This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (July 2008)

Part of a series on Government
Public finance
Policies Economic policy Fiscal policy · Monetary policy Trade policy · Investment policy Agricultural policy · Industrial policy Energy policy · Social policy Policy mix
Fiscal policy Tax policy · Budgetary policy Revenue · Spending · Budget Deficit or Surplus · Deficit spending Debt (External · Internal) Finance ministry · Fiscal union
Monetary policy Money supply · Interest rate Monetary base · Discount window Reserve requirements Bank reserves · Gold reserves Monetary authority (central bank · currency board) · Monetary union
Trade policy Tariff · Non-tariff barrier Balance of trade · Gains from trade Trade creation · Trade diversion Protectionism · Free trade Commerce ministry · Trade bloc
Revenue and Spending Tax revenue · Non-tax revenue Mandatory spending Discretionary spending
Optimum Balanced budget (fiscal) Price stability (monetary) Growth (trade and investment)
Reform Fiscal adjustment · Monetary reform
v t e

Public finance is the study of the role of the government in the economy.^[1]

The purview of public finance is considered to be threefold: governmental effects on (1) efficient allocation of resources, (2) distribution of income, and (3) macroeconomic stabilization.

Overview[link]

The proper role of government provides a starting point for the analysis of public finance. In theory, under certain circumstances, private markets will allocate goods and services among individuals efficiently (in the sense that no waste occurs and that individual tastes are matching with the economy's productive abilities). If private markets were able to provide efficient outcomes and if the distribution of income were socially acceptable, then there would be little or no scope for government. In many cases, however, conditions for private market efficiency are violated. For example, if many people can enjoy the same good at the same time (non-rival, non-excludable consumption), then private markets may supply too little of that good. National defense is one example of non-rival consumption, or of a public good.

"Market failure" occurs when private markets do not allocate goods or services efficiently. The existence of market failure provides an efficiency-based rationale for collective or governmental provision of goods and services. Externalities, public goods, informational advantages, strong economies of scale, and network effects can cause market failures. Public provision via a government or a voluntary association, however, is subject to other inefficiencies, termed "government failure."

Under broad assumptions, government decisions about the efficient scope and level of activities can be efficiently separated from decisions about the design of taxation systems (Diamond-Mirlees separation). In this view, public sector programs should be designed to maximize social benefits minus costs (cost-benefit analysis), and then revenues needed to pay for those expenditures should be raised through a taxation system that creates the fewest efficiency losses caused by distortion of economic activity as possible. In practice, government budgeting or public budgeting is substantially more complicated and often results in inefficient practices.

Government can pay for spending by borrowing (for example, with government bonds), although borrowing is a method of distributing tax burdens through time rather than a replacement for taxes. A deficit is the difference between government spending and revenues. The accumulation of deficits over time is the total public debt. Deficit finance allows governments to smooth tax burdens over time, and gives governments an important fiscal policy tool. Deficits can also narrow the options of successor governments.

Public finance is closely connected to issues of income distribution and social equity. Governments can reallocate income through transfer payments or by designing tax systems that treat high-income and low-income households differently.

The Public Choice approach to public finance seeks to explain how self-interested voters, politicians, and bureaucrats actually operate, rather than how they should operate.

Public finance management[link]

Collection of sufficient resources from the economy in an appropriate manner along with allocating and use of these resources efficiently and effectively constitute good financial management. Resource generation, resource allocation and expenditure management (resource utilization) are the essential components of a public financial management system.

Public Finance Management (PFM) basically deals with all aspects of resource mobilization and expenditure management in government. Just as managing finances is a critical function of management in any organization, similarly public finance management is an essential part of the governance process. Public finance management includes resource mobilization, prioritization of programmes, the budgetary process, efficient management of resources and exercising controls. Rising aspirations of people are placing more demands on financial resources. At the same time, the emphasis of the citizenry is on value for money, thus making public finance management increasingly vital.

Government expenditures[link]

Economists classify government expenditures into three main types. Government purchases of goods and services for current use are classed as government consumption. Government purchases of goods and services intended to create future benefits--- such as infrastructure investment or research spending--- are classed as government investment. Government expenditures that are not purchases of goods and services, and instead just represent transfers of money--- such as social security payments--- are called transfer payments.^[2]

Government operations[link]

Government operations are those activities involved in the running of a state or a functional equivalent of a state (for example, tribes, secessionist movements or revolutionary movements) for the purpose of producing value for the citizens. Government operations have the power to make, and the authority to enforce rules and laws within a civil, corporate, religious, academic, or other organization or group.^[3] In its broadest sense, "to govern" means to rule over or supervise, whether over a state, a set group of people, or a collection of people.^[4]

Income distribution[link]

• Income distribution - Some forms of government expenditure are specifically intended to transfer income from some groups to others. For example, governments sometimes transfer income to people that have suffered a loss due to natural disaster. Likewise, public pension programs transfer wealth from the young to the old. Other forms of government expenditure which represent purchases of goods and services also have the effect of changing the income distribution. For example, engaging in a war may transfer wealth to certain sectors of society. Public education transfers wealth to families with children in these schools. Public road construction transfers wealth from people that do not use the roads to those people that do (and to those that build the roads).
• Income Security
• Employment insurance
• Health Care
• Public financing of campaigns

Financing of government expenditures[link]

Budgeted revenues of governments in 2006.

