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[Topics under debate]: GOOD GOVERNANCE
___Help make this manifesto better, or accept it, and propagate it!___
these are extracts from: Economics by Design: Principles and Issues, by
Robert A. Collinge and Ronald M. Ayres.


Egalitarianism: A Dangerous Concept

The problem with using egalitarianism as the rule to allocate a
country's output is that egalitarianism provides no incentive for people
to be productive. If a country distributes the same amounts to all, its
people are not motivated to do their best. Since the Communist credo
requires that each person produce according to that person's abilities,
the lack of incentives to do so became a serious problem.

In a communist economy, smart people act stupid. The reason is simple.
The smarter you act, the more will be expected of you. To live well, you
advised to keep your head down and act as if you're no better than
anyone else It used to be said in the former Soviet Union that those
whose heads stuck above the crowd got them chopped off! 


Essential features of a free market

The free market does not work through altruism. Rather, as Adam Smith
put it, it is as though producers are guided by an invisible hand. The
invisible hand of the marketplace means that people acting in their own
self-interests will more effectively serve the public interest than
could even the most well-meaning of governments or altruistic of
philanthropists. In the marketplace, the myriad of decisions by
individual customers determines what is ahd is not valuable enough to
produce. The marketplace rewards those best able to offer goods and
services of value to others. The better a person is at providing value
to others, the more will be that person's income. In this way, each
person has an incentive to develop his or her productive potential.


Private schools: A Superior Good

For most goods and services, consumers know what they buy. With
education, in contrast, the idea is to learn. Consumers cannot know
exactly what that learning will be. If they did, they would not need to
learn it.

To the extent possible, consumers do pick and choose when it comes to
education. While most apparent at the college level, consumers also try
to be selective at the elementary and high school levels. For example,
consumers seek to live in public school districts with the best
reputations, which drives up property values in those districts. Public
schools also face competition from private schools. Private schools are
frequently perceived as a superior good. Superior goods are normal goods
that people buy more than in proportion to increases in their incomes.
This explains why private schools are able charge high tuitions and
still attract students from the free public schools. 

(Added) In India it is a truism to state that IAS officers and
professional political leaders - who run India's government schools -
invariably prefer to school their own children in private schools
(preferably the prestigious boarding schools) and very often send their
children to USA for higher studies. By doing so they signal the inferior
quality of government schools which they 'run' since they are the best
judge of their own schools. (end of added words)

Efficiency in the marketplace comes about through competition.
Competition would be more intense if private and public schools each had
equal access to tax rupees. Should public policy promote competition in
this way and let parents and students pick the winners?


Rent Controls Create Housing Shortages

What happens if rent controls are in place? There is no influx of
builders, because there is no surge in prices and thus no extra profit
to attract them. The burned-out/ risky housing is not replaced. If you
do not agree, consider the experience of Washington, DC, a city with
rent controls firmly entrenched.

Washington suffered through violent disturbances in the 1960s in
response to the assassination of Martin Luther King. Whole city blocks
were pockmarked with burned-out homes and businesses. Yet times have
changed. The population of the Washington metropolitan areas has more
than quadrupled since the 1960s, and land in the downtown business
district commands enormous prices. Even so, just on the edge of the
business district lies an area known as the frontier zone. Here can
still be found burned-out hulks of buildings from over three decades
ago. Why haven't these buildings been cleared to make way for new,
close-in housing for Washington's many commuters? The answer can be
found in rent controls.

Under rent controls, it is not possible to evict tenants in order to
renovate and upgrade properties. There would be no point in undertaking
the renovations and upgrades if rents cannot rise. Because there are
many rent-controlled properties throughout the frontier zone and the
rest of the city, developers know that they cannot turn these city
blocks into high-quality living environments. After all, living among
the often low-income tenants in the hodgepodge of rent-controlled
apartments is unlikely to appeal to the higher income tenants developers
want. In the Northeast and Southeast quadrants of Washington, the result
has been little development and a wide array of crumbling
rent-controlled housing. 

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