What makes an economy objectively “good”? People seem to complain about the economy being “bad” all the time but who/what determines if it’s truly “good” or “bad”?
In: Economics
Almost every measure people are talking about are just means to an end.
An economy is “good” if:
* 99+% of your population can achieve material security, as in their have the means to reliably and confidently have housing and clothing and food and transportation and access to basic medical care.
* 80%+ of your population is able to achieve moderate material prosperity, as in they are able to have a nice house and nice clothes and a nice car and own some luxuries and take the occasional vacation.
* 20% or so of your population is able to achieve wealth, as in they can afford a higher end lifestyle, engage in greater amounts of conspicuous consumption, have enough wealth to themselves become investors or economic resources for others in their community.
* 5% or so of your population is able to become quite wealthy.
While not necessary, greater stability will be achieved if those last two tiers are not tied or titles or inherited positions, but rather are accessible, at least in theory, to anyone.
The reason I say all of this is because what makes an economy “good” is it’s institutional stability. If your economy goes gang busters and generates extreme wealth, but does so at the cost of extreme social inequity and domestic unrest leading to rebellion and collapse, then it wasn’t a “good” economy really, even if a snap shot of the performance just before that collapse makes it seem that way.
A “good” economy is one that provides the necessary wealth and prosperity to maintain domestic tranquility among the population, or at least have economic stratification and material anxiety not be the source of unrest if unrest is present. But of course nothing lasts forever, all empires eventually fall, so we can gauge a “good” economy as the one that does the best job at that goal for the longest period.
This is something a lot of people miss when we talk about wealth inequality. Yes there is a moral component, but there is also a practical component. Wealth inequity can only go so far, the bulk of the people can only endure so much material anxiety, before they storm the bastille and start beheading aristocrats. That’s just the natural course. It is in everyone’s best interest to allow for a healthy, broad, and secure middle class for the majority of the population, and at least a safety net of material security for the poor. It makes for a better society in every possible way.
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