Thread: I found this to be quite fascinating...

Originally Posted by -Lazarus-

Interesting points. I'm familiar with the concepts you discussed here. I noticed that you seem to be ignoring the part where Williams talks about the "zero sum game" where government intervention involving essentially forced trade is brought into the picture. Williams is not saying welfare economics works the same way at all, though in your comments you lumped that in - this confused me a bit.

Yeah, I tried to nod towards that when I said:

This is part of the foundations of micro economics and welfare economics (no, not that kind welfare).

Welfare Economics is NOT about giving money to poor people. It's about looking at outcomes. It's asking questions like "In our economy, are we getting good results?" or "Are all the Pareto Exchanges happening? If not, why not? What's preventing these obviously good things from happening?"

If a Pareto Exchange happens, we say that Social Welfare has increased. At least one person is better off, and no one is worse off, and so that's better. Looking at all of us together, we're better off. There is a philosophical tradition here (ex: Jeremy Bentham, and John Stuart Mill) and also an economic tradition (Edgeworth, Pigou, Pareto, Hicks, Arrow, etc.).

The upshot is that free exchanges increase Social Welfare. It's a loose measure of how well-off we are collectively.

Originally Posted by -Lazarus-

The idea that government should not intervene in free trade or redistribute wealth is a very conservative principle, not a liberal one.

You call Pareto Exchanges the Liberal tradition but I have to disagree with you. Pareto exchanges are not a zero sum exchange. In Pareto exchanges, both people "win", or there is a net "win". In a welfare exchange, there is a winner and a loser to a zero sum.

I hope you will forgive me for being impertinent, but this is because you're using a bizarre definition of "liberal" and "conservative" that was invented a few decades ago as an attempt to poison our common language and create a legion of fan-boys who would cheer for a cause they didn't really understand.

The Liberal thing here is this: The individual judges what is best for them. The person matters. What the person thinks matters.

I recently made a sarcastic joke to you about all us Liberals sacrificing a goat to the ghost of John Locke. I chose that name on purpose because I wasn't just joking.

The idea that the government shouldn't interfere in trade is a radical liberal idea. As a formally expressed idea, it's usually traced to Adam Smith.

I know there are plenty of people around today who call themselves conservatives and want less government involvement in the economy. If that's what they want, then fine and I guess they can call themselves what they like. But they also imply (or say) that liberals think markets are bad and that straight-up communism is good. Nothing could be further from the truth, and it's no small irony to them that if we'd listened to conservative thinkers we not only wouldn't have free markets, but we also wouldn't have dirty liberal ideas like voting, or representative government, or enumerated powers, or...

... shit, now I'm ranting. Sorry.

If you want to talk about economic theory, then you might have to learn some of the jargon.

Originally Posted by -Lazarus-

One gets something without having to provide anything at the expense of the other. There are, I suppose, arguments that might be made about who can afford to have what taken from them, and those that need things, but that is beside the point.

Yes. There is an absolute loss associated with taking from one and giving to someone else. In our simple, static, Pareto model it's easy to see. Once we make our model dynamic (that is, play the game continuously over time), there are additional losses because we are now in a model where incentives matter, and so taking from someone has the additional downside of discouraging that person from making more stuff in the future.

It's even possible to say that the outcome is WORSE than zero-sum. It could be negative sum! If we take your favourite toy from you and give it to a kid who doesn't really like it, then we've made you worse off without making anyone else better. That's not zero-sum, it's a net loss of Social Welfare.

The next step after Pareto Efficiency is Kaldor-Hicks Efficiency. That will answer questions about the possibility of outcomes beyond Pareto Optima.

Cheers,


AetheLove

Originally Posted by AetheLove

Yeah, I tried to nod towards that when I said:




Welfare Economics is NOT about giving money to poor people. It's about looking at outcomes. It's asking questions like "In our economy, are we getting good results?" or "Are all the Pareto Exchanges happening? If not, why not? What's preventing these obviously good things from happening?"

