Case 2. Nationland.

Nationland is an imaginary country that faces some difficult budget and defense policy choices. Participants will divide into groups and, acting as the leaders of Nationland, decide how to allocate Nationland's budget for major government functions and resolve a number of national and defense policy issues. Each group will review the national functions of the government, determine the proper roles, and allocate resources for the macro-functions.

GAME BACKGROUND AND COUNTRY DESCRIPTION

Nationland is a large country with several hundred million people that faces several political, social, and economic security challenges. A variety of internal and external contingencies shape the domestic, foreign, and military security policy of the nation. Nationland is currently experiencing rapid economic growth and becoming more productive as market oriented reforms take hold. In the near future Nationland is expected to be a central player in the global economy. However, not everyone in Nationland has benefited equally from rapid economic growth. Unemployment is growing in the country as the government eliminates state subsidies from unproductive enterprises. As these bankruptcies grow—an inevitable part of economic transformation--the government must decide how much social protection to provide for those who are left behind Nationland's "economic miracle." Government leaders are also mindful of some of the environmental costs of rapid growth and do not want to repeat the environmental errors of other countries. Some of Nationland's leadership also believe that the entire educational system needs to be reexamined if the country is to be truly competitive in the global environment. Meanwhile, inflation is a concern of Nationland's leaders.

Nationland also has national security policy issues to wrestle with. Some of Nationland's regional neighbors contest some of the territory that Nationland believes is part of its historical legacy. More generally, the regional uncertainty is driven by racial, ethnic, religious and nationalistic forces. Political dissidents and even pockets of insurgency from those who refuse to accept the values expressed by Nationland's leadership threaten domestic stability. An immediate issue is the protection of fishing zones.

Given this environment, the leaders of Nationland must establish firm priorities between defense and non-defense spending and decide which programs deserve the most resources.

Citizens must also decide what purposes the military should serve and what roles (if any) the military should play in solving domestic problems. For example, should the military be given the role of infrastructure development? If so, should the funding be cut for civilian agencies (or private businesses) that would otherwise be providing infrastructure? Should the military be assigned a police function and fight increasing crime in some of Nationland's larger cities?

NATIONAL PRIORITIES

Each group must now determine how important defense spending is compared to other national needs of Nationland. Your group will present its answers in three ways.

• First, you will develop a display of government functions for Nationland. Categories might include:

Education Health Care Agriculture Transportation

Justice Systems Economic Development National Security

• Second, you will determine budget priorities by allocating 100 resource units to these functions. The 100 resource units represent the entire budget of Nationland.

• Third, you will be asked to develop a plan on how you would allocate a 10% increase and a 10% decrease in the budget.

1 The extent of private ownership is always a matter of degree however. Governments own some business even in the most capitalist economies; some farms are private in even most socialist economies.

2 Professor Kenneth Arrow of Stanford University won the Nobel Prize in economics in part for his work on this problem. Since each individual acting alone would make consistent choices. Arrow showed that to guarantee consistent decisions in public choice it would be necessary to allow one person alone (a dictator!)} to make decisions. The proof is based on the paradox of voting.

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