[ 20 February 2005: Message edited by: DrConway ]

From dokidoki's last post in the previous thread:

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So then, what normative work, in any should economists do, in your opinion, if they are going to prescribe policy?

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Originally posted by Mandos:
So to me it's an unsatisfactory result if everyone is better off, but some people are better off at a faster rate than others in a systematic way.

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Unless those others are healthy. That's why we should have medicine and 'welfare'. With a total production increase over whatever is an excess of need, do we say that those others should get exactly equal or not?

[ 20 February 2005: Message edited by: LeftRight ]

http://economics.about.com/od/economicsglossary/g/swf.htm

[ 20 February 2005: Message edited by: Mandos ]

1. If what we are interested in is allocation schemes, and what you are interested in is efficiency results, then would you characterize the relationship between academic economics and economic egalitarianism as orthogonal?

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Originally posted by Mandos:
Then I have two questions:

1. If what we are interested in is allocation schemes, and what you are interested in is efficiency results, then would you characterize the relationship between academic economics and economic egalitarianism as orthogonal?

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Not necessarily. There are apparently (not my field; just an impression) reasons to believe that greater equality increases efficiency. And again, it's not that we're not interested in equality issues, it's just that (the Arrow result again) there's no way of asserting that one particular form of equality should take precedence over the many available definitions. And there may be tradeoffs to be made here. To what extent are we willing to exchange a certain amount of inequality for a higher average?

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2. Are you saying that policy prescriptions based on efficiency results are orthogonal to allocation effects?

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If you're suggesting that we could have two completely independent sets of policies (one run by the Ministry of Efficiency, the other by the Ministry of Equality, with no co-ordination between the two), then no. Some policies that aim to reduce inequality can generate inefficiencies (an example would be income taxes). And some policies that increase efficiency may require a redistribution policy in order to compensate losers so that everyone can be better off (the standard free trade + redistribution package being a classic example).

[ 20 February 2005: Message edited by: Oliver Cromwell ]

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Originally posted by Oliver Cromwell:
No. As I said, an efficiency result makes it possible for everyone to be strictly better off. There's no reason why we couldn't decide to leave the rich as they were and concentrate the windfall on making the poor better off.

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I would have suggested that the goal in general is to construct a program that gives more power to the proletariat and demands more forethought for choosing how/why that power is used. Handing out a portion of 'windfalls' in this service or that does little to evolve the proletariat class in power nor ability. Leading the people to leadership .....not to be the lead (or led).

http://www.marxists.org/archive/marx/works/1848/communist-manifesto/ch03.htm

But still--when can we expect that innovations in economic theory that falsify older theory will start making their way into the actual teaching of economics? It seems as if we have decades of published academic work which Mr. Cromwell is convinced address every problem we might have. Wonderful! None of it seems to have penetrated below around the PhD level, so that by the time a student of economics learns any of it, they're already thoroughly set in the general attitudes about what's desirable that go with the old theories. And nobody *except* career academic economists seems to get exposed to what Mr. Cromwell would consider real economics, at all. Sheesh, postmodernism may be ludicrous, but at least modernism isn't still being uncritically taught at the one hundred level in english lit. courses, much less the four hundred level!! And I'm pretty sure that in geology, students don't have to be told when they arrive in grad school to forget all they were taught before because it's now time to be initiated into continental drift!

Meanwhile, back in economics, I'm nonplussed at Mr. Cromwell's description of how it doesn't matter if an efficiency agenda actually worsens average welfare, for instance, because that efficient economy will hand all the dollars to the political side from which it is hermetically sealed for decisions as to redistribution. This strikes me as a clear argument that an economics which imagines itself sealed from politics is bankrupt. It is to envision a world in which money and production are utterly divorced from power. In real life of course an economy which is in some sense efficient, but which creates a few wealthy and many poor, is also an economy which creates a few powerful and many powerless, and those few powerful have a well-documented tendency to make sure the rules are not written in such a way as to make them hand any of it back.

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Originally posted by Rufus Polson:
But still--when can we expect that innovations in economic theory that falsify older theory will start making their way into the actual teaching of economics? It seems as if we have decades of published academic work which Mr. Cromwell is convinced address every problem we might have. Wonderful! None of it seems to have penetrated below around the PhD level, so that by the time a student of economics learns any of it, they're already thoroughly set in the general attitudes about what's desirable that go with the old theories. And nobody *except* career academic economists seems to get exposed to what Mr. Cromwell would consider real economics, at all. Sheesh, postmodernism may be ludicrous, but at least modernism isn't still being uncritically taught at the one hundred level in english lit. courses, much less the four hundred level!! And I'm pretty sure that in geology, students don't have to be told when they arrive in grad school to forget all they were taught before because it's now time to be initiated into continental drift!

