As was foretold, we've added advertisements to the forums! If you have questions, or if you encounter any bugs, please visit this thread: https://forums.penny-arcade.com/discussion/240191/forum-advertisement-faq-and-reports-thread/
Options
What's the primary goal of the good economic management?
itylus
Registered User regular
Registered User regular
What the title says.
A slightly longer version: this morning I finished reading "Ozonomics" by Andrew Charlton, which, given that it's by someone with a PhD from Oxford and comes with a recommendation from Joseph Stiglitz, was rather bland and disappointing. Still, I generally agreed with the broad brushstrokes of what he was saying, and it's always good to see someone giving the reputation of Howard and Costello as "good economic managers" a kicking.
Anyway, he kept criticising Howard and Costello for basically putting their emphasis on public debt and interest rates as the two most important indicators of the government's success as an economic manager. This is natural in that the Howard government has paid down the public debt and kept interest rates low during their term in office, so obviously they want to say that those are the most important things for political reasons. Charlton, on the other hand, said that Productivity is basically the first and last item on the menu so far as what matters in economics goes. Productivity is the difference between being a poor country or a rich country, or a poor person or a rich person, and the rest of the economy is just details. The other two items on his list of "the big three" were employment and equality, I think. Or growth and equality? Can't remember, don't think it's too important.
I guess this was the part I disagreed with. I thought, where's the environment in this? What happens if we're all producing furiously, but most of our consumption is of status-oriented goods that don't actually make us any happier in aggregate, and all the while we're doing irreperable damage to our planet? Is that really an optimal economic situation?
Anyway, I thought it might be interesting to ask people here to nominate what they see as being the most important goals of economic management. I want to deliberately avoid talking about *how* to achieve those goals - all that fairtax and free trade stuff isn't on the agenda - and just look at what we think those goals should be. I'm going to write a long list of indicators, and ask for you just to nominate a short list (I'd suggest three, but choose just one or more than three if you can't restrain yourself) of which you think are the most important. Feel free to use terms of your own if you don't find what you want in my list. Note that some of the things on the list are "bad" or "good", but assume if you're putting it on your list it means you want a good outcome in relation to that thing: i.e., having "unemployment" on your list would mean you think low unemployment is of primary importance. The list is kind of arbitrary and based on what occurred to me off the top of my head, but it's basically meant to just give shape to ideas about "what we want from the economy".
My own top three:
1. Environmental Sustainability
2. Life Satisfaction
3. Economic Growth
My list of possibles:
Environmental Sustainability, Life Satisfaction, Economic Growth, Productivity, Interest Rates, Public Debt, National Debt, Educational Attainment, Technological Progress, Employment, Equality, Equality of Opportunity, Opportunity, Capital Growth, Agriculture, Manufacturing, Services, Stability, Military Production, Trade Surpluses, Economic Independence, Eradication of Poverty, Social Harmony...
A slightly longer version: this morning I finished reading "Ozonomics" by Andrew Charlton, which, given that it's by someone with a PhD from Oxford and comes with a recommendation from Joseph Stiglitz, was rather bland and disappointing. Still, I generally agreed with the broad brushstrokes of what he was saying, and it's always good to see someone giving the reputation of Howard and Costello as "good economic managers" a kicking.
Anyway, he kept criticising Howard and Costello for basically putting their emphasis on public debt and interest rates as the two most important indicators of the government's success as an economic manager. This is natural in that the Howard government has paid down the public debt and kept interest rates low during their term in office, so obviously they want to say that those are the most important things for political reasons. Charlton, on the other hand, said that Productivity is basically the first and last item on the menu so far as what matters in economics goes. Productivity is the difference between being a poor country or a rich country, or a poor person or a rich person, and the rest of the economy is just details. The other two items on his list of "the big three" were employment and equality, I think. Or growth and equality? Can't remember, don't think it's too important.
I guess this was the part I disagreed with. I thought, where's the environment in this? What happens if we're all producing furiously, but most of our consumption is of status-oriented goods that don't actually make us any happier in aggregate, and all the while we're doing irreperable damage to our planet? Is that really an optimal economic situation?
