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I assure you I am not being sarcastic. By history and by the objective metrics used by economists capitalism works and alternatives tried do not. There are two

by kobeya 9y ago

I assure you I am not being sarcastic. By history and by the objective metrics used by economists capitalism works and alternatives tried do not. There are two legitimate criticisms of this I'm aware of: (1) capitalism is less optimal than scheme X that has never been tried yet, or (2) the metrics used by economists doesn't measure what we should value--maximizing them doesn't necessarily result in optimal outcomes, as measured by better social utility metrics that we should be using instead. TFA falls in the first category as it makes an argument (which I believe btw) that interest rate policies in place result in net transfers of wealth from poor to rich since the 80's. I could also believe arguments that free market capitalism is a form of local gradient ascent of the GDP landscape that does anticipate or react to global or systemic risks like global warming. I could also believe an argument that our metrics of societal prosperity don't measure what we really want, which is a moral judgement about whether the society is better or not. E.g. if all the wealth gets concentrated in the 1% and the remaining 99% becomes figurative or even literal slaves, that's probably a worse outcome even if productivity increases. The problem is that while it is easy to cook up such what-if thought experiments, it is not easy to quantify the result into a mathematical model of moral social utility. Come up with such an objective, measurable metric and economists will start using it. Seriously try coming up with one and you will see why no one has. Moral philosophy is still a field of philosophic arguments, not solved problems.

arthur_pryor 9y ago
ok, first, i appreciate your more fleshed out argument here. > The problem is that while it is easy to cook up such what-if thought experiments, it is not easy to quantify the result into a mathematical model of moral social utility. that said... you seem to be implying that we should do things only if we can make decisions using a well understood objective model with easily measurable inputs and outputs. but if that model leads us to a world that i'd characterize as a moral travesty ("all the wealth gets concentrated in the 1% and the remaining 99% becomes literal slaves"), i'll take my chances with the thing that's hard to quantify that might get us a better outcome. and maybe that'll lead to even worse suffering. but seems worth a shot. EDIT: as a deeply logical person who greatly values the scientific method, i understand the desire to come up with a model of morality that has strong mathematical foundations, which can have its tenets checked against empirical evidence to provide us with something closer to a mechanically produced answer to a moral question. but i don't think we're there yet. and i think to some degree, it's fundamentally impossible, but i think we could get closer, and i think beyond some core moral tenets, it is best to optimize in a utilitarian way. but before we start the optimizing, i want to prevent things like slavery, or even de facto indentured servitude. i wish i could provide you with something like a mathematical proof of why indentured servitude is bad, but i'm going to keep operating on the premise that it's bad, despite the fact that i can't prove it in a mathematically rigorous way.
- EGreg 9y ago
  May I suggest that most non-sociopaths would like to see their society maximize the minimum of what people have, rather than minimize the maximum? It goes by many names Unconditional Basic Income Negative Income Tax Social safety nets Single Payer systems Or various Welfare schemes
  - kobeya 9y ago
    Ah so if I disagree with you I'm a sociopath? That's not a friendly rhetorical tactic btw. It may not be obvious, but your post is not critiquing capitalism. Free-market capitalism is solution in the space of how we decide to allocate scarce resources. It stands mostly in contrast to various forms of collectivism and central decision making (socialism). Take UBI/negative income tax since it is most relevant to the linked article. UBI is the equivalent of saying that rather than construct our incentive models in such a delicately balanced way as to target a specific value of τ, the wealth redistribution constant, let's just forceably redistribute wealth by that amount. It's only non-capitalist in the sense that any form of taxation and central governance structure is non-capitalist, but of possible welfare schemes it is probably the most capitalist -- it punts the issue of how those funds should be spent and lets their new owners decide.
    - EGreg 9y ago
      Well you likened those who merely disagree with the idea that Capitalism is as inevitable as gravity, to Flat Earthers - and now you complain? If it makes you feel better I said "most non-sociopaths want A", which doesn't imply that you are one if you don't want A. Nor does it imply that you are not a sociopath if you want A. But seriously, if you are ok with the poor running out of resources and starving, or even want it, then you'd be considered a sociopath. "Free-market capitalism is solution in the space of how we decide to allocate scarce resources." Exactly, which is why "we" is the society, and "we" usually decide that every human being is entitled to have their minimum needs met. The one who disagrees is labeled a sociopath - that's just how it works. Some nihilists for example may have a completely logical theory as to why people, like companies, should be subjected to market forces. "If animals die from hunger why not humans? If you don't work, you don't eat." But we don't reason with them, we dismiss them because our basic values are different. Do you understand now that I chose my words carefully? And what are those basic needs? Potable running water goes to your sink. That's not required for survival. Most societies carried water from the river. Romans had aqueducts but they didn't go to people's houses. Child mortality is down because of advancements in science and medicine. Who do we pay for all these things? The scientists who contributed to the growing snowball of knowledge are long dead. We are lucky to have been born in the 20th and 21st centuries and benefit from the amazing wealth humanity has built up. Capitalism deals with conferring PRIVATE PROPERTY rights to individuals and privately owned organizations of any size. PRIVATE PROPERTY IS A MONOPOLY RIGHT TO EXCLUDE OTHERS FROM THE USE OF A RESOURCE. Show me that this is always the best way to allocate the resources. Is selling a lake to a capitalist the best way to make sure the lake is not polluted? Is enforcing the monopoly right of an inventor to threaten others at the point of a gun (see what I did there) to extract rents from them for building on their idea the best way to promote scientific progress and software and drugs?
RealityNow 9y ago
It's impossible to come up with objective metrics as to how a society should be organized and what it should prioritize because that is an inherently political endeavor. That's why economics will never be a science, just like politics will never be a science.
rev_bird 9y ago
First off, I wanted to thank you for such a well thought-out post. There's a lot of room for condescension in discussions about stuff as fuzzy as economics, especially as it relates to overtly political debates, and it was refreshing to see someone acknowledge the weak points (or at least the most debatable issues) of their position. I'm curious about one assertion you made in particular: >it is not easy to quantify the result into a mathematical model of moral social utility. Come up with such an objective, measurable metric and economists will start using it. I agree that this is a hard problem, but I can't help thinking that we are already pretty close to at least being able to at least measure symptoms of an "immoral" economy -- like if we couldn't graph a function, but COULD graph its derivative. I'm thinking of metrics we already have: overall distribution of wealth (and its change over time), inter-generational economic mobility, rates of poverty/hunger/homelessness, access to essential services, educational outcomes based on family income, you get the idea. We know having money is a huge leg up, we know a child whose parents make $18,000 a year doesn't have the same chances (or even access to comparable education) as a child in an affluent family. I'm wandering off into other, more contentious debates, but my point is that there are plenty of metrics we already have that we can point to and say, "This is a bad sign. This is not a good number, and its badness is self-reinforcing and will only get worse." Just look at productivity: it's gone up consistently, year over year, for decades, and yet the real value of wages hasn't moved. SOMEONE is profiting off of that surplus value, but it certainly isn't the workers. At that point, the arguments begin about how to fix those metrics, and we're back to square one, but I'd argue that there is plenty of evidence for people who want to make the case that the current incentives in American capitalism are unfair, if not unjust.

