Two sides of the same coin

The progress of a country, understood as a sustained increase in the level of well-being of the general population in its different components that include, among others, the level of income and access to high-quality public services, is based on the existence of an institutional arrangement that rewards, above all, individual freedom to choose. This requires, as a sine qua non condition, an environment in which equal opportunities exist and property rights are efficiently defined in the legal framework and the government, in its task of procuring and administering justice, efficiently and effectively fulfills its raison d’être, which is to protect and guarantee these rights against acts of third parties that violate them, including, obviously, acts of the government itself.

An essential element in the institutional arrangement that allows individuals to effectively exercise their freedom of choice is that the markets in which they participate develop in a competitive environment and this applies to both the markets for goods, services and factors of production. as in the political market.

In its economic aspect, individuals aim to try to maximize the level of well-being of their family unit. Given that they are faced with scarce resources, both the income (labor, capital and financial) that the family members generated and the time (there are only 86,400 seconds in the day) is that they have to choose how to allocate them among the family members. different goods and services they consume.

Naturally, the greater the number of options among which individuals can choose from whom to purchase the goods and services they consume, taking into account the three main elements that are price, quality and accessibility, the greater, consequently, will be their freedom of choice. and, given the incomplete information they have, it will allow them to try to maximize their level of well-being. Also, the greater the options from which to choose to whom to offer the goods and services of their property (the savings that they channel to the financial system and the labor services that they offer to the companies that demand them), the greater their level of interest will tend to be. wellness.

In this way, family welfare will tend to be greater when the decisions made by individuals exercising their freedom to choose are made under an institutional arrangement of markets in which competition prevails, one in which they do not face monopolistic practices in the goods and services they demand or monopsonistic practices in the markets in which they offer their goods and services.

Put another way, family welfare will tend to be maximized in an environment in which economic democracy prevails and this is what tends, simultaneously, to maximize the welfare of society as a whole. The international evidence supports it: the greater the economic democracy, the greater the level of progress and economic well-being.

Similarly, the well-being of individuals and society will be greater when the political arrangement is one in which democracy prevails and there are, therefore, different offers and proposals. Politicians and the parties that bring them together demand the vote of the citizens and in return they make an offer of public policy proposals (economic, social, public services, environmental, etc.). Citizens, for their part, in principle would analyze the proposals of each one of the politicians and parties and would be willing to give their vote to the one that satisfies them the most, having evaluated not only the quality and consistency of what was offered, but also the chances of fulfilling them. If, having given them the vote that led them to be elected, they do not comply with what was promised, in the next election they will probably lose, just like companies that lose favor with consumers when they do not comply with what is offered and in the next purchase they opt for a competitor.

And just as there is solid evidence that those countries where economic democracy prevails are simultaneously the most developed, there is also the same evidence for political democracy. Greater economic and political democracy translate into greater economic progress because both types of democracy are the two sides of the same coin, the coin of freedom and the rule of law. It is in our hands to consolidate them and not allow them to be taken away from us.

Twitter: @econoclasta