Research Question: Considering the course readings, how would the contractarian, spontaneous order, and fiscal sociology approaches to public finance arrange taxation and expenditures under coexistence of genetically modified crops with conventional and organic farming?

Taxation and expenditures are policy means by which public authorities deliver financial support to companies and individuals. Policymakers and economists are often very divided about government intervention in the economy. The public finance arrangement of taxation and expenditure for genetically modified crops with conventional and organic farming could vary depending on dogma belief and approach. Under circumstances governments tend to allocate resources and budget to support investment. For example, if the government makes direct payments to genetically modified crops with conventional and organic farming, it will appear on the expenditure budget side while reducing the tax paid by genetically modified crops with conventional and organic farming is reflected on the revenue side.

 Contractarians principles advocates for “equal treatment under the law”. Contractarian like Buchanan and Congleton believe the equal treatment declaration should not be limited to criminal justice. We can apply “equal treatment under the law” to taxation and expenditure policies within the generality principle to solve market problems. Under the principle of the contractarians, it has been notified here that there needs to be an equal kind of the treatment for every person and one should not be treated superior or inferior over the other person by any mean. According to me I believe here that yes different contractarians would definitely allow every one of them by every single individual need.  Based on ‘generality taxation and expenditure’ we can achieve Pareto efficiency by having neutral taxation for genetically modified crops with conventional and organic farming. Even if your motives are good but you are not being just with interfering in the market and under the generality principal market incentives will find an efficient allocation of resources and taxation arrangement will not discriminate or favor a particular a group which will disturb the market order, this means unequal taxation and expenditure in a majoritarian democracy means punishing and exploitation of members of a monitory through fiscal policies. Let’s take into consideration an example of majoritarian democracy where there are different tax policies on agricultural farming (genetically modified and organic & conventional farming) you have the majoritarian cycle you will have one majority shifting and will keep discriminating against the minority. Though each GM product needs careful analysis and safety assessment and if GM crops have effects and externalities than under generality it compensates such as side payments – asymmetric externalities. However, it does not mean there will be different taxation. Under the generality principal taxation and expenditures can be arranged through anonymity rule to negotiate and reach consensus so that everybody agrees to same taxation (low tax, medium tax or high tax for everyone) to R&D for genetically modified crops with conventional and organic farming, there can be taxation and expenditures arrangements to allow the young and innovative firms to grow under generality without discrimination in the market.

Timothy Roth is another contractarian who believes in generality principles like Buchanan and Congleton and he places justice above efficiency. According to Roth taxation and expenditure arrangement should not violate the ‘moral equivalence’ principle. It means providing tax incentives or grants to genetically modified crops with conventional and organic farming is discriminatory and cannot be justified for being contrary to the moral equivalence of a person.

Different policies are being made up that can easily increase out the incentives towards the innovative that includes the guarantee of the different intellectual rights, assistance of government with the cost of researching and development and the last factor is the cooperative researching ventures. Taxation expenditures are some of the arrangements that definitely should not violate any of the principle through any mean.

Taxation and expenditures for genetically modified crops with conventional farming should be arranged under the constitution for all that promotes and embodies impartiality thus satisfies the respect for the constitution under moral equivalence. Under the contraction it is essential to adopt a non-interventionist and a non-discriminative policy of favoring one over another with only aim to allow the market to achieve its goals based on the first and second welfare theorem. Roth is a strong advocate of flat-taxation believing that all taxpayers hold the same moral equivalence and therefore all farmers are supposed to pay the flat-tax income. However, if genetically modified crops with conventional farming are supposedly excludable goods that creates jobs, investment opportunity and contribute to the economy through R&D can be given a grant.

Anthony De Jasay and Fredrik Hayek are the advocate of spontaneous order. In Hayek’s classical Greek Catallaxy the arrangement of taxation and expenditures to the coexistence of genetically modified crops with conventional and organic farming should be through neutral or uniform taxation in the market bottom-up approach - spontaneous order. Hayek strongly argues for fiscal neutrality and believes giving grants to farmers is considered interference in the market order. Hayek does not find any moral justification for taxation and expenditures arrangement for genetically modified crops with conventional and organic farming to imply ‘treated equally’ in Catallaxy. Based on Hayek’s argument there will be different outcomes for genetically modified crops with conventional and organic farming. We may evaluate per Theory as a transformation curve where he says; if the quantities of the two goods [GM crops with conventional and organic farming] are measured along with two rectangular co-ordinates, any straight line through the origin will represent the locus of all possible total quantities of two products in a given quantitative proportion (Routledge & Kegan Paul, 1982). With the equation of a+2b, 2a-4b, 3a-6b, where ‘a’ is the genetically modified crops and ‘b’ is organic and conventional farming was adjusting the relative quantities of different factors achieving Pareto-optima where consumers can have more of GM crops and less of organic with conventional farm or vice versa. Hayek who is a strong supporter of Adam Smith’s free-market economy also states authorities should not interfere to regulate the supply of agriculture products if the genetically modified crops have passed the safety standards. According to Hayek laws and orders evolve through human interactions and market functions bets without human meddling. Markets formed by human actions not human designs, having any arrangements for agriculture farming is not desirable for society. In order to have a competition and prevent the state from interfering the role of civil society in the market is very crucial since civil society is also a spontaneous order like the market that they can organize each other without the state.

