Monday, February 28, 2011

The Usefulness of Good and Bad

For a while now, my friend Greg has been talking about the use of moral arguments in economics. I understand morality to be an analysis of the world in terms of good and bad. But "moral" is not a word I use much, so I had trouble understanding Greg's posts. Like they were written in a foreign language. (Sorry, Greg!)

It festers.

Finally, it woke me up at one in the morning and I realized that my recent exchange of comments at was just the sort of thing Greg has been talking about. Pete Cooper writes in praise of Darrell Delamaide's "terrific article at MarketWatch" and lists Delamaide's key points. First among these being

The true problems are mass unemployment and home foreclosures...

Yeah, those are bad things. And that is a moral judgment, not that I actually noticed. I objected to Peter's selection of problems, saying

unemployment and foreclosures are problems for people. Not for the economy. If you want to fix the economy, you have to look at the economy’s problems.

Tom Hickey didn't like that:

“The economy” is the real process of people’s choices and behavior based on these choices...

I am saying that the economy is based on people and the choices they make...

People have problems, not “the economy,” and Peter identified some of these problems. If you said, “the country” (the people collectively), I would agree. But “the economy”?

So I gave an example:

Tom, if there is too much money in circulation (and if we accept Milton Friedman’s model for the sake of this example) then inflation is the economy’s solution to that particular imbalance. A general increase in the level of prices will dissipate the “excess” money and thereby correct the imbalance, and inflation will fizzle out of its own accord as the excess money is absorbed into the price level. BUT it is NOT anybody’s DECISION to correct that imbalance that way!

After that, there was no more discussion of whether the economy has problems. Instead, Tom waxed philosophical:

persons are never to be considered as means or treated simply as means, because they have absolute or intrinsic value. This is the foundation of liberal democracy as stated in our founding documents...

Then he quoted the Preamble, and concluded:

Peter is correct. THE problem is income, hence employment. ALL attention should be focus on that as an ethical matter

As an ethical matter. There it is, morality again. We want the economy to be "good" to us. And Tom tied it back to the founding fathers, making "good" a core principle.

I would say that morality and ethics might be useful for establishing objectives. But they are not useful for economic analysis. I think morality and ethics divert attention from the effort to understand and solve the economic problem.


piet said...

slightly off topic but followuppish also.
flint (mirror) five on this count.
Compare and contrast (if possible harmonize or even reconcile, 'relativate' - as dutch, quite uniquely perhaps, has in use*) with dreamspell mirror day i reffed last week. Disputes about wrong turns in ancient times are what feeds the religious classes. I hope we will soon see disrepute of reli-rows rather than disputes about them heating up and inflaming to the point of the old flare and burn up, over and out.

It's like economics innit, old uncorrected mistake become cumulative, growing and finally urgent need for UN CoreAction, deneglAction#

* must have something to do with the 1000 kinds of money in circulation during the golden age, a thing Bth liked to refer to frequently.

Not sure if that relates to Nick Szabo's vaunted universality preference as people's drive towards danger zones of obliquely monopolized centralization.
and to Gilder's vaunted monopolies broken lef n rait by telecosmicality

# during the Kosovo debacle i was thinking about the future of a popular and succesful UN alot, reading posts at warriornet appropriately enough. Turns out they were right and i was wrong, them was realizzts and a, a was naivelee adealist, .. as i said yesterday:

.... musical rockgrinders and hi-tec secured guerrilla gardening oases for oppressed folks - suffering dictators from anear and from the o so (IN)decent banking pressurings from afar - to desert, defect and escape to???

Jerry said...

I wonder if the difference might be: whether or not you consider Economics to be a science, or ... something else.

In physics, for instance, you could say: "You should apply your understanding of physics toward providing cheap electricity to everyone and making fast transistors, not to destroying cities." That's a moral statement - as you said, establishing objectives.

But either way, no matter how moral you are or aren't, you're not going to get very far toward your objective if you don't understand how the atom works.

So, perhaps: you consider the economy to be a "scientific phenomenon" that can be learned and understood, and the people you are discussing here do not?

Alternatively (more likely, i think): people have a vested interest in economics. Right now, the way it works is that more and more of the money goes to a certain subset of the people. Who are "coincidentally" the same guys who have a lot of influence in politics and the media.

