Efficiency, Fairness, and Public Policy (Expanded Public Expenditure is Imperative)

Author: Huang Youguang
Publisher:
Publish Date: 2003-06-01
Features: This book explores some very important and fundamental issues in the field of public policy, leading to several surprising and controversial conclusions. For example, the book argues that efficiency should be the sole criterion for decision-making on all specific policy issues (the principle of "one thing at a time"), while leaving the goal of equality to be achieved through a general income tax/transfer payment system. Although redistribution through the income tax/transfer payment system may create considerable disincentive effects, achieving the same redistribution goal through specific policies—such as taxing/subsidizing goods consumed disproportionately by the rich/poor—would also result in similar disincentive effects. Moreover, the latter measure has additional distortionary effects, making it inferior to the former. It is worth noting that the aforementioned "one thing at a time" principle is exactly the opposite of the conclusion I originally intended to prove when I began researching this issue. In this book, I also provide strong arguments for expanding public spending, particularly increasing public spending on research and environmental protection. I believe that despite some inefficiencies in public spending, its contribution to social well-being is likely greater than that of private spending. For countries that have alreadyed poverty, further increases in private consumption cannot enhance people's happiness because the consumption effect in wealthy countries is relatively small and is outweighed by negative environmental degradation effects. The reason people are still struggling to earn money is mainly due to competition and the related relative income effects. In fact, whether it is subjective well-being indices or objective quality-of-life indicators, they depend more on global knowledge progress than on per capita income levels. Partly because of the long-term and global nature of research and environmental protection efforts, it is reasonable to assume that governments around the world are spending far below the optimal level (Chapter provides a more detailed introduction to the content of the entire book).
Author Bio: Huang Youguang is a Professor and Distinguished Professor at Monash University in Australia. He was elected as a Fellow of the Australian Academy of Social Sciences in 1980 and was one of the ten Australian and globally renowned Chinese scholars selected for Who's Who in Economics: A Biographical Dictionary of Major Economists 1700-1986. He has published nearly 200 peer-reviewed papers in academic journals across economics, philosophy, biology, psychology, and mathematics. His interests and contributions include: Chinese economic issues, welfare economics and public policy, the creation of a comprehensive micro-macro and general equilibrium analysis, and the co-development of the emerging classical economics with Yang Xiaokai, which applies modern mathematical methods to analyze classical public works, specialization, and economic organization. He has published works such as Welfare Economics, Panoptics Economics, Specialization and Economic Organization, Efficiency, Equality, and Economic Policy, Economics and Reform, Economics and Happiness, Can Money Buy Happiness?, Economics and Society, and the literary work A Love Beyond Time.