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Economics Posts [1] - What Kind of Society Would I Want to Live In?

Adapted and excerpted from Ryan Foo - special thanks to Ryan for his article

What kind of society would I want to live in?

I was thinking about what I would do if I was given free reign over an economy or country. How would I run the country, what kind of tenets would I want to govern it by? What kind of questions would I have to ask, and what decisions would I have to make?

And here are some of the thoughts I fervently scribbled down while thinking about this issue. Now I'm assuming I somehow inherited the country - I don't have to fight a democratic battle or justify my decisions yet. Maybe I will in future, but right now I'm just a young dreamer, am I not?

What kind of society do I want?

Freedom, free market capitalism.

Equality of opportunity, not outcome.

People will vote with their dollars, leading to efficient outcomes. The right goods will be produced for the right people, in the right amounts, due to the invisible hand. Good, efficient companies that will be aligned with the social good.

Taxation would serve a Pigovian purpose rather than a redistributive purpose. I want to have my society be run by one of the central tenets of "equality of opportunity, not outcome". Sounds very similar to Singapore so far. However, I'll implement a high estate tax because I would want to level the playing field for the younger generation thus far. I believe this is one of the central problems of unfettered capitalism - that wealth begins to pool in the hands of the elite few. This is what I wouldn't want to happen within my society - wealth and happiness should be a reward for the individual largely on his own level and not meant as a way to gain power over others in a dynastic manner. I'd be pretty uncompromising on this.

Small government. The government's role would be to provide essential services such as the police force, the military, and emergency services. It would also be to regulate key industries such as the healthcare industry, education, and nudge the polity in the direction of what is good for them. I would also tax traditionally sinful products such as gambling, cigarettes, alcohol and drugs - the harmful kind. Careful regulation of the drugs and narcotics industry would lead to higher quality, safer consumption, Of course, we will want to nudge our citizens away from these no matter what. 

Only those who work hard should be able to afford such 'luxuries', shouldn't they? Just as those who work hard should be the only ones who are able to afford expensive cars. This view might be flawed and require more polishing.

This brings me to the question: does my ideal society value freedom of the individual more or do I really just want to mould my people into ideal citizens? Am I taking a more utilitarian or paternalistic approach then? We're still desperately trying to find a way to make citizens align with helping the social good without taking away their liberty. As such, fiscal policy would be centered around pushing the social good.

This is because I believe that dollar votes will eventually lead to efficient outcomes for the individual and will maximise utility for all parties involved - it incentivises you to work for your fellow man, to provide a service that others seek, and get rewarded in due kind for it. If you can contribute more, and people value your contributions, they will reward you with their dollar votes. This might sound barbaric to some. I think it's beautiful.

For example, if enough people value the social good - to combat global warming for example - they will reward those who are willing to do work towards combating global warming. In reality, we are not all self-serving, rent-seeking individuals, so why argue like we are such people? 

However, I do not dispute the point that perhaps we are not serving the social good enough, if the vast majority of us remain apolitical and even ignorant, which is why I believe that education can be our great social leveller.

In this society, how would I encourage research and development and discourage rent seeking (for example, of pharmaceuticals)? That's another important question to answer.

Source: http://ryanicale.blogspot.sg/

JC Economics Essays - Special thanks to Ryan Foo for his excellent sharing (originally posted on his blog) on society. Thank you. 

This is an interesting and thought-provoking question. What would you do one day if you were to be given free reign over an economy or country? How would you run a country, what kind of philosophical basis or tenets would you want to build and grow it by? What kind of hard questions would you need to ask, and what kind of decisions would you have to make? What kind of assumptions would we need to make to make such decisions for a country?

Ryan discusses wealth accumulation and estate taxes: A question arises: would unfettered capitalism really lead to wealth accumulation and income inequality, or is this purely an assumption that we are making? Could it be market failure (or many failures for that matter) or government failure that really leads to income inequality and huge wealth? What other economies or societies could you conceive of, and would they be better or worse structured and organised - and in which particular aspects, or all of them? There are many interesting questions from this reflection. 

Thank you for reading, and cheers. 

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