Designing an ideal economy balancing capitalism and social welfare

¶ … Economy

Design Features of My Ideal Economy

Capitalistic

Social welfare -- nationalized health care, subsidized state education on all levels

Progressive income tax

Free trade

Laws protecting consumers -- Anti-trust laws, legal prohibitions against selling unsafe products to consumers and using labor practices

Minimal government intervention in the economy, except during times of crisis

Individual liberty is stressed, but the state accepts some responsibility to ensure liberties are protected

Social arrangements

Engineering society to the degree specified in Plato's Republic, where the state takes away children from their parents to ensure the children will be inculcated in the correct values would be unacceptable to individuals in contemporary society, where nurturing and choosing how to educate one's offspring is a treasured right. But the government has some responsibility to engage in social engineering. For example, a nationally funded system of public education would eliminate some of the inconsistencies of quality between different states. Also, greater subsidization of student's university education would ensure the citizenry was better prepared to cope with the challenges of a more technological future. If young people graduated with less student loan debt, more students would be able to spend their money to buy goods and services. They would also not have to make decisions about where to go to school based solely on finances and this would make the state more meritocratic.

Regulating international trade

Protectionism is invariably a dismal failure, resulting in trade wars and less choice for the consumer, as well as more costly goods, often, inferior quality.

Promoting free trade

One of the concerns of free trade is that international companies may exploit workers in the developing world to keep input costs low, or that countries such as China possess low safety requirements for products made in their factories, which ultimately harms U.S. consumers. Although the government should not support protectionism and protect inefficient American industries simply because they are American, it should require that companies selling products in the U.S. Or even partially based in the U.S. meet certain basic human rights standards (no slave labor, for example) and safety standards. This is necessary to protect U.S. consumers and also to ensure that America's reputation for freedom as well as economic growth is sustained.

Redistributing income

Some unintentionally redistributive effects, such retaining a progressive income tax system to help poorer families survive while still remaining part of the workforce seem to be beneficial and necessary. Making charitable contributions tax-deductible is also an excellent idea to encourage redistributive effects, but no government can or should engineer a system where everyone is the same economically, without taking away the incentive to work.

Individualistic minimum

However, government production would be acceptable when private marginal benefits are less than private marginal costs, but social benefits are greater than social costs. This was the case with the public works projects instated during the Great Depression by the Roosevelt administration, which were necessary to break the cycle of consistently plummeting production and the need for more and more layoffs.

Industrial organization

Because of high barriers to entry, some industries tend to gravitate towards creating monopolies, thus to protect consumers against price-gouging and unsafe products, laws to prohibit monopolies in most industries, or to regulate monopolies in economic spheres such as utilities (which make use of finite natural resources and thus the industries cannot always support competitive markets) would be necessary to protect the citizens in the ideal economy. But a state entirely dominated by nationalized monopolies, as recommended by Marx, would take away the incentive for companies to innovate, change, and produce better products for most companies.

Employment

Full employment is not always possible or desirable -- sometimes it may be better to allow people on assistance to improve their job skills rather than to simply work at a minimum wage job to survive, and trying to overheat the economy to maintain full employment can result in high inflation.

Adam Smith

Ultimately, although the government may play a role in the economy, its aim should be to facilitate opportunity and liberty, not to constrain liberty.

Human capital

The state must accept some responsibility for protecting the citizens against physical harm by creating a defense system as well as subsidized health care. Along with the family, the state must strive to prepare individuals for the future, to become educated citizens, and citizens who are capable of making good personal, political, and economic choices.