Government expenditures are financed in three ways:

• Government revenue
  • Taxes
  • Non-tax revenue (revenue from government-owned corporations, sovereign wealth funds, sales of assets, or Seigniorage)
• Government borrowing
• Printing of Money or Inflation
• Privatization

How a government chooses to finance its activities can have important effects on the distribution of income and wealth (income redistribution) and on the efficiency of markets (effect of taxes on market prices and efficiency). The issue of how taxes affect income distribution is closely related to tax incidence, which examines the distribution of tax burdens after market adjustments are taken into account. Public finance research also analyzes effects of the various types of taxes and types of borrowing as well as administrative concerns, such as tax enforcement.

Taxes[link]

Taxation is the central part of modern public finance. Its significance arises not only from the fact that it is by far the most important of all revenues but also because of the gravity of the problems created by the present day heavy tax burden. The main objective of taxation is raising revenue. A high level of taxation is necessary in a welfare State to fulfill its obligations. Taxation is used as an instrument of attaining certain social objectives i.e. as a means of redistribution of wealth and thereby reducing inequalities. Taxation in a modern Government is thus needed not merely to raise the revenue required to meet its ever-growing expenditure on administration and social services but also to reduce the inequalities of income and wealth. Taxation is also needed to draw away money that would otherwise go into consumption and cause inflation to rise.^[5]

A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, tribes, secessionist movements or revolutionary movements). Taxes could also be imposed by a subnational entity. Taxes consist of direct tax or indirect tax, and may be paid in money or as corvée labor. A tax may be defined as a "pecuniary burden laid upon individuals or property to support the government [ . . .] a payment exacted by legislative authority."^[6] A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is "any contribution imposed by government [ . . .] whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name."^[7]

• There are various types of taxes, broadly divided into two heads - direct (which is proportional) and indirect tax (which is differential in nature):
• Stamp duty, levied on documents
• Excise tax (tax levied on production for sale, or sale, of a certain good)
• Sales tax (tax on business transactions, especially the sale of goods and services)
  • Value added tax (VAT) is a type of sales tax
  • Services taxes on specific services
• Road tax; Vehicle excise duty (UK), Registration Fee (USA), Regco (Australia), Vehicle Licensing Fee (Brazil) etc.
• Gift tax
• Duties (taxes on importation, levied at customs)
• Corporate income tax on corporations (incorporated entities)
• Wealth tax
• Personal income tax (may be levied on individuals, families such as the Hindu joint family in India, unincorporated associations, etc.)

Debt[link]

Foreign currency reserves and gold minus external debt based on 2010 data from CIA Factbook.

Governments, like any other legal entity, can take out loans, issue bonds and make financial investments. Government debt (also known as public debt or national debt) is money (or credit) owed by any level of government; either central or federal government, municipal government or local government. Some local governments issue bonds based on their taxing authority, such as tax increment bonds or revenue bonds.

As the government represents the people, government debt can be seen as an indirect debt of the taxpayers. Government debt can be categorized as internal debt, owed to lenders within the country, and external debt, owed to foreign lenders. Governments usually borrow by issuing securities such as government bonds and bills. Less creditworthy countries sometimes borrow directly from commercial banks or international institutions such as the International Monetary Fund or the World Bank.

Most government budgets are calculated on a cash basis, meaning that revenues are recognized when collected and outlays are recognized when paid. Some consider all government liabilities, including future pension payments and payments for goods and services the government has contracted for but not yet paid, as government debt. This approach is called accrual accounting, meaning that obligations are recognized when they are acquired, or accrued, rather than when they are paid.

Seigniorage[link]

Seigniorage is the net revenue derived from the issuing of currency. It arises from the difference between the face value of a coin or bank note and the cost of producing, distributing and eventually retiring it from circulation. Seigniorage is an important source of revenue for some national banks, although it provides a very small proportion of revenue for advanced industrial countries.^{[citation needed]}

Public finance through state enterprise[link]

Public finance in centrally planned economies has differed in fundamental ways from that in market economies. Some state-owned enterprises generated profits that helped finance government activities. The government entities that operate for profit are usually manufacturing and financial institutions, services such as nationalized healthcare do not operate for a profit to keep costs low for consumers. The Soviet Union relied heavily on turnover taxes on retail sales. Sales of natural resources, and especially petroleum products, were an important source of revenue for the Soviet Union.

