Well, the real problem is, what we define as rational decision. "Objectively" very self-destructive behaviour could be rationalized by the appropriate preferences (or utility functions in economist-speak). Economics can tell you the efficient action with given preferences, but stays mostly silent about how the preferences come about. But since with cigarettes preferences become endogenous, I do think that even those preferences are becoming an economic issue because you choose them ex ante...
My point was to show that addiction to nicotine is nether rational or irrational, but chemical in nature. You also have limitation of natural resources, pollution, energy demands; which are non-human forces at work in a system that is said to be free of force or fraud, and thus have no rational at all, but still have an impact on the economy.
Sure, there are tons of constraints and externalities. This is what economics is about. Getting by in an environment that is constrained in recources etc.
I agree with you that not everything is economic in nature,but many economists nowadays think that they can't take these limitations at face value. Somehow,they need to get incoorperated into the models (some of them are, albeit imperfectly),because otherwise the economic answers to for instance pollution are relatively meaningless.Of course then one would have to depart from the idea that markets are perfect and that it is all the governments fault. I doubt that Libertarians are ready for that.
I found your cigarette example to be really interesting. When I thought about though I realized that there is a profit to gain from not smoking, such as health benefits or saving your money. So those benefits could be seen as competition to cigarettes, whether it's adequate competition is up to the individual. The alternative would be to make cigarettes illegal, but doesn't that undermines free will as well? Your thoughts?
In fact, it is pretty silly to assume that the free market wants people to be stupid. That would mean a less productive, less efficient society. Free market is all about efficiency.
When we have free trade worldwide, that pool of resources turns worldwide and, as such, creates even a higher level of efficiency than before.
In many countries, important natural resources are imported; like Hong Kong. As such, a change in the availability of these resources (restricting trade, for example) negatively affects the Long-run AS. This makes a nation or region, or person, less productive and turn to a worse standard of living. Trade makes everyone better off.
For example, an increase in capital increases production. Highly educated individuals (human capital) creates a more technological society which creates higher rates of production. An increase in something like machines (physical capital) allows for a more productive, efficient, society as well. This is what free market economics is - efficiency of resources available.
Which does not need to be provided from some bureaucratic organization. Typically this leads to less efficiency.
Really the increase of Long-run AS is attributed to Changes in Labor (immigration burst); Changes in Capital (capital stock); Change in Natural Resources (what Doug cherry-picks as the sole provider); and Technological Knowledge (what I discussed, more efficient use of resources).
Farms are not as interconnected and do not collapse as a fishing reserve, so there is no need for common management.
Free markets do not accept externalities, there for they think its not possible to over fish. Production can always be increased through investments. When this policy fails, its governments fault for interfering (IE This would not have happened if we owned the fisheries.)
Proper management of a resource is dependent on policy, not who owns or doesnt own the resource.
Actually Free Markets wholly accept externalities; you are simply cherry-picking to make your argument have a false level of strength. Kind-of like inflation.
Managing a renewable resource depends on three things; knowledge, discipline, and consistency. Privet ownership dose not guarantee these three qualities, but nor dose it preclude it ether.
If a reserve has multiple owners, then one rouge owner for short term profits will compel the other owners in a race to the bottom. Each still exists in the larger market. A governing body is still needed for research, discipline and consistency.
Certainly, however, surely it's in the companies best interests to ensure they do their best to keep the resource renewed. Pine plantations would be another example.
Anyone that didn't, would soon go out of business.
Surely the reason we're seeing overfishing, is because the fishing is taking place in common grounds. At the moment aren't fishing ground government owned?
If plots were owned by companies, and any rogue fishing punished, wouldn't that be the same situation we have with farms?
Over the history of human civilization, through technological knowledge mainly, man has been able to more efficiently use his resources available - this is the very definition of economics. This is why the price of wheat is so low with only 2% of our workforce (now) when it was over 17% in the 50's, or the price of tin, steel, etc have been dropping. The absolute removal of this, like Doug seems to think, would imply prices to constantly raise, which he seems to think.
Cool video! You explain externalities quite well!
TheDudefromSomewhere 2 years ago
True, but the gains from not smoking can be hard to quantify. How dose one measure the value of not having a heart attack.
Point one not every thing has to do with money.
Point two even when it dose, we do not always make rational decisions
Point three even then, we may make decisions not in our best interest.
Should we man ban smoking? This is a political issue and should be treated as such. Do people have a right to smoke? This is a fair question.
CodeNameDoug 2 years ago
Well, the real problem is, what we define as rational decision. "Objectively" very self-destructive behaviour could be rationalized by the appropriate preferences (or utility functions in economist-speak). Economics can tell you the efficient action with given preferences, but stays mostly silent about how the preferences come about. But since with cigarettes preferences become endogenous, I do think that even those preferences are becoming an economic issue because you choose them ex ante...
