Wednesday, July 5, 2017

Democracy as Means for a Better Outcome

Democracy as means - even if not always understood on such terms - is the democracy which includes economic and social opportunity. Unfortunately, democracies are put in jeopardy, if basic means of production which include human capital, are too closely held. When this occurs, citizens can become locked in a struggle with one another, as they attempt to ration the increasingly judgmental outcomes of limited means.

Regular readers know that my earlier posts re direct democracy potential, include a broader management of means for human capital as resource capacity. Democracy is a more viable long run option, when production means for basic non tradable sector activity, and their related asset structure, are not limited at the outset. Nevertheless, democracies come under threat, once supply side production limits are so taken for granted as to not be part of active discussion, "hidden" as they are under extensive tax redistribution. And once political parties become reduced to "forcing" their preferred outcomes, any semblance of rational political discourse can be lost.

Even though some of our country's founders understood what could happen, should too much production become the purview of special interests, it took a long time for this supply side problem to reach proportions which now, finally, threaten further economic progress. Yet redistribution struggles are scarcely understood as a means problem. This is particularly important, since no democracy can last indefinitely on redistribution alone.

While some are beginning to insist that democracy can't last, many onlookers assume that struggles over outcome are inevitable, as if means need not be part of the public debate. Perhaps this helps to explain, why even the idea of economic opportunity, has diminished. When democracies are approached in terms of votes for the redistribution of outcome, the concept of democracy may not even appear as though particularly linked (or beneficial) to economic outcomes. For instance, in a recent discussion with Robin Hanson regarding democracy's shortcomings, Bryan Caplan adds:
I'll happily agree that democracy has little systemic effect on economic growth - and that economic growth is the closest thing humanity has to a panacea.
It would appear that growth can continue, in spite of a nation's political and social shortcomings. And growth is a panacea, to the degree it allows more participants - whether or not greater participation was the voter's direct intent. What is neglected in this assessment, however, is that further growth may not be possible, if neither citizens or leaders look beyond their immediate desires, to redistribute already existing outcome.

In particular, Republicans bear considerable responsibility for means of production - some of which limits aggregate outcome potential. Their reluctance to change this approach, is beginning to stand in the way of their rationale for holding power, as James Pethokoukis notes in "Are supply-siders losing their hold on the Trump GOP?" Indeed, the fact that Republicans may even consider raising taxes in the years ahead so as to make healthcare more accessible for working classes, indicates a long standing reluctance, to reform knowledge based production.

Should this be the case, we would be in the odd position of both Democrats and Republicans struggling over who has the most access to outcomes, instead of focusing on long term growth. If so, the difficult task of reforming means, could remain on the back burner. Is there a way to overcome this impasse? After all, so long as human capital remains excessively protected, populations are more likely to react in kind, as their leaders attempt to "protect" the wealth capacity of their tradable sectors.

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