‘Zbruch’ online media outlet talked with CASE Ukraine`s Senior Economist Volodymyr Dubrovsky about market, salaries and economic growth. Consistent liberals who believe that all people should be free (and responsible, of course), regardless of whether they want it or not, – deny any social benefits coming from the state. And such thinking logically leads to the conclusion that the state, if it has a right to exist, exists to defend and provide with law enforcement. This is logical in terms of the economic mainstream, but poorly consistent with human nature itself and ignores several purely economic aspects.
First, of course, not all people are seeking freedom and responsibility, which is closely following it. We live in a society, where the majority (even in the US!) consists of paternalists. They are just going into someone`s slavery. Or to exchange their freedom for security guarantees anda minimum of prosperity. More remarkable, Oleksiy Panych invented a term ‘nachalstvozalezhni’ (‘those, who entirely depend on bosses’). He applies it to the people who cannot live without authorities, because it is easier for them to put the decision-making process on the other`s shoulders. We all know a lot of such men and women, who do not fit to the concept of classical liberalism. But one has to do with them something, right?
Secondly, like every free and more or less well-to-do person, I am selfishly interested my less fortunate fellow-countrymen not to be hungry and sick. They should be educated, because I live next to them. Hunger drives people to crime – even those, who are not inclined to commit crimes otherwise. So if there are around hungry people, the middle class has to either live in houses, castles or build special protected, as it is in many countries in Africa and Asia. I still desire to move freely around a city and not to be afraid for my family. So, I have to ‘share’ resources to provide guarantees against hunger. If people around suffer en masse, especially from infectious diseases, is a great chance of getting infected from them – no matter how rich you are. So, again, it is worth to pay for their treatment. Finally, if these people vote, I suffer from the consequences of their vote: education makes them at least a little more conscious voters. And besides, it reduces risks of involvement into crimes.
Third, the market economy is a ‘positive-sum game’. Being a player, I am interested in people around me to live richer, because later they can pay my services. But, of course, not on my own cost (here I think about our sorry excuse of ‘economists’, who manage to write that, allegedly, if the government spends more, all the people get richer!), but by implementing their own abilities. That is, we talk here about increasing opportunities to be realized for the greatest possible number of people without distorting their incentives to work.A ‘poverty trap’ is an obstacle to that. It may have many forms, such as ‘poor – sick – unable to work – poor’; or ‘poor – uneducated – poorly paid – poor’; or ‘poor – badly fed – unable to fully work – poor’ and so on. Even worse, that the same traps are hereditary. As children from poor families tend to have more health defects, it is harder for them to get a high-quality education (although we have a reverse example: while the poor have to learn, rich people give bribes). I have seen many examples when completely capable person falls into this trap simply as a result of temporary difficulties. Many years later, this person could not get out of it. Thus, his/her potential is wasted. The society loses.
Read the full interview [in ukrainian].