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OPINION: The Secret to a Better Economy Lies in the Principles of Democracy

by Stephen Yearwood, published

Things are not going well for our ‘Western’ (or ‘Modern’) way of life. To save it, we must make fundamental changes. The most important thing is to reduce arbitrariness.

“Reduce arbitrariness” might not be what the reader expected there, but as John Locke said, arbitrariness in human relations is injustice. As a concept, “arbitrariness” is less abstract than “injustice” is (if not by much). As a practical matter, less arbitrariness in human relations means more liberty.

We cannot hope to eradicate arbitrariness in human relations, but we must seek to minimize it. Here I will focus on how political democracy already minimizes arbitrariness and how we can reduce arbitrariness in the economy.

By itself, majority rule reduces arbitrariness. It is true that ‘the people’ must abide by whatever decisions are made in any political process (or bear the consequences). In a democracy, however, people are always free to participate in the political process to have a different decision be effected.

There are rules governing participation in the political process of every nation. Those rules place restrictions on participation in it. The less arbitrary those restrictions are, the more just the political process is.

In a democracy, everyone is allowed to participate in the political process through freedom of speech. That means it is completely devoid of arbitrariness in that respect.

A democratic distribution of political rights minimizes arbitrariness in restrictions on further participation in the political process. A “democratic distribution” of political rights means that any restriction on those rights is universally applicable and universally applied.

For instance, in all democratic nations, age is used to determine whether a citizen may vote and what elective offices a citizen may seek. Age is a proxy for maturity. While choosing specific ages is ultimately, if unavoidably, arbitrary, age itself is universal; it does apply to every human being. Gender, race, color, and creed are not valid restrictions on political rights because they are not universal, and are therefore patently arbitrary. (Of course, the prerequisites of citizenship must also be free of all avoidable arbitrariness.)

It did surprise this author to realize that although we must make fundamental changes, we must retain the market-based economy. There is plenty of randomness in it, such as the circumstances of one’s birth and blind luck, but being market-based does reduce arbitrariness in the allocation of resources in the economy (much as ‘majority rule’ reduces arbitrariness in political democracy).

There is one area, however, in which there is too much arbitrariness in the market-based economy: incomes. How could we reduce arbitrariness in incomes? We can look to political democracy for the answer.

Think of it this way: money is to the economy as political rights are to the political process. Just as rights are necessary to participate fully in the political process, money is necessary to participate meaningfully in the economy. Just as a democratic distribution of political rights reduces arbitrariness in the political process, a democratically-distributed income would reduce arbitrariness in the economy.

Rights are abstract, however, whereas money is material. It is therefore easy to see how any number of people can share a right, but difficult to see how any number of people could share an income.

I’ve figured out how that can be done. It is not a scheme for taxing the rich (or otherwise taking from them) to give to others. In fact, taxes (with their inevitable arbitrariness) would be eliminated.

Having a democratically-distributed income does not mean that everyone would have to be paid the same amount. There would still be no limit on how much money a person could make (or how much property a person could own).

For that matter, in my proposal for reducing arbitrariness in incomes, everyone being paid an amount equal to the current median income or more would continue to be paid the same amount of money by their employers. Future changes in those incomes are not pre-determined in this proposal.

So, there would still be rich people. Indeed, eliminating taxes would make those who are already rich instantly richer. Poverty, however, would be eliminated as positively as taxes would.

The specific proposal for creating a democratically-distributed income is deceptively simple. For more details, go to “A New and Different Monetary System for a Better Economy” on IVN or or the first chapter of my book, A Just Solution. Is it any surprise to anyone that the key to a materially better life for more people is less injustice?

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