Obviously this is not healthy for the economy as a whole, but it's great for those guys. So anybody who's trying to understand (and fix?) the economy as a whole will eventually come up against these guys. So, these guys try to s0w any confusion that they can to prevent or delay that eventual result. One method would be to try to turn it into a "moral" discussion, instead of a scientific discussion. Any ambiguity they can add helps their case.

Tschäff said...

I would say that morality and ethics might be useful for establishing objectives. But they are not useful for economic analysis. I think morality and ethics divert attention from the effort to understand and solve the economic problem.

If you are designing anything, you do so with a purpose. What is the purpose of capitalism? We don't even hear capitalism mentioned anymore, it's just "the economy" as if there were no alternatives.

Listen to right wing radio for about five minutes and you'll get the strong impression there are markets (good) and government (bad). The latter must be squashed like a bug to make room for the good.

If you're not an idiot, you know that the two don't have to be at odds with each other, but compliments, but again what goals are you trying to achieve? Why do we have rules in just about any game? Why can't people just do whatever is physically possible to get the pigskin into the end zone? No refs, no rules, just that goal above all others. How do you know if it's not working if you don't have a vision of how it should be? Inside just about all of us we have a sense of what is just, what is good, what is desirable. It wouldn't make sense to build (or modify) a system if it doesn't try to promote these outcomes, no?

Economic forecasting on the other-hand is quite value neutral. If that's what you meant, disregard all I wrote above. ;-)

The Arthurian said...

Piet, Google returned just one result for 'telecosmicality,' but I found it more interesting than the Mayan magic :)
(I do like low-result queries.) Last I looked, George Gilder was unsatisfying: "only in an abstract mathematical world can the burdens of debt seem crushing." [Wealth and Poverty] Unless that's a different George.

Jerry, you remind me that Feynman asked whether people thought he was less able to appreciate the beauty of a flower because he was better able to appreciate the science of it.
Yeah, I think the economy is scientifically analyzable. But I don't know what other people are thinking.

Tschäff, what are you thinking? :)
I am not "designing" anything. I am trying to understand the economy. The "rules" of the economy emerge from people's behavior but are independent of it.
If you want to "design" a better economy you have to abide by those rules, or you are just wasting your time.
Your comment is very political, I think. Politics is the greatest obstacle to clear thinking in economics. Surely you have observed as much on "right wing radio," no?

piet said...

Tschäff and Art:
Telecosm = 3,700
first one: TELECOSM: How Infinite Bandwidth will Revolutionize Our World (9780684809304): George Gilder

he is a dreamer (i mean over optimistic, .. or dishonest, .. the fact that he is lately resorting to pouring laudations alll over israel makes me lean towards the latter judgement).
Still, 'Life after television' is a great little book, Andrew Lehman is quite a ways up his tracks with his neoteny in digital terms.

but you cannot possible play with bits like you can with mud
Ever seen 'first earth'?
just found the blurb for it:
maker of 'first earth' -- great anarchitecture
in 9 languages already

tsjef, i have often portrayed women and men as govts and markets, trust and grunt but predictably the latter overpowered the former, finality of death addled maleness mindsettings (a flow arresting settlerism) throttles and kills reversibility.
Da YelGlo mediacho, harder, heavier, invited (envyited) graceless behaviour, unhealthful professions, Pandoranoid vices and stuff to all come out (not in the wash, no going back in), as well as having harrowing effects. Now the focus is on the latter with renewed energy left over from/after dropping the former (no hands tied, no holds barred, .. heh ... 'barred', gold had severe drawbacks, ecological ones alone are huge enough to go for a systemic change, like a basket with photosynthesis rates factored in), a big bugaboo for the right, fit and willing to go for that heavy lifting again.

politics is not an obstacle so much as a usurped, substituted for betrayed, pre-empted, invaded, slaughtered and sacrificed FORM(ality) of voluntarity and sanctity of contract.

1000 kinds of money to choose from daily is voting according to your lights and weight and conscience. daily instead of qaudannually. And of course it would be so much the better had we state monies broken up into .. and here yes, substitute away, regio-money (an expression that caught on in germany) and city monies, the value of which lessens with distance.
And the universal ones can remain the icing on the cake, global but not floating on clouds hiding 'stoute' dreams (the dutch female form must be hidden, the anglo male version is the strutting kind) at best and harbouring deceptions.