In market-oriented economies with substantial state enterprise, such as in Venezuela, the state-run oil company PSDVA provides revenue for the government to fund its operations and programs that would otherwise be profit for private owners. In various mixed economies, the revenue generated by state-run or state-owned enterprises are used for various state endeavors; typically the revenue generated by state and government agencies goes into a sovereign wealth fund. An example of this is the Alaska Permanent Fund and Singapore's Temasek Holdings.

Various market socialist systems or proposals utilize revenue generated by state-run enterprises to fund social dividends, eliminating the need for taxation altogether.

Government Finance Statistics and Methodology[link]

Macroeconomic data to support public finance economics are generally referred to as fiscal or government finance statistics (GFS). The Government Finance Statistics Manual 2001 (GFSM 2001) is the internationally accepted methodology for compiling fiscal data. It is consistent with regionally accepted methodologies such as the European System of Accounts 1995 and consistent with the methodology of the System of National Accounts (SNA1993) and broadly in line with its most recent update, the SNA2008.

Measuring the public sector[link]

The size of governments, their institutional composition and complexity, their ability to carry out large and sophisticated operations, and their impact on the other sectors of the economy warrant a well-articulated system to measure government economic operations.

The GFSM 2001 addresses the institutional complexity of government by defining various levels of government. The main focus of the GFSM 2001 is the general government sector defined as the group of entities capable of implementing public policy through the provision of primarily nonmarket goods and services and the redistribution of income and wealth, with both activities supported mainly by compulsory levies on other sectors. The GFSM 2001 disaggregates the general government into subsectors: central government, state government, and local government (See Figure 1). The concept of general government does not include public corporations. The general government plus the public corporations comprise the public sector (See Figure 2).

Figure 1: General Government (IMF Government Finance Statistics Manual 2001(Washington, 2001) pp.13

Figure 2: Public Sector(IMF Government Finance Statistics Manual 2001(Washington, 2001) pp.15

The general government sector of a nation includes all non-private sector institutions, organisations and activities. The general government sector, by convention, includes all the public corporations that are not able to cover at least 50 % of their costs by sales, and, therefore, are considered non-market producers.^[8]

In the European System of Accounts^[9], the sector “general government” has been defined as containing:

• “All institutional units which are other non-market producers whose output is intended for individual and collective consumption, and mainly financed by compulsory payments made by units belonging to other sectors, and/or all institutional units principally engaged in the redistribution of national income and wealth”.^[8]

Therefore, the main functions of general government units are :

• to organise or redirect the flows of money, goods and services or other assets among corporations, among households, and between corporations and households; in the purpose of social justice, increased efficiency or other aims legitimised by the citizens; examples are the redistribution of national income and wealth, the corporate income tax paid by companies to finance unemployment benefits, the social contributions paid by employees to finance the pension systems;
• to produce goods and services to satisfy households' needs (e.g. state health care) or to collectively meet the needs of the whole community (e.g. defence, public order and safety).^[8]

The general government sector, in the European System of Accounts, has four sub-sectors:

1. central government
2. state government
3. local government
4. social security funds

"Central government"^[10] consists of all administrative departments of the state and other central agencies whose responsibilities cover the whole economic territory of a country, except for the administration of social security funds.

"State government"^[11] is defined as the separate institutional units that exercise some government functions below those units at central government level and above those units at local government level, excluding the administration of social security funds.

"Local government"^[12] consists of all types of public administration whose responsibility covers only a local part of the economic territory, apart from local agencies of social security funds.

"Social security fund"^[13] is a central, state or local institutional unit whose main activity is to provide social benefits. It fulfils the two following criteria:

• by law or regulation (except those about government employees), certain population groups must take part in the scheme and have to pay contributions;
• general government is responsible for the management of the institutional unit, for the payment or approval of the level of the contributions and of the benefits, independent of its role as a supervisory body or employer.

The GFSM 2001 framework is similar to the financial accounting of businesses. For example, it recommends that governments produce a full set of financial statements including the statement of government operations (akin to the income statement), the balance sheet, and a cash flow statement. Two other similarities between the GFSM 2001 and business financial accounting are the recommended use of accrual accounting as the basis of recording and the presentations of stocks of assets and liabilities at market value. It is an improvement on the prior methodology - Government Finance Statistics Manual 1986 – based on cash flows and without a balance sheet statement.

Users of GFS[link]

The GFSM 2001 recommends standard tables including standard fiscal indicators that meet a broad group of users including policy makers, researchers, and investors in sovereign debt. Government finance statistics should offer data for topics such as the fiscal architecture, the measurement of the efficiency and effectiveness of government expenditures, the economics of taxation, and the structure of public financing. The GFSM 2001 provides a blueprint for the compilation, recording, and presentation of revenues, expenditures, stocks of assets, and stocks of liabilities. The GFSM 2001 also defines some indicators of effectiveness in government’s expenditures, for example the compensation of employees as a percentage of expense. The GFSM 2001 includes a functional classification of expense as defined by the Classification of Functions of Government (COFOG) .