If a Pareto Exchange happens, we say that Social Welfare has increased. At least one person is better off, and no one is worse off, and so that's better. Looking at all of us together, we're better off. There is a philosophical tradition here (ex: Jeremy Bentham, and John Stuart Mill) and also an economic tradition (Edgeworth, Pigou, Pareto, Hicks, Arrow, etc.).

The upshot is that free exchanges increase Social Welfare. It's a lose measure how how well-off we are collectively.




I hope you will forgive me for being impertinent, but this is because you're using a bizarre definition of "liberal" and "conservative" that was invented a few decades ago as an attempt to poison our common language and create a legion of fan-boys who would cheer for a cause they didn't really understand.

The Liberal thing here is this: The individual judges what is best for them. The person matters. What the person thinks matters.

I recently made a sarcastic joke to you about all us Liberals sacrificing a goat to the ghost of John Locke. I chose that name on purpose because I wasn't just joking.

The idea that the government shouldn't interfere in trade is a radical liberal idea. As a formally expressed idea, it's usually traced to Adam Smith.

I know there are plenty of people around today who call themselves conservatives and want less government involvement in the economy. If that's what they want, then fine and I guess they can call themselves what they like. But they also imply (or say) that liberals think markets are bad and that straight-up communism is good. Nothing could be further from the truth, and it's no small irony to them that if we'd listened to conservative thinkers we not only wouldn't have free markets, but we also wouldn't have dirty liberal ideas like voting, or representative government, or enumerated powers, or...

... shit, now I'm ranting. Sorry.

If you want to talk about economic theory, then you might have to learn some of the jargon.




Yes. There is an absolute loss associated with taking from one and giving to someone else. In our simple, static, Pareto model it's easy to see. Once we make our model dynamic (that is, play the game continuously over time), there are additional losses because we are now in a model where incentives matter, and so taking from someone has the additional downside of discouraging that person from making more stuff in the future.

It's even possible to say that the outcome is WORSE than zero-sum. It could be negative sum! If we take your favourite toy from you and give it to a kid who doesn't really like it, then we've made you worse off without making anyone else better. That's not zero-sum, it's a net loss of Social Welfare.

The next step after Pareto Efficiency is Kaldor-Hicks Efficiency. That will answer questions about the possibility of outcomes beyond Pareto Optima.

Cheers,


AetheLove

Yes I think we're talking about the same things then, just using different terminology. Sorry, I didn't recognize it before. I won't use old terms for ideas being discussed today because most people just don't get it. The thing that frustrates me most is the moral judgment people tend to make regarding what liberals and conservatives think, then ascribe that thinking to everyone equally. What I mean is that it is possible to have liberals who are jerks and conservatives who are as well, but not all of us share the exact same worldview or morals at all. Sometimes I do make generalizations about these paradigms, but I usually try to stick to truisms about both sides and not a moral judgment.

Example: Liberals want bigger government and more taxes, Conservatives want the opposite. Liberals care about the environment more than the individual liberty of people, and conservatives care more about the individual liberty of people than the environment.

The type of examples I try to avoid because they are morally based: Liberals hate corporations and want to destroy them, and Conservatives are champions of industry and fair trade. Liberals are lazy and want something for nothing and will take from wealthy people to give to poor people; while conservatives are greedy and thinking of their own self-interests and don't care about poor people.

So I try my best to stick to the first sorts of generalizations I mentioned, and sometimes I fail. Sometimes I am also surprised by people with outlying beliefs that go against even the most traditional thinking though.

However, if I'm dealing with someone making those moral judgments about me or others as conservatives without asking what we really think or giving us a chance to comment, that crosses a boundary with me and I will usually respond and call that person out on their behavior. And of course I'm not afraid to admit when I'm wrong or to compliment someone else when they surprise me.

