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"Efficiency" is total Utility produced with the available resources. > People choosing free ice cream over expensive beer doesn't strike me as inefficient. Bu

"Efficiency" is total Utility produced with the available resources. > People choosing free ice cream over expensive beer doesn't strike me as inefficient. But it is! With the total available resources we have two options: All get beer. Or all get ice cream. Total utility (value/happiness/whatever) is maximized when everyone gets beer. When resources are unevenly distributed, ice cream is subsidized, and all get ice cream. When resources are evenly distributed everyone can make the choice themselves, and they get beer. Clearly "resources evenly distributed" had the better outcome.

robertlagrant 4y ago
Ah! I understand. I agree that if you do that once, it works one time. But as soon as you take the money they all gave to the bartender and redistribute it, to maximise happiness, and they all buy more beer, you might start to spot where this falls down as a useful model, mightn't you?
- geysersam 4y ago
  I haven't said anything about redistributing wealth. The point is not that redistribution is a good idea. The point is that wealth inequality makes the economy less efficient, and that it is something we should take into consideration. Redistributing wealth might also make the economy less efficient, that's an argument that can be made. From where I stand, it seems the inefficiency caused by wealth inequality is too rarely discussed relative to its harmful impact. The problems caused by redistribution/taxes etc. are otoh extremely often raised.
  - robertlagrant 4y ago
    Fair point - you didn't mention redistribution. But I do think your argument of efficiency is not persuasive, as the definition of utility relies on people making choices they never regret, or that don't harm their total lifetime utility. E.g. some people might want to take that money and save it, and if you come back to the situation in a year's time they now have more money than the people that bought beer. Now there's wealth inequality and they can buy something the others can't. Viewing the original situation in microcosm makes buying beer the "efficient" thing to do, but it also makes the second scenario less "efficient".

robertlagrant 4y ago

Ah! I understand. I agree that if you do that once, it works one time. But as soon as you take the money they all gave to the bartender and redistribute it, to maximise happiness, and they all buy more beer, you might start to spot where this falls down as a useful model, mightn't you?

geysersam 4y ago
I haven't said anything about redistributing wealth. The point is not that redistribution is a good idea. The point is that wealth inequality makes the economy less efficient, and that it is something we should take into consideration. Redistributing wealth might also make the economy less efficient, that's an argument that can be made. From where I stand, it seems the inefficiency caused by wealth inequality is too rarely discussed relative to its harmful impact. The problems caused by redistribution/taxes etc. are otoh extremely often raised.
- robertlagrant 4y ago
  Fair point - you didn't mention redistribution. But I do think your argument of efficiency is not persuasive, as the definition of utility relies on people making choices they never regret, or that don't harm their total lifetime utility. E.g. some people might want to take that money and save it, and if you come back to the situation in a year's time they now have more money than the people that bought beer. Now there's wealth inequality and they can buy something the others can't. Viewing the original situation in microcosm makes buying beer the "efficient" thing to do, but it also makes the second scenario less "efficient".