This functional classification allows policy makers to analyze expenditures on categories such as health, education, social protection, and environmental protection. The financial statements can provide investors with the necessary information to assess the capacity of a government to service and repay its debt, a key element determining sovereign risk, and risk premia. Like the risk of default of a private corporation, sovereign risk is a function of the level of debt, its ratio to liquid assets, revenues and expenditures, the expected growth and volatility of these revenues and expenditures, and the cost of servicing the debt. The government’s financial statements contain the relevant information for this analysis.

The government’s balance sheet presents the level of the debt; that is the government’s liabilities. The memorandum items of the balance sheet provide additional information on the debt including its maturity and whether it is owed to domestic or external residents. The balance sheet also presents a disaggregated classification of financial and non-financial assets.

These data help estimate the resources a government can potentially access to repay its debt. The statement of operations (“income statement”) contains the revenue and expense accounts of the government. The revenue accounts are divided into subaccounts, including the different types of taxes, social contributions, dividends from the public sector, and royalties from natural resources. Finally, the interest expense account is one of the necessary inputs to estimate the cost of servicing the debt.

[edit] Fiscal Data Using the GFSM 2001 Methodology

GFS can be accessible through several sources. The International Monetary Fund publishes GFS in two publications: International Financial Statistics and the Government Finance Statistics Yearbook. The World Bank gathers information on external debt. On a regional level, the Organization for Economic Co-operation and Development (OECD) compiles general government account data for its members, and Eurostat, following a methodology compatible with the GFSM 2001, compiles GFS for the members of the European Union.

See also[link]

	Book: Finance
Wikipedia books are collections of articles that can be downloaded or ordered in print.

• Constitutional economics
• Corporate finance
• Fiscal incidence
• Functional finance
• Government budget
• Personal finance
• Public economics
• Public choice
• Rule according to higher law
• Harris School of Public Policy Studies

Notes[link]

1. ^ Gruber, Jonathan (2005). Public Finance and Public Policy. New York: Worth Publications. pp. 2. ISBN 0-7167-8655-9. 
2. ^ Robert Barro and Vittorio Grilli (1994), European Macroeconomics, Ch. 15-16. Macmillan, ISBN 0-333-57764-7.
3. ^ Columbia Encyclopedia, Government, Columbia University Press
4. ^ See for example, The American Heritage Dictionary of the English Language, entry "Govern"
5. ^ http://budget.ap.gov.in/es2k_pf.htm
6. ^ Black's Law Dictionary, p. 1307 (5th ed. 1979).
7. ^ Id.
8. ^ ^{a b c} General Government sector, Eurostat glossary
9. ^ ESA95, paragraph 2.68
10. ^ Central government, Eurostat glosssary
11. ^ State government, Eurostat glosssary
12. ^ Local government, Eurostat glosssary
13. ^ Social security fund, Eurostat glosssary

References[link]

• Anthony B. Atkinson and Joseph E. Stiglitz (1980). Lectures in Public Economics, McGraw-Hill Economics Handbook Series
• James M. Buchanan and Richard A. Musgrave (1989). Public Finance and Public Choice: Two Contrasting Visions of the State. MIT Press. Scroll down to chapter-preview links.
• Richard A. Musgrave (1959). The Theory of Public Finance: A Study in Public Economy. J.M. Buchanan review, 1st page.
• R.A. Musgrave (2008). "public finance," The New Palgrave Dictionary of Economics Abstract.
• Richard A. Musgrave and Peggy B. Musgrave (1973). Public Finance in Theory and Practice
• Joseph E. Stiglitz (2000). Economics of the Public Sector, 3rd ed. Norton.
• Greene, Joshua E (2011). Public Finance: An International Perspective. Hackensack, New Jersey: World Scientific. pp. 500. ISBN 978-981-4365-04-8. http://www.worldscibooks.com/economics/8219.html. 

