This month's featured article
Japan's Fiscal Problem Calls for a New Political Philosophy
KOBAYASHI KeiichiroFaculty Fellow, RIETI
The government is set to present a fiscal reform plan at the end of June 2015. In order to organize thoughts before evaluating the specifics of the fiscal reform plan, I would like to consider the significance of fiscal problems in terms of political thinking.
Problems that must be addressed by politics and those that are dealt with by economics are often different in nature. The conflicts of interest that have to be resolved by politics are typically those that can be defined as a lifeboat dilemma, which refers to the following situation.
A group of people float adrift on a sinking lifeboat. If one person leaves the lifeboat (i.e., sacrifices his/her life), the lifeboat would stop sinking and all of the others would survive. However, if no one leaves, the lifeboat would sink and all of them would die.
In more generalized terms, this situation can be described as one in which a certain group (e.g., town, company, country) is facing a crisis, and an act of self-sacrifice by a small number of individuals to voluntarily accept disadvantages will benefit the remaining majority. A situation where some members of a group must be sacrificed for the survival of the entire group is a frequent occurrence in politics and, despite this, cannot be properly addressed by economic policies.
For instance, in the case of a prisoner's dilemma which is typically dealt with by economic policies, there exists an equilibrium at which all players can gain, and therefore, it would be possible to induce optimal behavior from all of the players with the promise of economic benefits, such as introducing long-term transactions. However, it is impossible to induce people in a lifeboat dilemma situation to self-sacrifice by promising economic benefits. Being in a state where there is no compensating for losses suffered by self-sacrificing people is the very definition of a lifeboat dilemma.
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