Efficiency, Equality and Public Policy: With a Case for Higher Public Spending

Efficiency, Equality and Public Policy: With a Case for Higher Public Spending

Efficiency, Equality and Public Policy: With a Case for Higher Public Spending

Efficiency, Equality and Public Policy: With a Case for Higher Public Spending

Synopsis

Yew-Kwang Ng provides compelling arguments for the exclusive concern with efficiency in all specific areas of public economic policy, leaving the objective of equality to be achieved through the general tax/transfer system.

Excerpt

This book addresses some important and fundamental problems of public policy, arriving at remarkable and controversial conclusions. For example, it is argued that pure efficiency (‘a dollar is a dollar') should rule in any specific issues, leaving the objective of equality to the general tax/transfer system. While redistribution through the tax/transfer system may generate substantial disincentive effects, doing so through specific measures like taxing/subsidising goods consumed disproportionately by the rich/poor also has the same degree of disincentive effects in accordance to its redistributive effects. in addition, the latter measure has additional distortive effects and hence is inferior. I arrived at this principle of ‘a dollar is a dollar' in my attempt to prove it wrong. a strong case for higher public spending, especially on research and environmental protection is also made. Despite some inefficiency in public spending, higher public spending is likely to be more welfare-improving than private spending. in countries that are no longer poor, further increases in private consumption fail to increase happiness. the small consumption effect may be more than offset by the negative environment disruption effect. People still engage in the rat race for making more money mainly due to competition and the related relative-income effects. Subjective well-being and objective quality-of-life indicators correlate more with the increase in knowledge at the global level than with income per capita. Public spending on research and environmental protection undertaken by national governments is much lower than optimal, partly because of the global and long-term nature of these items. (A more detailed introduction and summary is contained in Chapter 1.)

Elizabeth Kwok wordprocessed this book and purged the manuscript of many mistakes and inconsistencies. Her patience and efficiency are gratefully acknowledged. Tina Bell, Kate Orchard and other students in my Welfare Economics class made useful presentational suggestions.

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