by kobeya 9y ago

arthur_pryor 9y ago

ok, first, i appreciate your more fleshed out argument here. > The problem is that while it is easy to cook up such what-if thought experiments, it is not easy to quantify the result into a mathematical model of moral social utility. that said... you seem to be implying that we should do things only if we can make decisions using a well understood objective model with easily measurable inputs and outputs. but if that model leads us to a world that i'd characterize as a moral travesty ("all the wealth gets concentrated in the 1% and the remaining 99% becomes literal slaves"), i'll take my chances with the thing that's hard to quantify that might get us a better outcome. and maybe that'll lead to even worse suffering. but seems worth a shot. EDIT: as a deeply logical person who greatly values the scientific method, i understand the desire to come up with a model of morality that has strong mathematical foundations, which can have its tenets checked against empirical evidence to provide us with something closer to a mechanically produced answer to a moral question. but i don't think we're there yet. and i think to some degree, it's fundamentally impossible, but i think we could get closer, and i think beyond some core moral tenets, it is best to optimize in a utilitarian way. but before we start the optimizing, i want to prevent things like slavery, or even de facto indentured servitude. i wish i could provide you with something like a mathematical proof of why indentured servitude is bad, but i'm going to keep operating on the premise that it's bad, despite the fact that i can't prove it in a mathematically rigorous way.