External links[link]

Wikimedia Commons has media related to: Public finance

• Taxation and Public Finance course at the Harris School of Public Policy Studies
• State and Local Public Finance course at the Harris School of Public Policy Studies
• IMF--Dissemination Standards Bulletin Board-- Subscribing ... (see "fiscal sector")
• The IMF's Public Financial Management Blog
• Other Public Financing Resource
• US Debt Clock.org - Real Time U.S. Debt Clock
• Canadian Governments Compared

Walter Block

Austrian School
Walter Block teaching
Born	(1941-08-21) 21 August 1941 (age 70) New York
Nationality	United States
Field	Political economy, environmental economics, transport economics, political philosophy
Influences	Ludwig von Mises, Murray Rothbard, Ayn Rand

Walter Edward Block (born 21 August 1941) is an Austrian School of economics economist and anarcho-capitalist.^[1]

Personal life[link]

Block was born in Brooklyn, New York to Abraham Block, a certified public accountant, and Ruth Block, a paralegal, both of whom Block has said were liberals.^[2] He earned his undergraduate degree in Philosophy summa cum laude from Brooklyn College, where he was a member of the varsity swimming team. Block earned his Ph.D. degree in economics from Columbia University and wrote his dissertation on rent control.^{[citation needed]} Block, who is of Jewish background, self-identifies as a "devout atheist".^[3]

Block's early thinking life was characterized by egalitarian thought. In an interview by the Austrian Economics Newsletter, Block stated, "In the fifties and sixties, I was just another commie living in Brooklyn."^[4] Block credits his "conversion" to Libertarianism to personal meetings with Ayn Rand while he was an undergraduate student. Alan Greenspan was in attendance at some of these meetings.^[2] As Block describes it, "In 1963, when I was a senior at Brooklyn College, Ayn Rand came there to give a lecture. I attended, along with about 3,000 of my fellow mainly leftish students, in order to boo and hiss her, since she was evil incarnate. Afterward, the president of the group that had invited her to campus announced there was to be a luncheon in her honor, and anyone was welcome to take part, whether or not they agreed with her ideas. Not having had enough booing and hissing at Ayn in her formal lecture, I decided to avail myself of this opportunity to further express my displeasure with her and her views."^[2]

Block thereafter attended a luncheon with Rand, Nathaniel Branden, and Leonard Peikoff. After Block's challenging of several luncheon attendees, Branden forged an agreement with Block: "Nathan very graciously offered to come to the other end of the table with me for this purpose, but he imposed two preconditions: first, I would be honor bound not to allow this conversation to lapse with this one meeting, but would continue with it until we had achieved a resolution: either he would convince me of the error of my ways, or I would convince him of his. Second, I would read two books he would later recommend to me (Atlas Shrugged by Ayn Rand and Economics in One Lesson by Henry Hazlitt).^[2]

Although Block credits Ayn Rand, Branden, and other Objectivists with his initial interest in laissez faire theory in general, he says of Murray Rothbard that,

After I met Murray, it took him probably all of 15 minutes to convert me to the same anarcho-capitalist position I have held ever since.... In retrospect, before I had met Murray, I was nine tenths of the way toward embracing laissez faire capitalist anarchism; all I needed was a little push in the same direction I had already been going for some time.^[2]

Professional career[link]

Block now holds the Harold E. Wirth Endowed Chair in Economics at Loyola University in New Orleans. From 1979 to 1991, he was the Senior Economist with the Fraser Institute. In addition to his faculty position at Loyola, Block is also a Senior Faculty member of the Ludwig von Mises Institute for Austrian Economics. His most famous work is Defending the Undefendable, of which John Stossel said, "Defending the Undefendable... opened my eyes to the beauties of libertarianism. It explains that so much of what is assumed to be evil--is not."^[5] Lew Rockwell of the Mises Institute said this about Walter Block's active role in modern libertarianism:

Murray Rothbard, in his life, was known as Mr. Libertarian. We can make a solid case that the title now belongs to Walter Block, a student of Rothbard's whose own vita is as thick as a big-city phonebook, and as diverse as Wikipedia. Whether he is writing on economic theory, ethics, political secession, drugs, roads, education, monetary policy, social theory, unions, political language, or anything else, his prose burns with a passion for this single idea: if human problems are to be solved, the solution is to be found by permitting greater liberty.^[6]

Political views[link]

Block, along with Robert Nozick, is one of the leading libertarian defenders of voluntary slave contracts, arguing that a slave contract is "a bona fide contract where consideration crosses hands; when it is abrogated, theft occurs". He critiques other libertarians who oppose voluntary slavery as being inconsistent with their shared principles. Block seeks to make "a tiny adjustment" which "strengthens libertarianism by making it more internally consistent." He argues that his position shows "that contract, predicated on private property [can] reach to the furthest realms of human interaction, even to voluntary slave contracts."^[7]

On February 17, 2006, Dr. Walter Block publicly expressed his support for the Free State Project (FSP). He is quoted as saying,

You people are doing the Lord's work. The FSP is one of the freshest practical ideas for promoting liberty that has come out of the libertarian movement in the past few decades. May you succeed beyond your wildest dreams, and thus demonstrate in yet another empirical way the benefits and blessings of liberty.^[8]

Books[link]

As author[link]