TheDudefromSomewhere 2 years ago
My point was to show that addiction to nicotine is nether rational or irrational, but chemical in nature. You also have limitation of natural resources, pollution, energy demands; which are non-human forces at work in a system that is said to be free of force or fraud, and thus have no rational at all, but still have an impact on the economy.
CodeNameDoug 2 years ago
Sure, there are tons of constraints and externalities. This is what economics is about. Getting by in an environment that is constrained in recources etc.
TheDudefromSomewhere 2 years ago
I agree with you that not everything is economic in nature,but many economists nowadays think that they can't take these limitations at face value. Somehow,they need to get incoorperated into the models (some of them are, albeit imperfectly),because otherwise the economic answers to for instance pollution are relatively meaningless.Of course then one would have to depart from the idea that markets are perfect and that it is all the governments fault. I doubt that Libertarians are ready for that.
TheDudefromSomewhere 2 years ago
I found your cigarette example to be really interesting. When I thought about though I realized that there is a profit to gain from not smoking, such as health benefits or saving your money. So those benefits could be seen as competition to cigarettes, whether it's adequate competition is up to the individual. The alternative would be to make cigarettes illegal, but doesn't that undermines free will as well? Your thoughts?
thestuart 2 years ago
In fact, it is pretty silly to assume that the free market wants people to be stupid. That would mean a less productive, less efficient society. Free market is all about efficiency.
Offatwork 2 years ago
When we have free trade worldwide, that pool of resources turns worldwide and, as such, creates even a higher level of efficiency than before.
In many countries, important natural resources are imported; like Hong Kong. As such, a change in the availability of these resources (restricting trade, for example) negatively affects the Long-run AS. This makes a nation or region, or person, less productive and turn to a worse standard of living. Trade makes everyone better off.
Offatwork 2 years ago
For example, an increase in capital increases production. Highly educated individuals (human capital) creates a more technological society which creates higher rates of production. An increase in something like machines (physical capital) allows for a more productive, efficient, society as well. This is what free market economics is - efficiency of resources available.
Which does not need to be provided from some bureaucratic organization. Typically this leads to less efficiency.
Offatwork 2 years ago
Really the increase of Long-run AS is attributed to Changes in Labor (immigration burst); Changes in Capital (capital stock); Change in Natural Resources (what Doug cherry-picks as the sole provider); and Technological Knowledge (what I discussed, more efficient use of resources).
Offatwork 2 years ago
Farms are not as interconnected and do not collapse as a fishing reserve, so there is no need for common management.
Free markets do not accept externalities, there for they think its not possible to over fish. Production can always be increased through investments. When this policy fails, its governments fault for interfering (IE This would not have happened if we owned the fisheries.)
Proper management of a resource is dependent on policy, not who owns or doesnt own the resource.
CodeNameDoug 2 years ago
Actually Free Markets wholly accept externalities; you are simply cherry-picking to make your argument have a false level of strength. Kind-of like inflation.
Offatwork 2 years ago
Sorry, just a question on externalities.
In particular, the fishing one.
How does the enforcement of property rights not help in that case?
If a company, etc, is only allowed to fish in their own property, then wouldn't they work to keep their resource fit?
Farmers do the same thing, they only have limited land, and stock, yet farms are run in a renewable manner?
MonkeyThatIsLuminous 2 years ago
Managing a renewable resource depends on three things; knowledge, discipline, and consistency. Privet ownership dose not guarantee these three qualities, but nor dose it preclude it ether.
If a reserve has multiple owners, then one rouge owner for short term profits will compel the other owners in a race to the bottom. Each still exists in the larger market. A governing body is still needed for research, discipline and consistency.
CodeNameDoug 2 years ago
Certainly, however, surely it's in the companies best interests to ensure they do their best to keep the resource renewed. Pine plantations would be another example.
Anyone that didn't, would soon go out of business.
Surely the reason we're seeing overfishing, is because the fishing is taking place in common grounds. At the moment aren't fishing ground government owned?
If plots were owned by companies, and any rogue fishing punished, wouldn't that be the same situation we have with farms?
MonkeyThatIsLuminous 2 years ago
Over the history of human civilization, through technological knowledge mainly, man has been able to more efficiently use his resources available - this is the very definition of economics. This is why the price of wheat is so low with only 2% of our workforce (now) when it was over 17% in the 50's, or the price of tin, steel, etc have been dropping. The absolute removal of this, like Doug seems to think, would imply prices to constantly raise, which he seems to think.
Offatwork 2 years ago
The price of wheat is so low because it is highly subsidized by the government.
CodeNameDoug 2 years ago
Much better than number one.
MonkeyThatIsLuminous 2 years ago