done on purpose.

The real origin of the problem is that government property exists in the first place and that this property does not actually belong to people. Although it is true that these kinds of conflicts of interest can be somewhat prevented by attacking the side effects, they can never be eliminated until the root cause is eliminated. And how do we eliminate the root cause? By destroying the ridiculous concept of "government property". Either governments come out clean and provide actual shares for all the so-called "public properties", shares that can be traded freely without limitations or we get rid of governments themselves.

A matter of trust

Which brings us to the original issue, distrust of governments. All these issues about conflicts of interest were triggered because according to the OECD:

Integrity policies, aimed at preventing corruption and fostering high standards of behaviour, help to reinforce the credibility and legitimacy of those involved in policy decision making, safeguarding the public interest and restoring confidence in the policy making process.

The problem of governments is not lack of credibility because of conflicts of interest, the problem is lack of credibility because they lie; they are utterly dishonest. They lie every single time they manage "government property" as their own property. At the very least people understand intuitively that "public property" (i.e. "government property") is actually theirs but they were robbed of it by governments. It does not matter how many laws, rules, regulations or guidance get published by governments. None of them can change the underlying problem which is that "government property" exist and we don't have access to it.

Note: please see the Glossary if you are unfamiliar with certain words.

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