• Defending the Undefendable (1976; translated into Chinese, Dutch, French, Italian, Portuguese, Romanian and Russian languages) ISBN 0-930073-05-3
• A Response to the Framework Document for Amending the Combines Investigation Act (1982)
• Focus on Economics and the Canadian Bishops (1983)
• Focus on Employment Equity: A Critique of the Abella Royal Commission on Equality in Employment (with Michael A. Walker; 1985)
• The U.S. Bishops and Their Critics: An Economic and Ethical Perspective (1986)
• Lexicon of Economic Thought (with Michael A. Walker; 1988)
• Economic Freedom of the World, 1975-1995 (with James Gwartney, Robert Lawson; 1996)
• The Privatization of Roads and Highways: Human and Economic Factors (2006)
• Labor Economics from a Free Market Perspective: Employing the Unemployable. (2008)
• The Case for Discrimination (2010)
• Ron Paul for President in 2012: Yes to Ron Paul and Liberty (2012)

As editor[link]

• Zoning: Its Costs and Relevance for the 1980s (Ed.; 1980)
• Rent Control: Myths & Realities (Ed. with Edgar Olsen; 1981)
• Discrimination, Affirmative Action and Equal Opportunity (Ed. with Michael A. Walker; 1982)
• Taxation: An International Perspective (Ed. with Michael A. Walker; 1984)
• Economics and the Environment: A Reconciliation (Ed.; 1985; translated into Portuguese 1992) ISBN 0-88975-067-X
• Morality of the Market: Religious and Economic Perspectives (Ed. with Geoffrey Brennan, Kenneth Elzinga; 1985)
• Theology, Third World Development and Economic Justice (Ed. with Donald Shaw; 1985)
• Reaction: The New Combines Investigation Act (Ed.; 1986)
• Religion, Economics & Social Thought (Ed. with Irving Hexham; 1986)
• Man, Economy and Liberty: Essays in Honor of Murray N. Rothbard (Ed. with Lew Rockwell; 1988)
• Breaking the Shackles; the Economics of Deregulation: A Comparison of U.S. and Canadian Experience (Ed. with George Lermer; 1991)
• Economic Freedom: Toward a Theory of Measurement (Ed.; 1991)
• Libertarian Autobiographies (Ed.; forthcoming)

Articles[link]

• "Katrina and the Future of New Orleans" Telos 139, Summer 2007.
• "Hayek's Road to Serfdom". Journal of Libertarian Studies (Center for Libertarian Studies) 12 (2): 339–365 (1996).

Notes[link]

External links[link]

• WalterBlock.com
• Commentary by Walter Block for CNBC
• Biography and Article Archive at Mises.org.
• Media Archive at Mises.org.
• Defending the Undefendable

This article may require copy editing for grammar, style, cohesion, tone, or spelling. You can assist by editing it. (April 2012)

Ashraf Ghani Ahmadzai
Ashraf Ghani Ahmadzai in July 2011
Chairman of the Institute for State Effectiveness
Incumbent
Assumed office 2005
Chancellor of Kabul University
In office December 2004 – 2008
Succeeded by	Hamidullah Amin
Finance Minister of Afghanistan
In office June 2002 – December 2004
President	Hamid Karzai
Preceded by	Hedayat Amin Arsala
Succeeded by	Anwar ul-Haq Ahady
Personal details
Born	1949 Logar Province, Afghanistan
Religion	Islam

Dr. Ashraf Ghani Ahmadzai is a prominent politician in Afghanistan and the former chancellor of Kabul University. He is also the chairman of the Institute for State Effectiveness, an organization set up in 2005 to promote the ability of states to serve their citizens. Before returning to Afghanistan in 2002, Ahmadzai was a leading scholar of political science and anthropology. He has worked at the World Bank for a number of years where he learned the tools of international development assistance. As Finance Minister of Afghanistan between July 2002 and December 2004, he set the path for Afghanistan's attempted economic recovery after the collapse of the Taliban. He is usually referred to as Ashraf Ghani, while Ahmadzai is the name of his Pashtun tribe.

Dr. Ghani is also a member of the Commission on Legal Empowerment of the Poor, an independent initiative hosted by the UNDP. In the 2009 presidential election, he was ranked fourth in the polls, behind the president Hamid Karzai, his main contender Dr. Abdullah, and Ramazan Bashardost.^[1]

In 2010, Foreign Policy Magazine placed him in its annual list of the Top 100 Global Thinkers.^[2]

Early years[link]

Ghani was born in 1949 in the logar Province of Afghanistan. An ethnic Pashton, Pakhtun from an influential Ahmadzai family, he completed his primary and secondary education in Habibia High School in Kabul. He travelled to Lebanon to attend the American University in Beirut and earned his first degree in 1973. During his stay there he met his future wife, Rula Ashraf Ghani Ahmadzai was elected for the UN post, has ranked second rank in the UN election he is a well famouse economist of Afghanistan and well known abroad. he has also taught in the Harvard University in the U.S. He returned to Afghanistan in 1974 to teach Afghan studies and anthropology at Kabul University before winning a government scholarship to study for a Master's degree in anthropology at Columbia University in the United States. He left Afghanistan in 1977, intending to be away for two years.

