Lab c1: Economic Justice and Welfare

Economic justice and welfare

Marco, as we know by now, is an experienced Oboxplanet-Explorer from Earth. Jan is a 35-year old inhabitant of the OboxPlanet.

Marco: Thank you, Jan, for allowing me to record the interview and publish it on Earth.

Jan: You’re welcome.

Marco: On Earth, we have an organization called the State, which looks after the poor, the socially disadvantaged, all people who have not been spoiled by fate. What does that look like here, who takes care of these people?

Jan: Which people do you mean exactly?

Marco: The poor, for example.

Jan: Sorry, but which poor people? Family members or strangers?

Marco: All poor people, including people in distant places who don’t yet have the same level of prosperity.

Jan: I’ve never asked myself that in such general terms. I can only think of specific people. Firstly, there is the family, and in most cases, that’s enough. But even before the family comes personal responsibility. We learned that as small children.

Marco: What did that look like exactly?

Jan: Children and young people like to play at being adults and they like to do little jobs. First in the household, then outside. My parents insisted that I save at least 20% of what I earned. As my salary increased, I increased this to 40% and was therefore able to buy a house when I was 25. I am 35 now and my house is debt-free this year. Now, with my family, I’m saving 10% for additional reserves and for my retirement. I think my savings behavior is typical for this area and that gives me enough in reserve if I ever have no income or fall ill for a long time.

Marco: But what about those who are unable to work?

Jan: Unable or unwilling? Who would be incapable?

Marco: The disabled, or those with mental health problems.

Jan: Physical disabilities are either by birth or by accidents, and there is insurance for that. These premiums have become very cheap simply because there are fewer and fewer physical disabilities. For example, we have better and better artificial limbs and even artificial sight and hearing. It’s practically unheard of for someone to become completely incapacitated.

Marco: And what about mental health problems?

Jan: That’s a different issue. Mental health problems are difficult to insure because many personal factors play a role. They are usually solved within the family or with friends.

Marco: But there are difficult situations that can overwhelm people.

Jan: What are you thinking of?

Marco: Crime, rape…

Jan: In the event of a crime, the perpetrator is held responsible and must pay all costs. More precisely, the victim immediately receives help from the insurance company, which then searches for the perpetrator.

Marco: Or let’s take personal strokes of fate, relationships, illnesses, sometimes it’s not the victim’s fault.

Jan: Agreed. But that doesn’t give you any right to help, because it’s not the others’ fault either.

Marco: No, but who takes care of such cases?

Jan: Again, it’s primarily family and friends, and if that’s not enough, there are charities and self-help organizations. I know this from personal experience. My friend Tom had serious problems—relationships, drugs—he ended up at the bottom. I finally took him in and at the same time set clear and tough conditions. Decent behavior, helping around the house, looking for work. That was almost more difficult for me than for him, but he needed that, he needed rules and a regular way of life. He then recovered and now works in a charitable organization that helps people in difficulties like he had.

Marco: And what about people in faraway places who have less than you?

Jan: Of course, there are differences in wealth, there is no other way. If someone becomes rich through a new idea, a new product, or a new service, the difference to the others becomes greater, but all his customers also benefit, otherwise he wouldn’t be successful. I don’t see the problem.

Marco: Yes, but if people go hungry…

Jan: They haven’t done that on our planet for a long time, except people on diets. Or after a natural disaster. Then there are aid campaigns, neighborly help. That goes without saying.

Exploration room: more details of the planet

On the OboxPlanet, there are no states and no income distribution programs. The income of the rich tends to grow faster than that of the poor, but all groups of people are significantly wealthier than on Earth, and there is considerable mobility among income categories.

The rich on the OboxPlanet invest heavily in philanthropic, charitable, and prestigious projects on a scale unimaginable on Earth. The reason is straightforward. While wealthier individuals on Earth may consume a substantial portion of their income, the rich on the OboxPlanet can only consume a small fraction of theirs. Additionally, everyone enjoys much higher disposable income because there are no taxes—no levies on income, wealth, capital gains, or anything else.

Is there greater inequality of income and wealth on OboxPlanet? Perhaps yes, perhaps no. Most wealth inequality on Earth today stems from asset price appreciation, driven by easy monetary policies and fractional lending—factors absent on the OboxPlanet.

Regardless, wealth and income inequality are of much less significance for several reasons.

The overriding principle is that “a rising tide lifts all the boats”. As we will see under “wealth creation”, wealth on the OboxPlanet far exceeds the Earth’s wealth and without borders, it is world-encompassing.

