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Old 07-22-2012, 04:34 PM   #21
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Anytime there is a social program, there will be people who benefit and people who feel they carry more of the burden.
You are of course right. Maybe my argument came out wrong.
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Old 07-22-2012, 06:26 PM   #22
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Maybe my argument came out wrong.
Not necessarily.

Although I value individualism, I also believe in "enlightened self-interest", and that what one contributes to society will come back to benefit the individual. Even the earlier settlers in the Wild Wild West could not exist alone and had to rely on others for trade. We do not exist in a vacuum, or on an isolated island.

But even if a social program has a good intention (don't they all?), and seems to achieve its objective, one should always ask if there is not a better way to obtain the same results. I get suspicious of people who always suggest throwing money at a problem, as if that would bring about a solution. As an engineer, I have seen plenty of money being wasted on ill-defined projects, and suspect that the same would happen on social programs everywhere.

Thus, efficiency of various social policies as implemented in different countries should be compared. Hence, it is intriguing to compare tax rates of different developed countries and to see how their respective citizenry fares.
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Old 07-23-2012, 02:57 AM   #23
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Thanks for the link, I hadn't heard the term "enlightened self-interest" before. It's basically the opposite of what Adam Smith meant when he said "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest", right?
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Thus, efficiency of various social policies as implemented in different countries should be compared.
I'm most worried about the incentives they provide. E.g., I'm 100% sure that too generous unemployment benefits will result in more unemployment. Here's an example: A family of four on welfare gets about 1.864 per month (this includes direct payments as well as their rent being paid by the state). Combine that with some other benefits like discounts on public transport or cultural events, and you have a level of income that can hardly be achieved by working most low-paying jobs. In other words, a warehouse man or hairdresser will think twice whether they want to work hard if they can achieve a similar lifestyle by NOT working. Even if they could make, say, 2.000 , does it make sense for them to work full-time for an additional 136 bucks?
Now, I'm not saying 1.864 for a family with two children is much or too much, but I think there must be a significant "lifestyle gap" between those working and those on the dole.

Our system provides strong incentives NOT to give on's best effort. I'm making good money, so I'm in a high tax bracket. The marginal rate is 42%, so for every additional $ I earn, 42ct go directly to the tax man. Now, will I really put in the 60-hour work weeks necessary to get that Director's position? Maybe I'm doing just fine with my current salary, and the stress level is lower...
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Old 07-23-2012, 09:21 AM   #24
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No, the enlightened self-interest philosophy does not at all contradict what Adam Smith preached.

What Adam Smith said was that we should not expect and could not demand the baker to give out free bread. But a baker, out of enlightened self-interest, would extend credit to a regular customer of his who was short one week, knowing that this customer would most likely pay him back at the next paycheck. We cannot force the baker to do this, but it would be beneficial to him to keep good regular customers this way.

In the example you gave, if the chronically unemployed can get nearly as much as a low-wage worker, then it is not at all an enlightened social policy. We do not want people dying in the streets or Dickensian misery, but the former should be somewhat "hungry" to give him an incentive to work. Finding the right level of hunger so that he wants to work to get more, yet not let him starve to the point of incapacity, now that's enlightenment. Of course, another problem is to make sure there are jobs out there for him.

As I said, when I was down in NZ for a vacation more than 10 years ago, I thought it was a nice place, with no dead bodies on the streets, no squalor that I could see (well, I did not spend that much time to really know), and I do not recall seeing any beggar either. Just now learned from you that they have low tax rates. How do they do that?

I just now checked and found that the latest NZ unemployment rate was 6.7%, not too bad given the current world-wide economic condition. Could it be that this is a more enlightened nation? Makes me want to spend more time down there for my own personal study into sociopolitical issues. It could be a lot more interesting than watching TV.
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Old 07-23-2012, 03:34 PM   #25
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I didn't mean that this concept contradicts Smith. As I understand his concept of the "invisible hand", he believes that if everbody acts selfishly in their own best interest, this will result in greater prosperity for all of society.

Again, as I understand it, enlightened self-interest claims that if one furthers the interests of others, they will ultimately serve their own self interest.

Kind of the opposite, isn't it?
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Old 07-23-2012, 03:47 PM   #26
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...if one furthers the interests of others...
I guess they mean "selectively", and not blindly or unconditionally. I believe the latter would be very unenlightened generosity.
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