When the PDPA communist party came to power in Kabul, most of the male members of his family were imprisoned and Ahmadzai was stranded in America. He stayed at Columbia University and earned his Ph.D. there, and was immediately invited to teach at University of California, Berkeley (1983) and then at Johns Hopkins University (1983–1991). During this period he became a frequent commentator on the BBC Dari and Pashto services, broadcast in Afghanistan. He has also attended the Harvard-INSEAD and Stanford business schools leadership training program for the World Bank. He served on the faculty of Kabul University (1973–77), Aarhus University in Denmark (1977), University of California, Berkeley (1983), and Johns Hopkins University (1983–1991). His academic research was on state-building and social transformations. In 1985 he undertook a year of fieldwork researching Pakistani Madrasas as a Fulbright Scholar. He has also studied comparative religion. He joined the World Bank in 1991, working on projects in East Asia and South Asia until the mid 1990s.

In 1996, he pioneered the application of institutional and organizational analysis to macro processes of change and reform, working directly on the adjustment program of the Russian coal industry and carrying out reviews of the Bank’s country assistance strategies and structural adjustment programs globally. He spent five years each in China, India, and Russia managing large-scale development and institutional transformation projects. He had worked intensively with the media during the first Gulf War, commenting on major radio and television programs and being interviewed by newspapers.

Recent years[link]

This section may require cleanup to meet Wikipedia's quality standards. No cleanup reason has been specified. Please help improve this section if you can; the talk page may contain suggestions. (July 2011)

After 9/11, he took leave without pay from the World Bank and engaged in intensive interaction with the media, appearing regularly on PBS’s News Hour as well as BBC, CNN, other television programs, the BBC, Public Radio, other radios, and writing for major newspapers. In November 2002, he accepted an appointment as a Special Advisor to the United Nations and assisted Mr. Lakhdar Brahimi, the Special Representative of the Secretary General to Afghanistan, to prepare the Bonn Agreement, the process and document that provided the basis of transfer of power to the people of Afghanistan.

Returning after 24 years to Afghanistan in December 2001, he resigned from his posts at the UN and World Bank to join the Afghan government as the chief advisor to President Hamid Karzai on February 1, 2002. He has worked on a pro bono basis and was among the first officials to disclose his assets. In this capacity, he worked on the preparation of the Loya Jirgas (grand assemblies) that elected President Hamid Karzai and approved the Constitution of Afghanistan. After the election of President Karzai directly by the people of Afghanistan in October 2004, Mr. Ghani declined to join the cabinet and asked to be appointed as Chancellor of Kabul University. As Chancellor of the University, he worked to institute a style of participatory governance among the faculty, students, and staff, advocating a vision of the university where men and women with skills and commitment to lead their country in the age of globalization can be trained.

Asrhaf Ghani Ahmadzai chatting with U.S. Ambassador to Afghanistan Karl W. Eikenberry at Panjshir Province in 2011.

Since leaving the university, Dr. Ghani has co-founded the Institute for State Effectiveness, of which he is Chairman. The Institute has put forward a framework which proposes that the state should perform ten functions in the contemporary world in order to serve its citizens. This framework was discussed by leaders and managers of post-conflict transitions at a meeting sponsored by the UN and World Bank at the Greentree Estates in September 2005. The program also proposes that the vehicle of state-building or sovereignty strategies, underpinned by double compacts between the international community, government and the population of a country could be used as a basis for organizing aid and other interventions, and that a sovereignty index to measure state effectiveness should be compiled on an annual basis.

Mr. Ghani was tipped as a candidate to succeed Kofi Annan as Secretary General of the United Nations at the end of 2006.^[3] His name was floated in a front page report in The Financial Times (September 18, 2006) which went on to quote him as saying, “I hope to win, through ideas.” Two distinguished experts on international relations told the paper that "the UN would be very lucky indeed to have him" and praised his "tremendous intellect, talent and capacity."

Doubts about his temperament seemed to be haunting him a few months later, in April 2007, when his name appeared as a possible candidate to head the World Bank.

Mr. Ghani has been sought as a public speaker and in 2005 given the keynote speeches for a number of meetings including the American Bar Association’s International Rule of Law Symposium, the Trans-Atlantic Policy Network, the annual meeting of the Norwegian Government’s development staff, CSIS’ meeting on UN reform, the UN-OECD-World Bank’s meeting on Fragile States, and TEDGlobal. He has contributed to the Financial Times, International Herald Tribune, Los Angeles Times, New York Times, the Wall Street Journal, and the Washington Post.

