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1. Economics, unlike the other social sciences, is built off of mathematical assumptions about behavior. Computers are built similarly off of the math that is V

by dlss 10y ago

1. Economics, unlike the other social sciences, is built off of mathematical assumptions about behavior. Computers are built similarly off of the math that is Von Neumann's modification to Turing machines, so I'll use them as a metaphor: if Windows 95 crashes, it's probably not a problem with the Von Neumann or Turing's work. This is to say that if you believe the 1974 famine in Bangladesh (which I also discuss below) is indeed a counter example to the optimality of markets for allocating scarce resources without violating natural law, I encourage you to examine the foundational assumptions and theorems in Economics to locate where the error is. That would be big news to a lot of people! 2. In response to: "Disneyland and Apple hardware has its target demographic as the top quartile of the population. The people who spend all their money on basic necessities such as rent, food, water, heat can't ever access these "awesome" services." The result of capitalism is not that everyone gets the same outcome. The result is that everyone has a better outcome than they would have with a system other than capitalism. This is why I above mention that if we could modify the laws of physics, we could do better than capitalism. Put another way: you and I do not have private jets. But we also wouldn't in any other system, at least on average. That's not a fault with axioms of capitalism, that'a a fault with the laws of physics (if only metal and rocket fuel were plentiful enough!... :p) 3. In response to your examples I generally encourage you to google the benefits of allowing others to speculate ("speculation economic benefits" in google looks good to a first glance). The gist of it is that speculators add liquidity to a market by moving risk to themselves (who demonstrably are happier to hold the risk than the other market participants). My understanding is that most speculation ends in financial loss. Re: "A particularly chilling example of this would be the 1974 Bangladesh famine, when food production in Bangladesh was at a local peak, yet speculative hoarding of grain drove 1-1.5 million people to starvation." I'm not so familiar with this example, however looking at Wikipedia (https://en.wikipedia.org/wiki/Bangladesh_famine_of_1974 https://en.wikipedia.org/wiki/Bangladesh_famine_of_1974) there seems to have been a major flood following a war in Bangladesh at this time. These seem to be pretty large confounding factors, but let's assume they are not and play a little game: --> Imagine you're in Bangladesh in 1974, and you are in possession of food enough to feed 100 people for 1 month. How do you decide what to do with this food? Remember that you do not know in advance when the food shortage will recover, and that if you don't save enough, you'll have to buy it at even higher prices or starve. Also, if you give all the food away, another famine may come along in the future, and you will have no capital left over to save those people. (For a reasonable ethical framework you can use to build an answer, consider reading the material provided for free at https://80000hours.org https://80000hours.org) Re: "In 1943, due to a combination of Churchill's policies and hoarding, an estimated 4 million people starved to death." I've often wondered by people use famines which happen in freer markets as examples, while ignoring the tremendous numbers of famines and shortages that happen through government intervention. Thank you for listing one. 4. For an example of what happens when scarcity occurs and speculators / hoarders aren't allowed to operate, consider the current situation in Venezuela https://en.wikipedia.org/wiki/Shortages_in_Venezuela https://en.wikipedia.org/wiki/Shortages_in_Venezuela . You can also find the a tremendous number of (Godwin's law skirting) examples from Russia and China (countries which acted similarly to Venezuela). You can find good economic analyses of all of these btw, if you are curious about how they were caused on a mathematical/game-theoretic level, and how to minimize the chance of such shortages happening in the future.

