December 11, 2012

A Lesson of History: From Sir Robert Walpole to President Victor Yanukovych

History can teach us really good lessons. For example, the British history can shed light on the current events in Ukraine and other former Soviet states.
So here is a tough question for you. What do Sir Robert Walpole (1676-1745) and President Yanukovych have in common? If your answer is political corruption, you are the history buff.

In the 18th century the House of Commons was useless link in the British government. The House of Commons stood aside doing nothing when the British government expenditure got out of control. The British National Debt experienced a ten-fold increase over the course of the 18th century.

While the British government was approaching the debt crisis, the government of Sir Robert Walpole, First Lord of the Treasury and the de facto first British Prime Minister (1721-1742), went in all history textbooks as the "government by corruption". Walpole who was the Crown's favorite manipulated individual members of the parliament and the aristocratic groups to wield control over parliamentary nomination. He bought and sold seats in the British parliament. The parliamentary members also received bribes for their votes. The legislative branch of the British government became a commodity that was sold and bought. Does it sound familiar?

So what happened to the pervasive corruption in the British Empire? The government implemented several reforms to eradicate the corruption. Intellectual elite actually pressured the government to change the situation. The main advocate for the change was Adam Smith, Scottish political economist. Yes, the same Adam Smith who wrote the Wealth of Nations (1786). Actually, his seminal work was the foundation for critical review of the British government policy.

The British government had economic advisers who represented the Mercantilist school of economics. The Mercantilist economists believed that international trade can reduce the government debt if the British Empire exports more than imports. The Mercantilists were fools who believed that free market is a zero-sum game because someone always gets hurt. The connection between the Mercantilism, socialism, communism, and interventionism is obvious, right? All these fools believe that free market is a bad institution. By the way, American electronic libraries are reporting a significant increase in online search requests for "the Mercantilist school" from China, Russia, and Argentina.  

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