Diatribes - Computer, Economic & Political

This blog is really just for me. If you find something interesting on it, leave me a comment. If you disagree with something, let me know what and why. In this blog I am just putting some of my thoughts for computers, the economy, politics, and other topics in writing.

03 February 2010

A New Idiocy

I read an article " A New Capitalism or a New World?" recently.  It is head-in-the-sand embarassingly bad.  The kind of thing that happens when comparative lit majors try to solve real problems - it ends up a mess.  Unsurprisingly the author is a math & philosophy PhD - two studies famous for head-in-the-cloud non-practical thinking, not constrained by the real world.  Actually it looks like the whole institution which put out this article is deluded, or at least their readers.  On their home page they have a poll - "what will reduce poverty & hunger most" and the highest voted option is "pay small farmers for carbon sequestration."  Really!? But that's something like an ad hominem attack, so lets get to substantive discussion. 

The author mistates a lot of things - investment was terribly mangled (the bit about private investment was WTF bad), confidence was placed at the root of all economic problems (which is really really wrong), people as legal commodities (anyone with rudimentary legal training would scoff at this), and the author played fast and light with numbers (ok GDP doesn't represent well being - lots of other tests do - so who cares if GDP doesn't?).  Plus the author wholly ignores, rather than deals with, real economic principles which conflict with his utopian idea - such as free riding and (anti)commons problems.  

Given how often people say the government screws up compared to private industry as a whole, especially when looking at decision making processes - I'm surprised anyone wants to make production more like government.  What happens when you can lobby for direct raises?  I can't keep track of all the pies our government has its fingers in already, what happens when the government has its fingers in all the pies - who can keep track of it then?  If the complexity of financial sector is too much for industry, it is definitely too much for the public sector.  

Plus, when government screws you, you're typically out of luck - the government isn't liable for economic harm short of a total deprivation of value, and has soveriegn immunity on top of that.  Not so when private industry screws you.  Making everything like the government is a really bad idea.  Someone said democracy is two wolves and a sheep voting on what's for dinner, it seems to fit here.  

But the article ignores bigger problems.  First, cognitively people can only care about so many other people.  See Dunbar's Number for estimations of this number.  The more say people have over others they don't care about, the more they will act opportunistically - that is try to screw the others.  With private industry, each employee has a relatively smaller reach.  If we can vote on everything, our reach expands.  

Second, yes we need to protect our environment.  Yes many businesses have a short run perspective.  But the cost of environmentalism isn't measured just in dollars, it is measured in standards of living.  Environmentalism reduces standard of living, all else equal.  Of course we need to have a balance of sorts, but insisting 3rd world countries adhere to high environmental ideals imposes a terrific human cost.

Abstractly, no one thinks forcing companies to internalize the externalities they create is a bad idea.  Of course it is hard to discover and price out effects of various externalities - do we measure costs in total cleanup, or cost effective clean up, or cost savings to the firm, etc.  My point is that it is hard, and it isn't clear to me that we have a much better way of doing things right around the corner.  

Envisioning an environmentally friendly & sustainable world is easy - we're all subsistence farmers.  Envisioning one with a high standard of living is more difficult, especially in underdeveloped countries.  To have some semblance of equality  would require Americans & Europeans enduring a drastically lower standard of living.  You don't hear as much from environmentalists about that. 


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