6 ms·

They can also profit from either the sale of the lobsters or the sale of services to fishermen.

rayiner 12y ago
As broken down above, most of the money from that lobster ultimately goes somewhere else. But that's the reality of the market. Bengali villagers don't have the capital to get lobsters from water to the table where someone will pay $60 for it. The companies that do have all the leverage, and extract most of the value. Are they better off in some sense? Sure. But unless you're an economist, you have to posit that the enjoyment from a lobster dinner is the same whether you're a Bengali villager or a yuppie in San Francisco. In a sense they're giving up $60 of enjoyment to get a couple of dollars of cash.
- jrells 12y ago
  If the lobster were so valuable to the locals, they probably wouldn't be selling them far below $60.
  - harlanlewis 12y ago
    If you're being paid for labor to extract a resource, your wage is much more closely tied to difficulty and volume than sale value.
  - rayiner 12y ago
    The value of that lobster dinner is $60 to someone in SF. If the locals choose to sell them for the few dollars they get for them, either: 1) the locals are irrational; 2) or the value of the dinner to them is less than a few dollars. In neoclassical economics, we assume rational actors. So it must be 2. But why would a Bengali villager get much less utility out of a lobster dinner than a San Francisco yuppie? Sesfood is a staple in Bangladesh, and lobster is a delicacy. [1] The answer is because they're poor: measured by the market, they, ostensibly, ascribe less value to everything than the San Francisco yuppie. That's an interesting result. The San Francisco yuppie derives far more utility from that lobster than the Bengali villager does. Why? Because he's richer. By the measure of the market, the rich derive far more utility from everything, and the market allocates scarce resources to those who value them the most. [1] This is not an example out of an economics textbook, where country A sells something it doesn't value to country B who does value it.
    - briandh 12y ago
      You're forgetting that $60 buys much more in Bengal than it does in SF.
    - _dps 12y ago
      There's an important part of utility theory that answers this question: utility is not comparable between people, only between options available to a single person. So Yolanda-Yuppie gets more Yolanda-utility out of a lobster than she would out of keeping her $60. Vikram Villager gets more Vikram-utility out of a few more dollars of income than he would out of keeping his lobster. No mainstream utility theorist would claim to quantitively compare Yolanda-utility to Vikram-utility. Edit/Clarification: the essence of social welfare economics is in trying to do interpersonal utility comparisons that yield a social utility function that behaves as much as possible like a personal utility function. Arrow's theorem tells us that this is not possible to do perfectly; any attempt to do so will result in one of several significant deviations from what we consider "utility" for a single person.
      - rayiner 12y ago
        You're correct, but that's the boring way of saying it. The Bengali villager doesn't sell the lobster because he gets less pleasure out of eating the lobster than the San Francisco yuppie. Obviously, he forgoes the delicacy, one with a rich culinary tradition in his country, because he has to. Because he has limited choices while the San Francisco yuppie has many choices. The market works to allocate him a couple of dollars worth of necessities at the cost of forgoing a pleasure for which the San Francisco yuppie is willing to pay $60. I think this situation is a great illustration of the human implication of the economics you just recited.
        icebraining 12y ago
        Why does he have to? He lived before the yuppie offered to pay for it, so he could refuse and eat the damn lobster. All the market has done is given him an extra option.
- nickff 12y ago
  >"In a sense they're giving up $60 of enjoyment to get a couple of dollars of cash." You could also make the argument that the villagers have the opportunity to have $60 of enjoyment at a bargain price, whereas the San Francisco yuppies must pay a high price.
- QuantumChaos 12y ago
  >As broken down above, most of the money from that lobster ultimately goes somewhere else. You can't have it both ways. The only affect that the market has on the local market for lobsters in Bangladesh, is via the price in Bangladesh, i.e. the price the fishermen pay. So to the extent that they are affecting the market in Bangladesh, they must be paying higher prices, and therefore the parent comment applies. >But unless you're an economist, you have to posit that the enjoyment from a lobster dinner is the same whether you're a Bengali villager or a yuppie in San Francisco. In a sense they're giving up $60 of enjoyment to get a couple of dollars of cash. The economists are in fact correct. You cannot measure enjoyment in dollars, because $60 will buy a lot more additional enjoyment for a Bengali villager than a San Francisco yuppie. So the villager would be willing to give up the enjoyment of a lobster dinner for much less than $60, which is precisely what they are doing.
- thaumasiotes 12y ago
  > But unless you're an economist, you have to posit that the enjoyment from a lobster dinner is the same whether you're a Bengali villager or a yuppie in San Francisco. Huh? I could take a friend to a restaurant and order two of the same dish. Odds are sky-high that enjoyment from eating the same dish, prepared in the same restaurant, against the same cultural background, would be rather different.
  - deleted 12y ago
    [deleted]

