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Pareto improvements are positive sum.

malandrew 6y ago
Thanks for the correction. That said I would say "pareto improvements can be positive sum" since they can be but aren't necessarily so.
- chordalkeyboard 6y ago
  My understanding is that pareto improvements are positive sum by definition. >> Given an initial situation, a Pareto improvement is a new situation where some agents will gain, and no agents will lose. [0] Neonological seems to believe that pareto improvements are not possible because of negative externalities. Maybe they are right but positive externalities also need to be accounted for. https://en.wikipedia.org/wiki/Pareto_efficiency https://en.wikipedia.org/wiki/Pareto_efficiency
  - neonological 6y ago
    One way to see that the externality is overall negative is to make a small model of the economy with even tighter limits on the energy resource. You can literally hold this model in your head. We both agree that energy is a limited resource and that usage of a limited resource prevents others from using that resource and is thus zero sum. Just replace all available energy with a free triple A battery gifted to you by the government per day. That battery can’t even push your car 100 meters. If you can’t drive then the suburban layout of US cities can’t even function. Every aspect of the economy will grind to a near standstill. Energy is the primary resource that drives everything in an economy, everything. Because energy is limited the game in every economy is in actuality overall zero sum. Because energy is relatively abundant right now, certain models of the economy sort of do work for certain scenarios when they don’t account for energy. But I think these models are still bad because, practically, even differences in energy utilization correlate with how technically advanced an economy is. Once energy is used up, then all economies are basically dead. There is no positive externality here. Every economic transaction involves energy and is thus zero sum. If the United States uses up all the oil in the world to build its advanced economy then other countries and people in the future and past cannot build that same economy because there is no oil. Zero sum.
ZWoz 6y ago
Pareto improvements are theoretical concept. neonological argues here, that those are impossible in reality. I think this is pretty hard to argue one or other way, because side effects of our activities aren't always obvious. Things like tumbleweed in northern america or any accidentally imported plant/animal is good example about costs, that arrive later and for other people. Though I think there is possible to construct some clear Pareto improvement cases, like early improvements of internal combustion engine, where I don't see possibility of negative effects, only additional power out of same amount of fuel.
- neonological 6y ago
  From certain perspectives increasing available energy or increasing energy efficiency is a net positive. But the modus operandi of humans is to pay for goods because of limited supply. The game is basically zero sum but occasionally you roll some dice and if it lands on a 6 you can increase the total sum. However the game in between the dice rolls is zero sum. To frame it in a real world example: you still pay for energy as if it was limited even though nuclear fusion has the potential to make it unlimited. Growth in terms of resource discovery and better technology is not zero sum. But exchanges and transactions in terms of current available resources and technology is zero sum. That should help setup a dichotomy and clarify things.

Thanks for the correction. That said I would say "pareto improvements can be positive sum" since they can be but aren't necessarily so.

chordalkeyboard 6y ago
My understanding is that pareto improvements are positive sum by definition. >> Given an initial situation, a Pareto improvement is a new situation where some agents will gain, and no agents will lose. [0] Neonological seems to believe that pareto improvements are not possible because of negative externalities. Maybe they are right but positive externalities also need to be accounted for. https://en.wikipedia.org/wiki/Pareto_efficiency https://en.wikipedia.org/wiki/Pareto_efficiency
- neonological 6y ago
  One way to see that the externality is overall negative is to make a small model of the economy with even tighter limits on the energy resource. You can literally hold this model in your head. We both agree that energy is a limited resource and that usage of a limited resource prevents others from using that resource and is thus zero sum. Just replace all available energy with a free triple A battery gifted to you by the government per day. That battery can’t even push your car 100 meters. If you can’t drive then the suburban layout of US cities can’t even function. Every aspect of the economy will grind to a near standstill. Energy is the primary resource that drives everything in an economy, everything. Because energy is limited the game in every economy is in actuality overall zero sum. Because energy is relatively abundant right now, certain models of the economy sort of do work for certain scenarios when they don’t account for energy. But I think these models are still bad because, practically, even differences in energy utilization correlate with how technically advanced an economy is. Once energy is used up, then all economies are basically dead. There is no positive externality here. Every economic transaction involves energy and is thus zero sum. If the United States uses up all the oil in the world to build its advanced economy then other countries and people in the future and past cannot build that same economy because there is no oil. Zero sum.

ZWoz 6y ago

Pareto improvements are theoretical concept. neonological argues here, that those are impossible in reality. I think this is pretty hard to argue one or other way, because side effects of our activities aren't always obvious. Things like tumbleweed in northern america or any accidentally imported plant/animal is good example about costs, that arrive later and for other people. Though I think there is possible to construct some clear Pareto improvement cases, like early improvements of internal combustion engine, where I don't see possibility of negative effects, only additional power out of same amount of fuel.

neonological 6y ago
From certain perspectives increasing available energy or increasing energy efficiency is a net positive. But the modus operandi of humans is to pay for goods because of limited supply. The game is basically zero sum but occasionally you roll some dice and if it lands on a 6 you can increase the total sum. However the game in between the dice rolls is zero sum. To frame it in a real world example: you still pay for energy as if it was limited even though nuclear fusion has the potential to make it unlimited. Growth in terms of resource discovery and better technology is not zero sum. But exchanges and transactions in terms of current available resources and technology is zero sum. That should help setup a dichotomy and clarify things.