These days, state after state announces financial problems and ask for help from the super-state institutions. Is this only a coincidence or is there a pattern?
Let's take a look at the classical state, from an economical perspective. I'll not talk about a particular state, I'll just refer to an "industry average" state.
1. Budget deficit
- There is no real incentive for raising the income, because as in the real economy this happens very slow and people in power cannot benefit too much;
- State expenses are always inefficient because the incentive of efficiency doesn't exist. On the other hand, there are enough reasons to overpay and to distribute the money based on subjective criteria.
- The easiest way to redistribute the wealth in the interests of the people with power;
3. Bankruptcy system
- It doesn't matter who drive the state, the bankruptcy is shared among all "shareholders";
4. Election system
- Not flexible enough to be use as an economical driver. People vote people, not budgets, not structured programs.
There are many other measures of the state failure. On the stock market, you would never buy a country stocks even if you know that country is making the rules. Some people, some institutions buy bonds, not betting on the fact the state will not go bankrupt, betting only on the distance of that moment.
Disclaimer: I'm not a libertarian in a sense that everybody is free to fight for himself. I believe in the power of utility and the results of the efficiency for all the stakeholders.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.