Secondly, there is remarkable social flexibility. Even on Earth, today’s wealthiest individuals are often newcomers, and statistically, few remain at the bottom of the ladder for life. Without the constraints on the poor and the privileges for the rich on Earth, OboxPlanet exhibits even greater social flexibility.

One important aspect is, paradoxically, the greater downward mobility (they are actually the same, just from a different angle). Several mechanisms on Earth impair downward mobility (for example, government guarantees for industries, too-big-to fail banks), and these artificial structural support programs hinder healthy, new companies to expand and and thus impair upward mobility.

Thirdly, there are more opportunities for youngsters and the disadvantaged to get a foot into the labor market. There are no minimum wages, no maximum hours, no paperwork for hiring and firing, no license requirements and no and legal traps like equity criteria or quotas. Newcomers with little qualification can be hired and trained for food and lodging and handshake is as good as an elaborate working contract on earth. This flexibility helped the spread of skills with the corresponding productivity increases in labor markets all across OboxPlanet.

Lastly, people do not care about the income differences with the hope of levelling them by taxes and income distribution because there is no use in doing so. There simply exists no state which could take from some and give to others. And since “opportunity makes the thief”, where there is no opportunity, there are no thieves. And less envy.

What about the question of equal opportunity? Once again, there is no state which could enforce any rule that supposedly equals opportunities for some. There are charitable organizations and employers who support unfortunate fellow humans but all in all, equal opportunity is considered an absurd idea. How do you equal the basketball-opportunities of a short person or the programming abilities of somebody completely disinterested?

Summary: 1. Welfare and poverty, a non-issue

Above, we highlighted why people on the OboxPlanet are significantly wealthier than on Earth, with abject poverty being a non-issue and robust private welfare available for those few who may be unable to work or temporarily face dire circumstances through no fault of their own.

2. Economic justice and envy – a non-issue as well, almost…

The question of economic justice often arises on Earth, with concerns about individuals having varying levels of talent and consequently amassing different levels of wealth. The idea of wealth redistribution is sometimes considered to address feelings of injustice.

On the OboxPlanet, the question of economic justice in the sense of equal wealth and incomes has a completely different quality. It is not a political issue, because politics doesn’t exist. It is like debating about other things in life like the height of people. It’s as futile as being upset about someone’s sex, skin color, or eye color.

Human differences, be it in height, health, character, intelligence, discipline, or attractiveness, exist and can vary. Some of these traits can be changed, to a certain extent, while others cannot be altered at all. Is this fair?

On Earth, people generally accept such differences, realizing that having certain traits doesn’t guarantee a good life. Some tall people benefit from it, others suffer from the same fact, super-intelligent geniuses often end up in the loony bin.

Similarly, on the OboxPlanet, people acknowledge these natural variations. However, unlike on Earth, there is no contemplation or upset about wealth differences. The idea of someone having 100 times more wealth than another could be a reason to question the universe’s justice doesn’t even cross people’s minds. It’s as pointless as being upset about the height of other people because there’s simply nothing anyone can do about it. There’s no state to tax and redistribute wealth. The notion of getting upset about wealth differences is perceived as simple stupidity.

To sum it up: Income and wealth differences have the same envy-potential as other facts of life. Some envy others for their beauty or whatever, and they might envy you for your wealth. But it has a different quality than on Earth because on the OboxPlanet, there is no state that could do something about it.

Retrieve area: experiences on Earth

What experiences on Earth, past and present, help us understand life on the OboxPlanet?

1. Freedom produces wealth. More freedom produces more wealth. See graph 1 and chapter D “Wealth Creation”

2. More wealth trickles down to the poorest parts of the population. The poorest 10% of people in the freer countries earn the same or more than the average of the bottom half of the world’s population, see graph 2

3. In the last about 40 years, the World has experienced an unprecedented increase in average incomes, mainly in the most populous countries like China, India and Indonesia. And there is no doubt whatsoever to it’s cause: economic liberalization, a move toward capitalism, see graph 3.

All graphs see the Economic Freedom of the World: 2022 Report, World Bank.

In summary: Freedom produces wealth, and this has one logical consequence:

For those readers who do care about human welfare, the example of the OboxPlanet should be a guiding star, a standard of measure for politics on Earth.

For those readers for whom human welfare is not important, life on the OboxPlanet, with no state and maximum freedom, has nothing to inspire or to teach.