Anyway, I thought it might be interesting to ask people here to nominate what they see as being the most important goals of economic management. I want to deliberately avoid talking about *how* to achieve those goals - all that fairtax and free trade stuff isn't on the agenda - and just look at what we think those goals should be. I'm going to write a long list of indicators, and ask for you just to nominate a short list (I'd suggest three, but choose just one or more than three if you can't restrain yourself) of which you think are the most important. Feel free to use terms of your own if you don't find what you want in my list. Note that some of the things on the list are "bad" or "good", but assume if you're putting it on your list it means you want a good outcome in relation to that thing: i.e., having "unemployment" on your list would mean you think low unemployment is of primary importance. The list is kind of arbitrary and based on what occurred to me off the top of my head, but it's basically meant to just give shape to ideas about "what we want from the economy".
My own top three:
1. Environmental Sustainability
2. Life Satisfaction
3. Economic Growth
My list of possibles:
Environmental Sustainability, Life Satisfaction, Economic Growth, Productivity, Interest Rates, Public Debt, National Debt, Educational Attainment, Technological Progress, Employment, Equality, Equality of Opportunity, Opportunity, Capital Growth, Agriculture, Manufacturing, Services, Stability, Military Production, Trade Surpluses, Economic Independence, Eradication of Poverty, Social Harmony...
itylus on
0
Posts
That's the thing, economists mostly dump that stuff in the too-hard basket and pretend it doesn't exist.
We don't, and haven't.
Fact: We can build new oil refineries that produce more gas and by products per barrel. These new refineries are safer, and are better for the environment. We could get more MPG out of the gasoline.
We don't, and haven't.
Trying to manage the economy to be best beneficial to the environment is necessarily something that economists do not want to do. It is something that politically economists, managers, and CEO's have hit a roof trying to do.
Politics has killed the free-market system in America.
That being said,
Environmental Sustainability
Technological Progress
Economic Independence (If by this you mean trade surpluses, reducing the national dependency on foreign investments, reducing the national debt, and essentially moving more towards an isolationists view of the economy.)
Our greatest time of progress in any respect comparatively was during isolationism when we only cared about the western hemisphere and problems there. That includes industrially, economically, and socially.
I don't think it's being dumped in the "too hard" basket so much as it's being dumped into the "it's not a direct cost to the business I'm focusing on so I don't care about it" basket.
Net Quality of Life.
...
Those are like the two I care about really on a roughly equal basis and largely because they encompass everything else. That said a third would be "Progress" in the sense that I'm not interested in trading Quality of Life for Sustainability.
People value what they value, and an economist is going to value getting paid, and people will value whatever they're taught or otherwise learn to care about within the time frame they care about. Some will worry for the future of the world, some will worry for the future of their wallet while they can still get away with clubbing. So, if an economist wants to achieve the goal of mo' money, they have to focus on whatever is popular.
Economics has to deal with the perpetual war with the personal present and the public future.
And, unfortunately, many of the people who actually DO care about the public future are being muddled by the people who are aiming for the personal future; see stupid nuclear hate thing maintained by people who want to get elected or whatever.
Primary goal though? Sustainability.
That's about it right there. I'm all for environmental regulations when you can prove the environment is being harmed, but when proof is staring you in the face and you don't do anything because you're afraid of absurd political repercussions?
The thing is, it's hard to know what the solution is.
Requiring that advocates show their credentials?
I'm pretty sure most already do, but that's not much of a factor for many politicians.
Plenty of economists do their work in the area of "whole economy" effects, though, so I wouldn't have thought this was a universal issue.
I guess I'm with Cat in that the problem is saying "quantifying these costs is very difficult, therefore let's assume they're zero". That seems like a very irrational approach to me. Much better would be "we assume these costs as being X, we know it's hard to be exact but this is our provisional number. As soon as someone comes up with a convincing argument for why it should be Y rather than X, we'll change it to X." Assuming that costs which are difficult to calculate default to zero seems... optimistic would be a kind word for it.