EGreg 9y ago
May I suggest that most non-sociopaths would like to see their society maximize the minimum of what people have, rather than minimize the maximum? It goes by many names Unconditional Basic Income Negative Income Tax Social safety nets Single Payer systems Or various Welfare schemes
- kobeya 9y ago
  Ah so if I disagree with you I'm a sociopath? That's not a friendly rhetorical tactic btw. It may not be obvious, but your post is not critiquing capitalism. Free-market capitalism is solution in the space of how we decide to allocate scarce resources. It stands mostly in contrast to various forms of collectivism and central decision making (socialism). Take UBI/negative income tax since it is most relevant to the linked article. UBI is the equivalent of saying that rather than construct our incentive models in such a delicately balanced way as to target a specific value of τ, the wealth redistribution constant, let's just forceably redistribute wealth by that amount. It's only non-capitalist in the sense that any form of taxation and central governance structure is non-capitalist, but of possible welfare schemes it is probably the most capitalist -- it punts the issue of how those funds should be spent and lets their new owners decide.
  - EGreg 9y ago
    Well you likened those who merely disagree with the idea that Capitalism is as inevitable as gravity, to Flat Earthers - and now you complain? If it makes you feel better I said "most non-sociopaths want A", which doesn't imply that you are one if you don't want A. Nor does it imply that you are not a sociopath if you want A. But seriously, if you are ok with the poor running out of resources and starving, or even want it, then you'd be considered a sociopath. "Free-market capitalism is solution in the space of how we decide to allocate scarce resources." Exactly, which is why "we" is the society, and "we" usually decide that every human being is entitled to have their minimum needs met. The one who disagrees is labeled a sociopath - that's just how it works. Some nihilists for example may have a completely logical theory as to why people, like companies, should be subjected to market forces. "If animals die from hunger why not humans? If you don't work, you don't eat." But we don't reason with them, we dismiss them because our basic values are different. Do you understand now that I chose my words carefully? And what are those basic needs? Potable running water goes to your sink. That's not required for survival. Most societies carried water from the river. Romans had aqueducts but they didn't go to people's houses. Child mortality is down because of advancements in science and medicine. Who do we pay for all these things? The scientists who contributed to the growing snowball of knowledge are long dead. We are lucky to have been born in the 20th and 21st centuries and benefit from the amazing wealth humanity has built up. Capitalism deals with conferring PRIVATE PROPERTY rights to individuals and privately owned organizations of any size. PRIVATE PROPERTY IS A MONOPOLY RIGHT TO EXCLUDE OTHERS FROM THE USE OF A RESOURCE. Show me that this is always the best way to allocate the resources. Is selling a lake to a capitalist the best way to make sure the lake is not polluted? Is enforcing the monopoly right of an inventor to threaten others at the point of a gun (see what I did there) to extract rents from them for building on their idea the best way to promote scientific progress and software and drugs?

RealityNow 9y ago

It's impossible to come up with objective metrics as to how a society should be organized and what it should prioritize because that is an inherently political endeavor. That's why economics will never be a science, just like politics will never be a science.

rev_bird 9y ago

First off, I wanted to thank you for such a well thought-out post. There's a lot of room for condescension in discussions about stuff as fuzzy as economics, especially as it relates to overtly political debates, and it was refreshing to see someone acknowledge the weak points (or at least the most debatable issues) of their position. I'm curious about one assertion you made in particular: >it is not easy to quantify the result into a mathematical model of moral social utility. Come up with such an objective, measurable metric and economists will start using it. I agree that this is a hard problem, but I can't help thinking that we are already pretty close to at least being able to at least measure symptoms of an "immoral" economy -- like if we couldn't graph a function, but COULD graph its derivative. I'm thinking of metrics we already have: overall distribution of wealth (and its change over time), inter-generational economic mobility, rates of poverty/hunger/homelessness, access to essential services, educational outcomes based on family income, you get the idea. We know having money is a huge leg up, we know a child whose parents make $18,000 a year doesn't have the same chances (or even access to comparable education) as a child in an affluent family. I'm wandering off into other, more contentious debates, but my point is that there are plenty of metrics we already have that we can point to and say, "This is a bad sign. This is not a good number, and its badness is self-reinforcing and will only get worse." Just look at productivity: it's gone up consistently, year over year, for decades, and yet the real value of wages hasn't moved. SOMEONE is profiting off of that surplus value, but it certainly isn't the workers. At that point, the arguments begin about how to fix those metrics, and we're back to square one, but I'd argue that there is plenty of evidence for people who want to make the case that the current incentives in American capitalism are unfair, if not unjust.