What is wealth?
What is economics? Nothing is 'mere'. — Richard P. Feynman
I guess I'm just terribly naive or insane.
It's just that so many forms of value cannot be assessed in terms of production and labour or supply and demand. When we start placing monetary value on them, then we begin fucking everything up. (I'm thinking nature, cultural heritage, well-being...) Those who can make you believe absurdities can make you commit atrocities. -Voltaire
I guess a charitable way to state Keynes' point is that the scope of economic theory is limited to those things that can be measured in monetary terms, but that opens an entire new avenue of attack. Nothing is 'mere'. — Richard P. Feynman
The more important economic question is why do we work? You can't be me, I'm taken
How much would someone have to pay you to work on a project instead of cooking Thai to your daughter's playing? That's one way to quantify how wealthy you feel. Nothing is 'mere'. — Richard P. Feynman
But cultural hiccups about sex and money being dirty (separately, let alone in combination) that is the only reasonable way to evaluate things. Nothing is 'mere'. — Richard P. Feynman
I need sleep... You can't be me, I'm taken
The road will obviously make the nation richer in terms of dollars, just as drilling in the Arctic National Wildlife Refuge would, but, in the latter case, we've, at least so far, made the judgment that we're happier without that drilling -- that ANWR yields sufficient utility among a sufficient number of active participants in the political debate to inspire them to voice their preference by voting for a pro-environment candidate or pressuring their congressmen with phone calls, emails and letters. So there are rough ways to discuss this in economics, as viewed through decisions within political institutions, because people presumably vote for candidates based upon their views on this and other issues, but it is clearly a very rough, and frustrating, means to measurement.
That's why I think economics can, and should, try to deal with the value of these, at least in a rough way, but it requires input from other fields to achieve anything that begins to resemble a solid grip on the issue.
Hope that makes at least some sense, but I'm having trouble figuring out how to word my explanation properly. I know what I want to say, but I'm not sure how to say it. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
The road will obviously make the nation richer in terms of dollars, just as drilling in the Arctic National Wildlife Refuge would
That is an unanswerable question for economics, because it would require measuring utility levels across people ... we've, at least so far, made the judgment that we're happier without that drilling
Not necessarily, an archaeological site or a wildlife refuge is a potential tourist attraction. Also, it does not lack value and its destruction iss an irreparable loss.
In the case of many parks and sites, that's certainly true. There was certainly no shortage of tourists when I visited the Smoky Mountains (and, by the way, none of them should have been allowed to drive on mountain roads -- my future mother-in-law more so than anyone). As it is, ANWR only has a few hundred visitors each year, so I think it's safe to say that the oil business would produce more money, unless these poor tourists are coughing up insane amounts of money to visit.
Presumably that happened non-economically?
What do you mean? Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
Some people would have us believe that all such decisions boil down to some sort of cost-benefit analysis.
The pro-drilling side would suggest that there is little by way of cost: "America needs energy, and most of the need will be for gasoline, so, with rising prices, the benefit of drilling in ANWR, thereby increasing supply, must trump any costs that exist, anyway." The anti-drilling side has engaged in the discussion more honestly, in my opinion, and it goes beyond whether a bunch of deer die of exposure to industry. We also have to take into account the fact that, by drilling, we would be extending our reliance on oil, which, in the end, is economically -- even ignoring the costs associated with global warming -- stupid.
Also, if a decision was made not to drill, it must be that the economic necessity of drilling just was not there, or was not sufficient. But you said the question could not be decided within economics.
It must be that the gains to drilling were not sufficient to push Americans to support opening ANWR, if the current situation holds, because Americans have, up to now, exercised their rights in pressuring Congress to not allow drilling. That can be looked at in an economic framework, I suppose, but the analysis necessarily spreads into political science, sociology and psychology, because, as I said, we can't compare utility levels clearly across people. I can't say, "Americans who oppose drilling gain a higher level of utility from saving ANWR than Americans who support drilling lose." I can say, "Americans who oppose drilling exercised greater influence over the Congress." Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
I don't think economics really exists as a separate discipline. I think it exists as a kind of academic cult cursed by delusions of infallibility, but the practical policy foundations are always based on politics, sociology and psychology - with a bit of game theory and statistical analysis at the more rigorous end.
In terms of real-world decision making, I think it really isn't possible to understand economic relationships except in terms of politics, sociology and psychology. They're not footnotes or distractions, they're fundamentals.
Politics obviously plays an enormous role, because governments are enormous actors in the economic arena. Psychology's role is growing -- there is actually a sub-discipline called Economic Psychology, although it's still in its infancy -- because psychologists can help economists develop a stronger understanding of (say) happiness or buying habits or or or.... Sociology and economics have always had a great deal of overlap, and academics from each work together quite often. (My uncle, who is a retired sociologist, is an example.) If I wanted to write a book on Africa's current economic situation, I would likely need to get in touch with someone who understands African culture and politics, because it would shed a great deal more light on the issue for me. Proposed solutions to problems are, obviously, useless if they do not work properly with the cultural and political situation (as when FDR had difficulty pushing Keynesian worker programs in an era of American politicians seeking a consistently-balanced budget).