Or perhaps it's to do with an ideological attachment to the idea that the market produces prices for things which are normative-value-free. Whether this is really credible is another question, but clearly it's not going to work for something like pollution or global warming or whatever. Individuals and corporations clearly do not factor in externalities that fall on future generations when making their pricing decisions... which means that those externalities ought to be decided on normatively and then implemented by government regulation... something which many economists oppose on principle.
What do you mean by quality of life? The continued or increasing production of goods and services?
I'm not stretching to hyperbole or forecasting some terrible inevitability because I don't have any sense of the figures or time-scales involved, but with the burgeoning world population and increasing industrialisation of countries such as India and China in I get the impression that the balancing act will become a lot harder to enforce. Everyone is rushing to produce and consume - the western world can hardly begrudge any other countries their economic development - and there seems very little that anyone can do stop this process short of a paradigm shift in human attitudes.
Or put it another way - while you certainly see the megarich consuming extravagantly, the things the rest of us use in our day to day lives aren't necessarily impossible to provide on a large scale to everybody - at least in my opinion. Some would argue this.
I'm reminded of some graffiti in the movie "Children of Men" that said:
"Would the last person alive please turn out the lights."
Its sort of haunting that in my lifetime or my childrens lifetime it really could get to an apocalyptic shift where the ocean currents stop moving in just the right way. The ocean becomes too acidic to support most marine life. Wars will start being fought over fresh water instead of oil.
Even in Canada the government caught a HUGE amount of flak for pulling out of the Kyoto accord. Even though it wasnt really their fault, the previous government that signed on didnt do enough to allow us to make the goals and deadlines. But here we are years later still not even beginning to slow down let alone swing in the other direction.
MWO: Adamski
It's really difficult for Canada because there is a lot of growth in Oil production, and that is typically a very large large emitter of carbons.
I was at a meeting in Toronto where the keynote speaker touched on his skepticism about global warming (the topic was of tertiary importance). He was questioned at the end of his presentation - I'm not going to mention most of his assertions, but one of the most interesting things he said was that Canada has a lot to gain from Global Warming. Apparently, according to the National Geographic, Canada would benefit the most from climate change, after Russia. His point was that if the Americans, Chinese and Indians, who have a lot to lose from global warming don't want to do anything, then Canada should not stop them. He's an interesting guy. Slightly crazy, but he's quite brilliant at what he does.
There is actually a word for it - externality (or 'neighborhood effects'). It is not that they do not exist, but they are not factored into a company's balance sheet because, as you said, it is too difficult to quantify qualitative effects. And things that are not quantifiable are out of the scope of traditional economics. But that doesn't stop people from trying to quantify everything. And it does not mean that economics is bullshit, just that it is foolhardy to use economic policy to affect the environment.
Environmental policy is thus separate from economic policy. The former should limit the latter, but should be careful not to strangle it. It is a difficult balancing act.
I would have to agree with Charlton. Productivity growth should be the only economic goal, beyond the obvious (maintaining the currency, inflation, unemployment, balancing the budget). In the long it is the only cause of GDP growth.
As for equality, there is no problem with wage disparity (other than envy), as long as the median wage is growing (it is not). Beyond financially allowing for public services that increase social mobility (schooling, medical) there should be no other goals of economic policy in this regard.
Neither did the liberal government who signed the damned thing. I wish they would both get their collective heads out of their asses, stop bickering and actually DO something.
The libs sign the treaty, and the tories berate them for strangling Canada's economy.
The tories come into power, say they cannot hold to the targets because the libs didnt do enough and they try to implement the clean air act. Which the whole country hates because it doesnt even attempt to resolve anything until 2050. So the whole no confidence thing causes the tories to actually write something, even then we arent looking at any serious attempts at improvements until 2012.
