Public economics aims to allocate resources to benefit all individuals in a market, with redistribution of wealth being a major tenet. A command economy or wealth redistribution are common methods used, but both have their challenges. Public choice is placed in the hands of individuals, but sustainability may be an issue.
The public economic theory – which takes the alternative name of welfare economics – has the idea that the allocation of resources should be made in order to serve all individuals in a market. In most cases, the economy should benefit as many people as possible at the same time through economic movements. One of the major tenets of public economics is the redistribution of income or wealth; that is, the money of the most successful goes to those individuals at the bottom of the economic ladder. Individuals are the most important decision makers in this economy, not large entities or corporations. It may be necessary, however, for a large government or central entity to also intervene in the market.
In a free market economic society, most – if not all – individuals generally act in ways that benefit their own interests. This allows each and every individual to thrive and achieve goals that benefit themselves and their families. The biggest problem, therefore, results in individuals not wanting to work or not having the ability to overcome their current situations. When this happens, public economic theory holds that redistribution of wealth is necessary to ensure that these individuals achieve some level of success. An important issue here, however, is that wealth redistribution is often seen as anti-capitalist in a free market society.
The two most common ways in which a nation engages in public economics or welfare economics are through the use of a command economy or redistribution of wealth. A command economy solves problems as this institution measures natural resources or other economic resources for end users. Rather than a few ambitious individuals getting most of the resources – which is possible in a free market – all individuals get a certain amount of natural or economic resources to use. The main objective here is to ensure that all individuals are equal in terms of economic wealth and livelihood. Unfortunately, this is not as easy as once thought by benevolent individuals in a command economy.
Wealth redistribution moves the allocation of natural and economic resources from a command economy to individuals. Of course, a government may need to ensure that redistribution takes place through taxation, fees or other methods. These processes collect income at one point and then redistribute it through tax credits, welfare payments, or other means to low-income individuals. The result is to place public choice – another tenet of public economics – in the hands of individuals rather than a government agency. However, this may not continue in perpetuity, as those generating higher income may not be able or willing to support these activities over the long term.
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