As broken down above, most of the money from that lobster ultimately goes somewhere else. But that's the reality of the market. Bengali villagers don't have the capital to get lobsters from water to the table where someone will pay $60 for it. The companies that do have all the leverage, and extract most of the value. Are they better off in some sense? Sure. But unless you're an economist, you have to posit that the enjoyment from a lobster dinner is the same whether you're a Bengali villager or a yuppie in San Francisco. In a sense they're giving up $60 of enjoyment to get a couple of dollars of cash.

jrells 12y ago
If the lobster were so valuable to the locals, they probably wouldn't be selling them far below $60.
- harlanlewis 12y ago
  If you're being paid for labor to extract a resource, your wage is much more closely tied to difficulty and volume than sale value.
- rayiner 12y ago
  The value of that lobster dinner is $60 to someone in SF. If the locals choose to sell them for the few dollars they get for them, either: 1) the locals are irrational; 2) or the value of the dinner to them is less than a few dollars. In neoclassical economics, we assume rational actors. So it must be 2. But why would a Bengali villager get much less utility out of a lobster dinner than a San Francisco yuppie? Sesfood is a staple in Bangladesh, and lobster is a delicacy. [1] The answer is because they're poor: measured by the market, they, ostensibly, ascribe less value to everything than the San Francisco yuppie. That's an interesting result. The San Francisco yuppie derives far more utility from that lobster than the Bengali villager does. Why? Because he's richer. By the measure of the market, the rich derive far more utility from everything, and the market allocates scarce resources to those who value them the most. [1] This is not an example out of an economics textbook, where country A sells something it doesn't value to country B who does value it.
  - briandh 12y ago
    You're forgetting that $60 buys much more in Bengal than it does in SF.
  - _dps 12y ago
    There's an important part of utility theory that answers this question: utility is not comparable between people, only between options available to a single person. So Yolanda-Yuppie gets more Yolanda-utility out of a lobster than she would out of keeping her $60. Vikram Villager gets more Vikram-utility out of a few more dollars of income than he would out of keeping his lobster. No mainstream utility theorist would claim to quantitively compare Yolanda-utility to Vikram-utility. Edit/Clarification: the essence of social welfare economics is in trying to do interpersonal utility comparisons that yield a social utility function that behaves as much as possible like a personal utility function. Arrow's theorem tells us that this is not possible to do perfectly; any attempt to do so will result in one of several significant deviations from what we consider "utility" for a single person.
    - rayiner 12y ago
      You're correct, but that's the boring way of saying it. The Bengali villager doesn't sell the lobster because he gets less pleasure out of eating the lobster than the San Francisco yuppie. Obviously, he forgoes the delicacy, one with a rich culinary tradition in his country, because he has to. Because he has limited choices while the San Francisco yuppie has many choices. The market works to allocate him a couple of dollars worth of necessities at the cost of forgoing a pleasure for which the San Francisco yuppie is willing to pay $60. I think this situation is a great illustration of the human implication of the economics you just recited.
      - icebraining 12y ago
        Why does he have to? He lived before the yuppie offered to pay for it, so he could refuse and eat the damn lobster. All the market has done is given him an extra option.
nickff 12y ago
>"In a sense they're giving up $60 of enjoyment to get a couple of dollars of cash." You could also make the argument that the villagers have the opportunity to have $60 of enjoyment at a bargain price, whereas the San Francisco yuppies must pay a high price.
QuantumChaos 12y ago
>As broken down above, most of the money from that lobster ultimately goes somewhere else. You can't have it both ways. The only affect that the market has on the local market for lobsters in Bangladesh, is via the price in Bangladesh, i.e. the price the fishermen pay. So to the extent that they are affecting the market in Bangladesh, they must be paying higher prices, and therefore the parent comment applies. >But unless you're an economist, you have to posit that the enjoyment from a lobster dinner is the same whether you're a Bengali villager or a yuppie in San Francisco. In a sense they're giving up $60 of enjoyment to get a couple of dollars of cash. The economists are in fact correct. You cannot measure enjoyment in dollars, because $60 will buy a lot more additional enjoyment for a Bengali villager than a San Francisco yuppie. So the villager would be willing to give up the enjoyment of a lobster dinner for much less than $60, which is precisely what they are doing.
thaumasiotes 12y ago
> But unless you're an economist, you have to posit that the enjoyment from a lobster dinner is the same whether you're a Bengali villager or a yuppie in San Francisco. Huh? I could take a friend to a restaurant and order two of the same dish. Odds are sky-high that enjoyment from eating the same dish, prepared in the same restaurant, against the same cultural background, would be rather different.
- deleted 12y ago
  [deleted]