MWO: Adamski
Canada has a hell of a lot to lose due to climate change - certainly more than the Americans, at any rate. The only potential benefit would be the opening of the Northwest Passage, but that will only benefit us if the Americans don't annex our territory again. I'm still not convinced that the benefits of opening the Northwest Passage outweight the costs of damage to the Canadian environment. Specifically with regards to food production and resource extraction (just look at the devastation that the Mountain Pine Beetle has had, for one).
As far as tar sand production goes...That is a whole other can of worms. Stelmach is in the pocket of the Texas oil monkies and won't listen to reason when it comes to carbon emissions and rate of development - factor in the absolutely ludicrous policy of fucking over Newfoundland and Labrador (and their own reserves) and the insane rate of production from Alberta, and you have a clusterfuck of competing interests. All of which will be seriously hurt by global warming and environmental degradation. Especially Alberta. It takes something like four barrels of water to get one barrel of oil from the tar sands, and that is having a serious impact on the watersheds of northern Alberta and the Northwest Territories.
No; it's because these costs are shared across the population and are not direct costs to the company and/ or shareholders. Of course it's possible to at least roughly quantify the direct effects of environmental degradation and most other externalities.
Social instability, strongly divided economic demographics, and the effects of concentrated wealth on politics are strong "externalities" regardless of whether the guy in the middle of the curve got a raise.
I am not convinced that there is definite reason to actually try. Economic policy shouldn't focus on the externalities, as most them have their own policy departments.
I would disagree. The median income and its growth rate is a powerful determinate of social unrest. More Americans are concerned with the fact that their purchasing power has not increased significantly in the last 30 years than anything else economically.
I'm more concerned with lessening the effect of your parent's income on yours than punishing you if you do well financially.
To be fair, externalities are what everyone but the most diehard libertarian agrees is one of the best reasons for government intervention in the market. The producer and the consumer by definition don't care because the externality doesn't effect them, so it's up to regulations to control the impact, collect compensation for the externality, and redistribute it to the effected parties.
It's the reason things like a carbon tax are such good ideas, both because it helps correct the imbalance and because by making the producer/consumer bear the cost they drive them to find ways to avoid the externality in the first place.
Truth.
Limed for truth. I am in favor of anything to make that mother fucker driving around a hummer or the 10' tall oversized pickup truck that drive around all day for things they could have just have easily of done in a SMART CAR or a Hybrid of some sort. In the case of the hummer driver its a double annoyance because you KNOW they could easily afford something else.
EDIT: I may or may not be bitter because some guy in a H3 decided to hog both lanes bottlenecking traffic where everyone is trying to turn right. Even thought they fit into the left lane I watched as the fucker turned over to block the right like a prick.
MWO: Adamski
Dust-to-dust, Hummers are more energy efficient than both Civics and Hybrids. Clicky. Buy a Civic if you want to save on fuel costs - not because you want to save the environment.
Also - don't buy a Prius. The production of their batteries damages the environment, and it takes 60 months of filling up your tank to offset its premium price. Don't buy a Prius.
EDIT: Hahaha the more I look into that linked report the more bullshit "lol oil industry" comes out of it.
This was perhaps true a few decades back, as far as I'm aware. However there's now huge amounts of work being done on incorporating environmental effects into the market structure, and any economist keeping up with developments should be considering environmental externalities (that is, when speaking from an independant third-party style viewpoint). There are a great number of ways used to value environmental assets and environmental damage, and first-world governments are using these in attempts to restrain damage to the environment. We don't live in an ideal world, but we're progressing, right?
One shouldn't confuse the practice of economics with the practice of simply maximising profits for multi-national corporations, which seems to be a popular conception.
I added the emphasis here, sorry if I'm misrepresenting you, electricitylikesme.
http://newnations.bandcamp.com
Personally, I'd say it's the opposite. Since the 70's, the 'political' families and the 'economist' families have combined, which gives us a bunch of politicians who think only about their gains, and an administration that is dominated top-down by Oil Barons, and BAM, you have the ecopolitical incest that was the 1890s.
It's both killing both.