World Justice Project[link]

Ashraf Ghani is on the Board of Directors of the World Justice Project. The World Justice Project works to lead a global, multidisciplinary effort to strengthen the Rule of Law for the development of communities of opportunity and equity.

Role in post-Taliban Afghanistan[link]

Dr. Ashraf Ghani with United States Secretary of the Treasury John Snow in 2004.

Ashraf Ghani was recognized as the best finance minister of Asia in 2003 by Emerging Markets. During his tenure as finance minister of Afghanistan, he carried out a series of extensive reforms. He issued a new currency in record time, computerized the operations of the treasury, instituted the single treasury account, adopted a policy of no-deficit financing, introduced the budget as the central instrument of policy, centralized revenue, reformed the tariff system, and overhauled customs. He instituted regular reporting to the cabinet, the people of Afghanistan, and international stakeholders as a tool of transparency and accountability, and broke new ground in the coordination of donor assistance by requiring donors to keep their interventions to three sectors, thereby bringing clarity and mutual accountability to their relations with government counterparts, and preparing a development strategy that held Afghans more accountable for their own future development.

On March 31, 2004, he presented a seven-year program of public investment called Securing Afghanistan’s Future to an international conference in Berlin attended by 65 finance and foreign ministers. Described as the most comprehensive program ever prepared and presented by a poor country to the international community, Securing Afghanistan’s Future was prepared by a team of 100 experts working under the supervision of a committee chaired by Mr. Ghani. The concept of a double-compact, between the donors and the government of Afghanistan on the one hand and between the government and people of Afghanistan on the other, underpinned the program of investment in Securing Afghanistan’s Future. The donors pledged $8.2 billion at the conference for the first three years of the program –- the exact amount asked by the government—and agreed that the government’s request for a total seven-year package of assistance of $27.5 billion was justified.

The focus on poverty eradication through the creation of wealth and the establishment of the rights of citizenship has been at the heart of Mr. Ghani’s development approach. In Afghanistan, he is attributed with designing the National Solidarity Program, a program of bloc grants to villages in which elected village councils determine both the priorities and the mechanisms of implementation. The program currently covers 13,000 of the estimated 20,000 villages of the country. He also partnered with the Ministry of Communication to ensure that telecom licenses were granted on a fully transparent basis. As a result, the number of mobile phones in the country has jumped from 100 in July 2002 to over a million at the end of 2005. Private investment in the sector exceeded $200 million and the telecom sector emerged as one of the major sectors of revenue generation for government.

2009 Afghan presidential election[link]

Ahmadzai with Rajiv Shah and Karl Eikenberry

In January 2009 an article by Ahmad Majidyar of the American Enterprise Institute included Ghani on a list of fifteen possible candidates in the 2009 Afghan presidential election.^[4] On May 7, 2009, Ashraf Ghani registered as a candidate in the Afghan presidential election, 2009. In announcing his candidacy, Ghani emphasized the importance of: establishing a representative administration; good governance; building a dynamic economy and creating employment opportunities for the Afghan people.^[5] Unlike other major candidates, Ghani is specifically reaching out the Afghan diaspora to support his campaign and provide financial support. He has appointed Mohammed Ayub Rafiqi as one of his vice president candidate deputies, and hired noted Clinton-campaign chief strategist James Carville as a campaign advisor.^[6]

Preliminary results placed Ghani fourth in a field of 38. Ashraf Ghani finally ended up securing roughly 3% of the total votes.^[7]

Support to Afghan reconstruction[link]

On January 28, 2010, Ashraf Ghani attended the International Conference on Afghanistan in London together with president Karzai, pledging his support to help rebuild their country. Ghani called his decision to accept an invitation to present his ideas to Karzai an example of the importance of cooperation among Afghans and with the international community for the country's progress. This move by Ghani was a boost for Karzai's strategy of reconciliation in Afghanistan Ghani said hearing Karzai's second inaugural address in November 2009 and his pledges to fight corruption, promote national reconciliation and take over from international security forces persuaded him that it was important to help,^[8]

See also[link]

• Politics of Afghanistan
• Economy of Afghanistan

References[link]

External links[link]

Wikimedia Commons has media related to: Ashraf Ghani Ahmadzai

• Presidential Campaign Website
• Afghan Elections Dossier - Ashraf Ghani, August 2009 - Radio France Internationale
• Financial Contributions to Ashraf Ghani's campaign
• The Institute for State Effectiveness
• Video of Ghani's presentation about mobilizing capital for state-building. (Recorded at the TED Conference July 2005 in Oxford, UK. Duration: 19:24)
• Authors@Google: Ashraf Ghani & Claire Lockhart A talk in Google New York office, June 20, 2008 (Duration: 1 hr)
• TED Talks: Ashraf Ghani on rebuilding broken states at TED Global in 2005