wz1000 10y ago
Analysis of the famines in Bangladesh and the role of speculation in them has been done by Nobel prize winning economist Amartya Sen, and the examples I've given are taken from his work Poverty and Famines: An Essay on Entitlement and Deprivation(1982). Regarding economics as a science, it is widely accepted by economists that it is not a precise science, and has no inviolable axioms like math, or anywhere approaching the experimental accuracy of physics. It is a messy, complicated thing because humans are messy and complicated. In particular, it is well established through the works of people like Kahneman than people are not rational actors. In addition, you seem to be resorting to a false dichotomy between capitalism as it exists today vs command economies. You don't have to choose one or the other. Markets are certainly an important and useful way of distributing resources, but they are dominated and controlled by a small, powerful, capitalist class, who are also able to abuse regulatory institutions for their own benefit. The problem is that this class appropriates wealth created by society at large. They have the power to set up rules and conditions in their own favor. Any "just" and "fair" system could only begin by returning this wealth back to society.
- dlss 10y ago
  > Analysis of the famines in Bangladesh and the role of speculation in them has been done by Nobel prize winning economist Amartya Sen Then, assuming he agrees with your above summary, I encourage both you and Amartya to locate the foundational assumption. It really would be big news to a lot of people. > Regarding economics as a science, it is widely accepted by economists that it is not a precise science, and has no inviolable axioms like math https://en.wikipedia.org/wiki/Mathematical_economics https://en.wikipedia.org/wiki/Mathematical_economics would be a good starting point if you are wondering at economic axioms, etc. The Austrian School generally did a good job building models worth thinking about, rather than devolving into econometric-style silliness. > Any "just" and "fair" system could only begin by returning this wealth back to society. A lot of us disagree.
  - wz1000 10y ago
    > https://en.wikipedia.org/wiki/Mathematical_economics https://en.wikipedia.org/wiki/Mathematical_economics Like I said, mathematical models of economics are a simplification, and this fact is widely accepted by most economists. This is not by any means a dismissal, as it provides valuable insight into the behavior of human society, but viewing it as the beginning and end of economics will place massive limitations on any analysis. In particular, as I mentioned, the study of sociological conditions and human psychology provide valuable insights. Take a look at behavioral economics and the work of people like Daniel Kahneman. https://en.wikipedia.org/wiki/Behavioral_economics https://en.wikipedia.org/wiki/Behavioral_economics > A lot of us disagree. It is a simple conclusion that follows from three premises, the first of which you seemed to accept earlier, the second is self evident, and the third of which follows from simple economic principles 1. A lot of the wealth today has been created through illegitimate and unfair means. 2. Wealth gives its owner power over society and the direction it takes. 3. People who have power/wealth will do anything in their abilities to maintain and further increase it.

by dlss 10y ago

wz1000 10y ago

Analysis of the famines in Bangladesh and the role of speculation in them has been done by Nobel prize winning economist Amartya Sen, and the examples I've given are taken from his work Poverty and Famines: An Essay on Entitlement and Deprivation(1982). Regarding economics as a science, it is widely accepted by economists that it is not a precise science, and has no inviolable axioms like math, or anywhere approaching the experimental accuracy of physics. It is a messy, complicated thing because humans are messy and complicated. In particular, it is well established through the works of people like Kahneman than people are not rational actors. In addition, you seem to be resorting to a false dichotomy between capitalism as it exists today vs command economies. You don't have to choose one or the other. Markets are certainly an important and useful way of distributing resources, but they are dominated and controlled by a small, powerful, capitalist class, who are also able to abuse regulatory institutions for their own benefit. The problem is that this class appropriates wealth created by society at large. They have the power to set up rules and conditions in their own favor. Any "just" and "fair" system could only begin by returning this wealth back to society.

dlss 10y ago
> Analysis of the famines in Bangladesh and the role of speculation in them has been done by Nobel prize winning economist Amartya Sen Then, assuming he agrees with your above summary, I encourage both you and Amartya to locate the foundational assumption. It really would be big news to a lot of people. > Regarding economics as a science, it is widely accepted by economists that it is not a precise science, and has no inviolable axioms like math https://en.wikipedia.org/wiki/Mathematical_economics https://en.wikipedia.org/wiki/Mathematical_economics would be a good starting point if you are wondering at economic axioms, etc. The Austrian School generally did a good job building models worth thinking about, rather than devolving into econometric-style silliness. > Any "just" and "fair" system could only begin by returning this wealth back to society. A lot of us disagree.
- wz1000 10y ago
  > https://en.wikipedia.org/wiki/Mathematical_economics https://en.wikipedia.org/wiki/Mathematical_economics Like I said, mathematical models of economics are a simplification, and this fact is widely accepted by most economists. This is not by any means a dismissal, as it provides valuable insight into the behavior of human society, but viewing it as the beginning and end of economics will place massive limitations on any analysis. In particular, as I mentioned, the study of sociological conditions and human psychology provide valuable insights. Take a look at behavioral economics and the work of people like Daniel Kahneman. https://en.wikipedia.org/wiki/Behavioral_economics https://en.wikipedia.org/wiki/Behavioral_economics > A lot of us disagree. It is a simple conclusion that follows from three premises, the first of which you seemed to accept earlier, the second is self evident, and the third of which follows from simple economic principles 1. A lot of the wealth today has been created through illegitimate and unfair means. 2. Wealth gives its owner power over society and the direction it takes. 3. People who have power/wealth will do anything in their abilities to maintain and further increase it.