While Paul Krugman and I disagree on some things, but those disagreements are small compared to our common ground, from being both economists. Especially on the future, where most folks rely way too much on their intuitive naive social science. So it was a pleasure to read Krugman being reasonable on the future:
Krugman writes, "at that point we would no longer be concerned about material things and we could get past all of this striving and greed".
The best analysis I've seen along these lines is:
"In a post-industrial society, it is social status, more than anything else, that drives people to work so diligently all their lives." -- Edward Castronova, "Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier"
That is, people will no longer have greed for material necessities, but striving will continue in other arenas. (iPhone, anyone?)
You're correct. However, this is only true in scenarios where resources are limited. For instance, if someone invented a feasible asteroid mining technology and extracted massive profits from it, extreme inequality might increase while total *and* per-capita wealth could also increase.
This can only happen in transitional periods where innovations can unlock new forms of value or give access to new resources.
It also has an externality in that the same innovations/profits can't be made by others who might act more altruistically.
If the marginal utility function of a resource is non-linear (and it is), decreasing at higher magnitudes, then total utility over all individuals will be maximized with uniform distribution. Extreme inequality in resource distribution must cause a lower total utility.
Of course if you discount the ability of the poor to notice they are living in a dystopia, or work them so hard they don't have time to notice, or are too exhausted to feel hunger and pain, perhaps you don't feel it is a dystopia?
This effect can lead to (seemingly) perverse incentives for the producer. If, for example, potential business class customers will pay a large price differential only if economy class seats are uncomfortable while economy class customers are more sensitive to price than comfort, airlines may have substantial incentives to purposely make economy seating uncomfortable. In the example of coffee, a restaurant may gain more economic profit by making poor quality regular coffee—more profit is gained from up-selling to premium customers than is lost from customers who refuse to purchase inexpensive but poor quality coffee.
You should read up on the “agree todisagree” literature. It has been proven that two rational agentswith the same priors cannot agree on those priors and then honestlydisagree on what follows from those priors.
Robin has made some interestingcontributions to this literature, for example.
If you find yourself agreeing withKrugman's data (i.e. priors), then find yourself disagreeing with hisconclusions, either you don't actually have the same priors, or oneof you is being dishonest.
I think you may be conflating "liberty" with "economic opportunity".
Think of the masterless samurai of Japanese costume drama. They are free to go wherever they wish; it's the source of their appeal. They are also starving, even if they're too Zen to make a fuss about it. Most Asian societies tend to equate liberty with poverty; either you have a place in society (and the duties that come with it) or you don't.
Would you really want the perfect liberty of the hobo? Or would you take any job available, understanding that your new employer can cut off your food supply, making him (or her) your master? Don't assume you can just find another job... think 1935 (that's the Great Depression for the history challenged).
Not all poverty equals suffering. Poor people who live in environments where their need for shelter, clothing and food are satisfied are happy people. The type of poverty that crushes the human spirit can be found where the environment provides nothing. These people would farm, sew and build if their environment made it possible. Concrete and asphalt make farming difficult. One cannot build where one does not own property. One cannot build where raw materials are unavailable. Hopelessness, depression and hunger are causes of suffering. Unfortunately, humans will tolerate a great deal of suffering before they rebel; making it nearly impossible for revolutions to succeed. Besides, the poor are told that they live in the "best" nation on earth. "If you can't make it here, you can't make it anywhere.".
Until various economic hypotheses have solved the problem of poverty, they are incomplete. There is no economic theory that can claim superiority to any other because of factors other than material considerations. The economic theories' components are not axioms, but are merely conjecture. Top economists are those individuals who are best at selling a nation's style of economics back to that nation's people. They style of economics across nations is in reality of one type: those with the advantage exploit the disadvantaged.
I think I understand the problem - just as the existence of "creation" doesn't imply a (divine) creator, the existence of a distribution doesn't imply a (state) distributor.
Only in certain rhetorical constructions. Self interest does not mean owning everything you can without regard to consequences. Greed is indicated by doing whatever you have to to get More, even when the consequences are ultimate loss of everything, as in the inevitable burstings of bubbles that are driven by greed. I think they know very well the difference and use the terms accurately.
That sounds good, but just about all revolutions are aimed at the freedom to Have Something being denied. The American revolution, regardless of its other qualities, was very much a propertarian revolution (you will not tax us without due representation) and was started and largely fought by hopeful landowners and entrepreneurs. A middle class revolution, in other words, which makes it unique among revolutions and perhaps one reason it has rarely if ever been duplicated. The vast majority of Central and South American revolutions, going all the way back to the early 19th century, are based in land reform. Unequal distribution of "liberty"---however you care to define it---has always manifested as inequitable distribution of resource. Gaining the ability to say "This is mine and you can't have it" underlies all revolutions. (Including England's Glorious Revolution, which resulted from a question of patronage tied to taxes and the succession.)
