Yesterday I saw the Watchmen movie. I haven’t read the comics or any of that jazz, but I was told that it provided a compelling critique of utilitarianism. As an ethical theory it definitely illustrated the short-comings of utilitarianism. But in the way economists use utilitarianism – namely as a framework to hang value judgments off – the argument is far less compelling.
Note if you don’t want any spoilers don’t click the tag …
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I get called a rampant greenie/hippie by other economists for my interest in environmental issues. On the other hand, environmental activist types tell me I’m a brainwashed tool of the capitalist hegemony. For a long time I’ve been wracked with insecurity, but now John Whitehead assured me I’m not alone and explains why he thinks nobody understands environmental economists Read more
I have noticed that there is a belief out in New Zealand that there is a set “lump” of jobs – and if foriegn people come in they take them, and “New Zealander’s miss out”.
Now if this matters to us this may be concerning – however, we have been talking about migrants “creating work” and saying that they do “different jobs” than the New Zealand trained workers.
The idea that there is a fixed lump of jobs does not fit this description. However, the idea has a name: The lump of labour fallacy.
The confusion stems from a fundamental misunderstanding surround what labour is. Labour is an input to production. However, as people (who we value in society) get their income by acting as an input we sometimes view work as income. From this step – we end up saying that other people are “stealing our income” by doing this work.
However, what this argument ignores is that labour is an input to production – if you bring in more people, more stuff can be produced. If the addition person is really productive (skilled labour, or domestic poorly provided unskilled labour) then when they come in to society they quickly help everyone else.
As a result, policies to kick current skilled labour out of the country will be counter-productive. Even if we didn’t care about the welfare of foreign people (which of course we do – and really should equally, but oww well) we are effectively cutting off our nose to spite our face. Keep that in mind.
Paul Roberts has a very interesting and worthwhile discussion of sustainable farming over at Mother Jones. The key issue is:
I think that most consumers who buy organic are also the type of people who want to do the environmentally friendly thing. While organic farming may not be as polluting as farming with synthetic fertilizer it is much more resource intensive. So where’s the incentive for farmers to move towards less resource hungry AND more sustainable alternatives? Read more
Kevin Drum thinks that a cap-and-trade system for controlling pollution is not worth having if you don’t auction off the permits:
There are loads of special interests who hate the idea of a 100% auction, of course. But once you start giving away permits, you’ll never stop. It is, plain and simple, a massive giveaway … makes a mockery of any serious cap-and-trade plan. …Without a 100% auction, cap-and-trade is a bad joke.
Unless you have the option of a decent tax scheme I don’t really see what his problem is. Read more
It appears that economics is on the verge of war … ok maybe I’m being melodramatic – but the change in tone of economists recently (well, actually mainly macroeconomists) has been startling!
During the credit crisis, more and more economists have moved towards a panicked position. However, the first true indication that this might be different than a few little methodological spats came to me from these posts (Econlog and VoxEU).
These posts indicated that the very structure of economics was preventing research into valuable fields – we had failed to achieve knowledge by focusing on “equilibrium”, “mean reversion”, and/or the constant obsession by ignoring the depression when we analyse data.
There are two primary areas where I think the main set of criticism will fall – and the size and scope of this criticism will determine whether it is war, or merely an evolution of ideas. These areas are 1) aggregation and stability conditions (so macroeconomics and its current foundations) and 2) behavioural assumptions (a more widely shared issue). Tyler Cowen links on both issues to some degree 1,2.
Hopefully there is a realisation that economic methods and models are useful – even if the value judgments economists make aren’t always up to scratch. My concern is that disputes about value judgments will lead to a situation where the entire framework is thrown to the side. However, if this occurs it will be partially the result of some economists inability and unwillingness to describe their assumptions openly – something we should all keep in mind.