As far as infallibility is concerned, in any field -- in my experience, at least, and I must admit to having little in the hard sciences (so I'll leave that to Miguel, Colman and anyone else who has said experience) -- you'll find people who take this view of their discipline, but I think you'll find plenty of examples, especially among the big names, of economists who do not believe in the infallibility of economics. In fact, the book Miguel wrote this diary on was one built to challenge a previous failure in the field, as were Friedman's writings on things like the Phillips Curve. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
we can't compare utility levels clearly across people. I can't say, "Americans who oppose drilling gain a higher level of utility from saving ANWR than Americans who support drilling lose." I can say, "Americans who oppose drilling exercised greater influence over the Congress."
This collection of concepts breaks down in at least two ways: the hedonic treadmill (increments in income, etc., produce only transient happiness, vide infra), and the difference between life satisfaction and happiness. The latter difference, in turn, has some relationship to the non-unitary nature of the human mind -- internal goals conflict in ways that make the notion of an individual's utility less useful.
However, people and societies are products of evolution (and it is often unnecessary to ask what is biologically evolved and what is cultural). One can argue that an evolutionary function of the hedonic treadmill is to drive people toward the accumulation of ever more wealth and power, which in turn aid the propagation of the characteristic features of "successful" people and societies.
Put more bluntly and focused on GDP: greater national wealth enables greater military power. World affairs therefore tend to be dominated by cultures and nations that pursue wealth, and their cultures tend to be imitated. Words and ideas I offer here may be used freely and without attribution.
This is an interesting take on it, but I'm not sure it's true historically. Firstly military power doesn't necessarily translate to political influence - as the US discovered in Vietnam, and is discovering in Iraq.
Secondly, successful military power is used to grow empires. Not vice versa. The Romans and the British had empires because of their superior military skills and technology, not vice versa.
I think a necessary, but not a sufficient condition for empire is that there has to be a background of aggressive acquisition driven by a political system of internal competition. E.g. Roman acquisition was driven by political and economic status within the oligarchies that ran Rome.
If a system isn't internally competitive, there's less drive to expand outwards and acquire resources away from home.
During the Napoleonic wars Britain bankrolled many of France´s opponents on the continent. This economic power enabled Britain to in the long run win and thus end up with (among other things) a lot of possesions in India.
And although I disagree with the notion that GDP measures national wealth, I agree that a large GDP enables a big army. As GDP measures taxable transactions, it gives a hint of how large spendings a government can get going, among those spendings military spendings. Of course this only really applies to our modern day states with high-tech expensive weapons.
In roman time a main portion of wages was pay in land on retirement, thus creating a drive to conquer more land. Not that that was the only force pushing for expansion... A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!
To clarify, in that paragraph I was responding to this statement by technopolitan:
Put more bluntly and focused on GDP: greater national wealth enables greater military power.
And I also made a rather convoluted reference to a previous discussion where I stated my answers to Migerus socratic questions as:
1. What does GDP measure? Tax base. 2. Why does it need to grow? To enable politicians to keep their promises, wheter in expanding services but not increasing taxes or lowering tax percentages while keeping services constant. Or both. Few run on a platform of increased taxes and lowered services. Or on a reality-based platform where you need to pay for what you eat. Fiscal conservative is just a oppostion position, when in power you need to keep promises. 3. Does the need for GDP growth outweigh any other policy goal? Policy is set by politicians right? Then - almost always - yes.
2. Why does it need to grow? To enable politicians to keep their promises, wheter in expanding services but not increasing taxes or lowering tax percentages while keeping services constant. Or both. Few run on a platform of increased taxes and lowered services. Or on a reality-based platform where you need to pay for what you eat. Fiscal conservative is just a oppostion position, when in power you need to keep promises.
3. Does the need for GDP growth outweigh any other policy goal? Policy is set by politicians right? Then - almost always - yes.
My aim was to suggest why minds and cultures that seek happiness through wealth/power will tend to spread, in part because gaining wealth/power in fact yields no satisfaction or lasting happiness. Words and ideas I offer here may be used freely and without attribution.
That would be my take on it too. I think it starts with a military advantage, which can then create a positive feedback loop where there's an interest in empire building.
But there's another angle, which is how economic and political domination as a substitute for physical warfare. US interests are no longer served by sending in the marines and killing anyone who refuses to pay tribute.
Instead there's the World Bank and the World Trade Organisation, which set trading terms favourable to the US and make military action in pursuit of US interests less necessary.
5th Century Rome was incredibly wealthy in local economic terms, but was taken down by bands of nomads who considered themselves lucky to own a wagon.
Some of the tribal groups had a numeric advantage, with migrations that literally stretched across entire countries.
Others had a huge advantage in military skill and tactics - including better technology, with a short bow that could punch through a metal shield at a distance of hundreds of yards.
Conversely when Rome originally started to expand, its only advantage was military. It wasn't any richer than its neighbours, but it knew how to put together and drill an extremely effective citizen army.
Today if terrorists had more imagination and skill than they seem to have, it would take very little money to do huge, even terminal, economic damage to London or one or more major cities in the US. An insignificant fraction of the US military budget would be more than enough.
