economic policy

The Good Life, the Good Society and the Role of the State

What constitutes a good life? Or put differently what is a life well-lived? Philosophers, artists and theologians have struggled with this question down through the ages.

The enjoyment of “life, liberty and the pursuit of happiness” was a famous attempt at describing what a life well-lived meant. That was the culmination of thinking that began in antiquity and was captured by the Enlightenment, which defined a life well-lived as one in which people took responsibility for their own self-determination, as opposed to living under the strictures of gods, ancient scriptures, absolute monarchs, traditions of an external authority (tip of the hat to AC Grayling for that).

Professor Grayling says that this was not always the predominant way of thinking about the good life. He says that “from the fourth century AD until the Reformation a hegemony over thought was exercised by the Christian religion. The Church had a definite idea about how people should live, what the aim of life is, and how happiness is to be obtained. Part of this view was that happiness…is secured by living so that one survives into a posthumous existence in which one will be permanently in the presence of God’s glory, and therefore will enjoy bliss forever. In the mortal dispensation of the flesh, one might suffer and undergo the agonies of the ‘vale of tears’.”

We no longer think of pursuing the good life in that way. It is now seen as being possible in this life. The science of happiness is helping us uncover meaning behind that elusive term, happiness, or what psychologists call “subjective well-being”. It turns out that attaining physical security and material wealth is necessary but not a sufficient condition for it. Having positive social connections and a sense of purpose in what you do is just as important.

Thinking about the good life is ultimately tied to the question, what kind of society do we want to live in? Do we want to live in a world where the opportunity to have a good life is limited to some? Perhaps if we were part of the few that enjoyed the good life, that might be alright. But just as self-interest is part of human nature, so is empathy.

From Good Life to Good Society

When you walk down the street and see a homeless person, you might feel a sense of gratitude that you are not in that position. Much as I would like to think that where I am now is all a result of my personal effort, I know for a fact that I owe it to so many other factors that were outside my control. It distresses me then to realise that under a different set of circumstances, I might be that person living on the street.

That sense of lost utility or well-being comes from knowing that the society I live in still cannot cope fully with this problem. I know that in Australia’s case homelessness is not simply a financial question, but is connected to poor mental health. It is then incumbent on me to act on that by supporting causes and policies that address it. I live in a community, and part of my happiness is tied to the happiness of others with whom I live. I want others to have the same opportunity to pursue the good life, just as I have.

It is in considering the first two questions, that a third one emerges, what is the role of the state in guaranteeing equal opportunity to pursue the good life?

Some would limit the state’s role to simply securing life and liberty. Providing national defence, upholding the rule of law, protecting property rights and ensuring transparency and accountability of institutions is the only role of government, the only role it can perform competently, they would say.

Education, health, social security, including housing, unemployment insurance, disability support, are all best left to the private sector, charities and civil society groups to sort out. Any form of government intervention in these areas is seen as meddling that simply “crowds out” the private sector.

In most modern societies, the role of the state in providing an educated, healthy workforce is recognised as central to maintaining a high standard of living for its citizens. The public, social and economic benefits of health, education and social security are reasons for government to get involved. The pursuit of happiness depends on it.

The debate centres on how, not whether the government should, get involved to provide such services: whether directly, or indirectly, through co-production, collaboration and coordination with private providers, community and client groups. Public provision does not necessarily mean public production. But public provision is needed nonetheless.

Rather than seeing the public sector as “deadweight” to society, it is increasingly being seen as an important part of the economy, one on which a great deal of our personal well-being depends. Improving the quality, efficiency and effectiveness of its service delivery thus becomes the challenge.

Providing a skilled and healthy workforce is only half of the equation. The other half is fostering a vibrant economy that produces jobs. This leads to the next question: does the government have other roles to perform in the economy?

Some would limit its role to providing a favourable business environment by having “business friendly” regulations, low taxes, and efficient administration. Government should simply “get out of the way” of the private sector, remove barriers to entry, promote an entrepreneurial culture, efficient capital markets, healthy competition and reduce transactions costs.

That is not all, though. When private markets crash or hit a rough patch as they often do, government’s role is to smoothen out the business cycle by providing liquidity, unemployment insurance, and pump priming the economy through infrastructure spending.

Even when the economy is not in the doldrums, the state’s role in promoting innovation and technological breakthroughs has been recognised. Only the state has demonstrated the capacity to fund basic and applied research for a prolonged period of time in the early stages of technological development. Private sector involvement often comes in at a later stage.

Vision and Ethos Create a Moral Compass

The story of the recently deceased Douglas Engelbart, inventor of the computer mouse, illustrates this point. Decades before the rise of personal computing, funding for his research came from the government’s Defence Advanced Research Projects Agency (ARPA).

At the Stanford Research Institute he worked on the ARPANET computer network, a precursor to the Internet. Although the state had originally approached IBM and AT&T to run this project, they declined thinking that it would compete with their existing business. IBM’s vision of the future was a world in which a handful of large machines did all the computing.

Of the 21 patents which Engelbart produced at SRI, the last one, which was for “an X-Y position indicator control for movement by the hand over any surface to move a cursor over the display on a cathode ray tube” now known as the mouse, was later bought by Apple.

This ubiquitous device and many others such as touchscreen technology, the Internet, HTTP/HTML, GPS and SIRI to name a few, form the basis for today’s electronic gadgets that provide us with so much social connectivity and enjoyment. They all came about through government funding of early stage, high risk entrepreneurial projects. The same state that is often derided for being bureaucratic, risk averse and an obstacle to creative dynamism.

Engelbart never received royalties for his inventions. He and the state actors that supported him were motivated by something else other than money. For Engelbart the young navy officer stationed in Leyte during the War, inspiration came from the words of Vannevar Bush, head of the US government’s wartime research effort.

Bush envisioned a “future device for individual use, which is a sort of mechanised private file and library,” on which someone “stores all his books, records, and communications, and which is mechanised so that it may be consulted with exceeding speed and flexibility.” This vision created an ethos, one on which he operated.

It is that same long-term vision and planning that motivates the pursuit of energy security and environmental sustainability today with an agency called ARPA-E. And it was that same sort of vision and ethos that motivated the developmental states of East Asia to promote rapid industrial development through state investments and guidance.


It was easier in a way for these states, since all they needed to do was find a way to adapt existing technologies to local circumstances in a process of “catching up”. Assisting local firms in this process was often needed as they were inhibited to shoulder the associated costs which others would avoid by simply piggybacking or free riding on their discoveries.

From Japan’s Ministry of International Trade and Industry, to Korea’s Economic Planning Board to Taiwan’s Industry Development Boards to Singapore’s Temasek Holdings, they were governed not according to any external authority’s directives, dogmas or mantras, but according to what they saw was in the interest of their own national development.

It was in pursuit of the good life for their citizens that they operated for decades until that vision became a reality. It is only by following their example that other nations can find their own path to development, in which all their citizens not just a few have the opportunity to pursue a life well-lived.