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Indeed. Although I will be guilty of some thread drift here, I must say that the closest science that approaches this strange way of teaching economics is chemistry, and even we do not go so far in iterating through successive revisions of models that get taught at each stage.

For example, the bulk of chemistry that we learn is valid regardless of educational level. The main "successively better approximation" area is in atomic structure, where in high school we are taught the very simplified "solar system" like model, and only in university or college are we then taught that no, in reality the atomic model is more like probability clouds.

Even the valence-bond model (which is a special case of the molecular orbital model) still holds validity when handling very light elements and is not a completely wrong model that must be "unlearned" (as opposed to RPolson's pointing-out that economists apparently need to "unlearn" all this stuff that gets into the first-year texts). FTEOTMC^* The "hybridization" model where orbitals become, say, "sp³ hybridized" works best for the first and second row of the periodic table but tends to flounder once one enters the heavier third, fourth and fifth row elements, and it also doesn't work well for complex "ligand groups". Molecular orbital theory has proven to be an immensely better model overall.

But I don't recall any professor standing up in front of us fourth-year students and saying "EVERYTHING you have learned in all your years is WRONG and HORRIBLY INCOMPLETE."

The closest I can say I got to this was actually in physics when I discovered that the kinematic equations one learns in high school are very special cases of complex general equations, and when I discovered to my horror that Maxwell's Equations do not obey the Galilean-Newtonian transformations, and so all the questions I've answered in electromagnetism classes have been carefully constructed (in a masterpiece of disguising the truth, I must say!) so as to obscure this "problem".

Ok, end digression. Though I will say that as far as OCromwell goes, I have myself observed this odd dissonance in which he claims that no serious academic economist takes the supply-siders very seriously, yet two first-year texts I read took valuable page space to clearly elucidate the case for a supply-side examination of economics.

Another example is this dismissal of the usefulness of the Phillips Curve, yet the econ texts I had - you guessed it - took up valuable page space to explain it!

... and unlike the chemistry texts I have which, when presenting "out of date" models, clearly identify that they are of historical importance only, the econ texts didn't, as far as I remember, do this.

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^* For The Edification Of The Morbidly Curious

[ 21 February 2005: Message edited by: DrConway ]

And I've thought that there should be more than enough wealth to have a highly equitable economy and society. The Scandi's and several Euro nations seem to be doing a better job of redistributing wealth. Europe has the highest concentration of millionaires in the world, and yet their social stats are still impressive. David Ricardo and Friedrich von Hayek would have been surprised to know that socialism has outlasted their predictions.

[ 21 February 2005: Message edited by: Fidel ]

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Originally posted by thwap:
Last night, I remembered something else from my economics textbook:

In a special section it addressed the theory that since the communists weren't as obsessed with profits as the dirty capitalists, surely the environmental policies in the Soviet Union would be better than those in the capitalist west.
But NO! Surprisingly, the communists were obsessed with maximization of output and the environment be damned.
Among other things, the writers of the textbook pointed out that some rivers in the Soviet Union were so polluted that they actually caught on fire!!
This would have been okay, the Soviets' treatment of the environment was appalling, but any serious discussion of the matter would have mentioned that rivers in the United States also caught on fire.

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Beside the enviro-point, I don't believe the communists were very Marxist either.

"Atheism, as the denial of this unreality, has no longer any meaning, for atheism is a negation of God, and postulates the existence of man through this negation; but socialism as socialism no longer stands in any need of such a mediation. It proceeds from the theoretically and practically sensuous consciousness of man and of nature as the essence. Socialism is man’s positive self-consciousness, no longer mediated through the abolition of religion, just as real life is man’s positive reality, no longer mediated through the abolition of private property, through communism.
Communism is the position as the negation of the negation, and is hence the actual phase necessary for the next stage of historical development in the process of human emancipation and rehabilitation. Communism is the necessary form and the dynamic principle of the immediate future, but communism as such is not the goal of human development, the form of human society. [34]"

http://www.marxists.org/archive/marx/works/1844/manuscripts/