Ultimately though I do find a free market system to be morally superior to other systems, and most conducive of growth and progress. Part of this might be the heavy influence on my thinking by Milton Friedman, who to me is one of the great thinkers of our time.

Having spent my college studying Economics and Philosophy

I watched it, and most of what he said are basic economic fundamentals. The primary point was about a type of social justice that rises from free exchange.

Yup. Cut anything down to a handful of basic points and just about any position can be argued. From my point of view the Jedis are evil.

There is more going on here than it seems. First, "better off" is something that's measured by each person. There is no objective assessment of what's better for you. YOU decide what you like. There is no State making a value judgement. This is a purely liberal idea (old school liberal) and fits in perfectly with the idea of individual rights. It all seems obvious to us now, but don't underestimate the extent to which Pareto's idea is a profound political statement.

True, but there does need to be a standard established to make an sense of whats going on in anything. Sports, science, data, life. While it's not a perfect math, a reasonable trend can be established. Will ever dot hit the R^2, not but you can interpret the flow of the numbers.

What am I rambling on about? The human welfare index or human development index. Education, income, and life expectancy maynot indicate an individual has to have a good life, but indicates they have a greater likelihood. Kind of a, if these basic needs are being fulfilled you can probably explore what means you need to be better off.

You call Pareto Exchanges the Liberal tradition but I have to disagree with you. Pareto exchanges are not a zero sum exchange. In Pareto exchanges, both people "win", or there is a net "win".
There are, I suppose, arguments that might be made about who can afford to have what taken from them, and those that need things, but that is beside the point.

No this actually plays a big role in "the point". At a Pareto Optimal point, there is zero incentive for any change from an efficiency. The economy is at a state of max output with as little or no remaning inputs.
The basic models we used in Econ Law consisted of a nations that can build tanks or butter. Invest everything into tanks and theres no food, make all butter and there's not defence. A mix of the two and we there may be too little food or too few tanks. Yet if there's not motivation to change, nothing will. The government is supposed to play a role in shifting the line when there's a lack of motivation. Now, I know I'm not explaining all of this right because the argument of the invisable hand would alter production was needed, but it really doesn't work that easy, and the government really doesn't do its job so hot either, so I would say your right in believing we've moved passed a rational level the design called for.


My opinion on the matter, [QUOTE][Furthermore, morality is a subjective topic./QUOTE]
Its foolish to use to put these words together; "Free Market Morality", for Gehns reason. This was why I so enjoyed my Easter Philosophy courses because it gives an idea into other styles of thinking. People think Dems and Reps, think different, East and West is were you see some real differences. It may have been Singer who argued that Western nations can never be moral, so long as there is a single individual who lives at a level below the words total GPD / the Worlds total population, give the fact that rich nations, even if they didn't commit the crime personally, enjoy an elevated life style because of the crimes performed by said rich nations against poor nations to obtain their equity.

There are people who don't think it's moral when you have people living on the streets, eating out of the trash, while other are able bathe in gold coins. It violates human dignity to for anyone to be without enough food to survive, clean water, and shelter.

Originally Posted by -Lazarus-

Example: Liberals want bigger government and more taxes, Conservatives want the opposite. Liberals care about the environment more than the individual liberty of people, and conservatives care more about the individual liberty of people than the environment.

I can't speak for anyone else, but I'm not looking for a bigger government and more taxes. I'm looking to better everyones standard of living. If that means 20 cents of my dollar goes towards doing that then I'm all for that. The end result just happens to be that you need more taxes and a bigger government for that. I won't on the other hand donate money to causes, I just don't do it. I'd much rather donate my time which I do every Saturday.

I also wouldn't say I care more about the environment, that is just silly. I care about the environment because it sustains me and I like to protect myself from an untimely death because I fucked up what I live in. If by liberty you mean being allowed to pollute the water I drink and only pay a fine because of it, then yes I'm against that. You certainly can't be human rights.