Wednesday, May 6, 2015

"Good-will" and harsh lessons

-- economic allocation --

Rupert Read (Green Party Transport Spokesperson, and chair of the UK think tank "Green House") says that "we must let go of this 'trickle-down' nonsense once and for all" (Guardian Sustainable Business, 23 March 2014 He identifies fundamental failings in our economic and biological systems, but fails to deal with very harsh lessons that humanity has learned over centuries.

Namely how to adjust for human tendencies to sloth, selfishness and righteous indignation.

As we saw in Soviet countries, and as we see today in South Africa's state education, relying on good nature breaks down. Owing to small indignities and to free-riding by the selfish minority.

A strength of market economies is that they reward productivity and frugality. Today, however, these are perverted with incentives for waste, obesity and imaginary economic activity. In order, I suspect, to keep deficit financing viable (by the government, for those who cannot be productive).

A further problem with rewarding productivity is that, as virtually any economic modeller will tell you, all of the wealth and all of the resources usually end up in the hands of only one producer.

To get around that, biblical writers suggested Sabbath years (when all debts are forgiven and land is redistributed). But this does great harm by eating up incentives to save.

In Islam Zakaat is promoted - where everyone should give, to the poor, 3 percent of their wealth each year. Which leaves grinding poverty among the majority.

Hence it seems to me that the fundamental question should be "How can we redistribute (provide for those who cannot work) - while maintaining incentives for productivity and frugality - and keep families and financing of the state viable?"

All economists agree, I think, that growth (which is inevitably exponential) cannot continue indefinitely. Owing to physical limits on resources. Which we see today in the Guardian's recognition of deadly climate change.

The Green Party, and many economist-philosophers like Rupert Read, do not address the question of incentives. And hold up, the old mirage, of enduring good-will.

Perhaps the Templeton Foundation, the NEF or the Aldersgate Group, will do helpful research on the topic.

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