Jasay, who is also a contractarian says; “if you treat everyone alike then some people will benefit more than others.’’ Taxation and expenditures should be arranged fiscally neutral system – flat taxation all agriculture and farming industry can compete without anyone (GM crops, conventional or organic) will think to cheat and One should not think of self-utility maximization and think of the long run benefit. All the agricultural farming industries receive higher pay off from mutual cooperation than pay off mutual defecation. Giving any tax exception or providing subsidy to GM crops, conventional or organic farming will create ‘free-riders’ as some will pay more or others will receive more than others which is unjust and is contrary to a market order. Jasay argues there can be exceptions under certain conditions to public goods but it is unlikely to say any of genetically modified crops, conventional or organic farming posses ‘public goods character’. Jasay believes there should be some redistribution exception in some cases such as everyone should have minimum income and some tolerance for medical care where the state can have redeemed vouchers regardless of their income. Under the welfare and investment credit schemes there can be an exemption of a certain level to finance seeds for genetically modified crops with conventional and organic farming.

Spontaneous approach of the Hayek and Jasay differ from one another in a way that arrangement of taxation and expenditures to the coexistence of genetically modified crops with conventional and organic farming should be through neutral or uniform taxation in the market bottom-up approach - spontaneous order. He argues strongly that no matter what happens every one needs to be treated equally and there should be no superior or inferior person in the group but everyone should be given equal importance and equal rights. While for Jasay, if everyone gets treated in the same way people would definitely take an advantage of this factor and they won’t work in a way they should. Therefore he said taxation along with the expenditures need to be arranged in a neutral and appropriate way so this is the point where both thinking differs.

Contrary to contractrian approach fiscal sociologist Richard Wagner believes the state is an order and it’s a social interaction that leads to political decision making in the state. He believes supports effective team production in the market square. Giving any tax incentives or subsidies to agricultural and farming industry would likely to emerge as political enterprise that may benefit a small sector agriculture sector (genetically modified crops, conventional or organic farming) but will create forced investors and will harm the relationship between taxpayers and political enterprise, therefore tax incentives have effect over political enterprise and it consequently cause the election lose for the governing party due to creating a large number of forced investors. In this scenario, the state will look to restore financial balance and look for ways to reduce the expenditures by decreasing expenditures to counter debits where budgetary bridge plays are a link between income, taxation and expenditure. Tax incentives may have an impact on available taxation so the budgetary bridge looks for other compensation from income and expenditure. Arranging tax in a non-discrimination manner and avoid preferences to consumer wise decision due to supporting certain agriculture farming. It is not the best to focus on the future and try to adjust the tax structure or capitalize on future benefits. It is hard to imagine future revenues based on support for a small agriculture industry that violates the market order.

There are different factors like political as well as the fundamental economy that may cause an effect on all these genetically modified crops. These kind of the crops are being made up through inserting a gene from any of the external source. This is the technique that is being most commonly in these days and it is being done due to multiple reasons and they are to make the growth of crops faster as the demand is increasing day after day and then to make them grow stronger and increase their quality as well. In terms of the politics, it will cause a much positive impact as the growth of the crops increases so is the economy so this is really beneficial.

Conclusively, the contractarian, spontaneous order and fiscal sociology approaches does not support or arrange taxation and expenditures for genetically modified, conventional farming or organic farming. They are all strong opponents of majoritarian utility even if the intentions are right to create efficiency but it is not justifiable. It is essential under the contractions principal to establish justice in the market you will have produce efficiency and everyone benefits without disturbing the market allocation for supporting any agriculture or farming industry. Hayek and Jasay advocates for uniform taxation to agriculture farming under spontaneous order notion and they are strong believers of Adam Smith’s non free market theory where humans can have ‘fellow feelings’ and if there is any support it has to be voluntarily without state interference. fiscal sociology approach states taxation and expenditure should not be arranged to ‘pick and choose’ certain farming industry and current taxpayers may end up paying the cost for the experimentation for the future.

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