Your phrasing---"If liberty is freedom to do what you wish, while accepting whatever consequences the land may require.."----implies the freedom to act materially. "Doing things" requires resources.
You’d like to imagine that we could eventually get to a point where we really are post-scarcity. But it’s a hard road. John Maynard Keyneswrote an optimistic essay called “Economic Possibilities for ourGrandchildren” [PDF] in the ’30s where he talked about once theworld was four times or eight times as rich as it was when he waswriting, at that point we would no longer be concerned about materialthings and we could get past all of this striving and greed."
Well, why not look at some actual statistics to evaluate the situation? For example, here is a nice site that reviews retirement in the U.S.:
We see that, prior to 1880, roughly 75 percent of people 65 and older were still working. In other words, there was no retirement. People worked until they became completely disabled, or died.
In 1930, 58 percent of those 65 and older were still working. By 1940, it had dropped to 44 percent. By 2000, only 17.5 percent of people 65 and older were still working.
Add to that the fact that, in 1950, a man at age 65 could be expected to live 13 more years, and now he can expect to live 18 more years.
Add to that the fact that the hours worked each year has gone down.
In short, despite all the "striving and greed," people in the U.S.work a considerably smaller portion of their lifetime than whenKeynes wrote his essay.
What does material equality have to do with liberty? If liberty is freedom to do what you wish, while accepting whatever consequences the land may require... then we all have liberty, no matter how totalitarian the state.
And even then, we're not talking about material equality. I believe material equality and liberty are independent qualities--the level of one has no bearing on the level of the other.
Krugman writes, "at that point we would no longer be concerned about material things and we could get past all of this striving and greed".
The best analysis I've seen along these lines is:
"In a post-industrial society, it is social status, more than anything else, that drives people to work so diligently all their lives." -- Edward Castronova, "Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier"
That is, people will no longer have greed for material necessities, but striving will continue in other arenas. (iPhone, anyone?)
You're correct. However, this is only true in scenarios where resources are limited. For instance, if someone invented a feasible asteroid mining technology and extracted massive profits from it, extreme inequality might increase while total *and* per-capita wealth could also increase.
This can only happen in transitional periods where innovations can unlock new forms of value or give access to new resources.
It also has an externality in that the same innovations/profits can't be made by others who might act more altruistically.
If the marginal utility function of a resource is non-linear (and it is), decreasing at higher magnitudes, then total utility over all individuals will be maximized with uniform distribution. Extreme inequality in resource distribution must cause a lower total utility.
Of course if you discount the ability of the poor to notice they are living in a dystopia, or work them so hard they don't have time to notice, or are too exhausted to feel hunger and pain, perhaps you don't feel it is a dystopia?
>a society with extreme inequality must be dystopian, no matter what its other features. With that view I heartily disagree.
http://en.wikipedia.org/wik...
This effect can lead to (seemingly) perverse incentives for the producer. If, for example, potential business class customers will pay a large price differential only if economy class seats are uncomfortable while economy class customers are more sensitive to price than comfort, airlines may have substantial incentives to purposely make economy seating uncomfortable. In the example of coffee, a restaurant may gain more economic profit by making poor quality regular coffee—more profit is gained from up-selling to premium customers than is lost from customers who refuse to purchase inexpensive but poor quality coffee.
I guess we'll have to wait and see.
You should read up on the “agree todisagree” literature. It has been proven that two rational agentswith the same priors cannot agree on those priors and then honestlydisagree on what follows from those priors.
Robin has made some interestingcontributions to this literature, for example.
If you find yourself agreeing withKrugman's data (i.e. priors), then find yourself disagreeing with hisconclusions, either you don't actually have the same priors, or oneof you is being dishonest.
I think you may be conflating "liberty" with "economic opportunity".
Think of the masterless samurai of Japanese costume drama. They are free to go wherever they wish; it's the source of their appeal. They are also starving, even if they're too Zen to make a fuss about it. Most Asian societies tend to equate liberty with poverty; either you have a place in society (and the duties that come with it) or you don't.
Would you really want the perfect liberty of the hobo? Or would you take any job available, understanding that your new employer can cut off your food supply, making him (or her) your master? Don't assume you can just find another job... think 1935 (that's the Great Depression for the history challenged).
Not all poverty equals suffering. Poor people who live in environments where their need for shelter, clothing and food are satisfied are happy people. The type of poverty that crushes the human spirit can be found where the environment provides nothing. These people would farm, sew and build if their environment made it possible. Concrete and asphalt make farming difficult. One cannot build where one does not own property. One cannot build where raw materials are unavailable. Hopelessness, depression and hunger are causes of suffering. Unfortunately, humans will tolerate a great deal of suffering before they rebel; making it nearly impossible for revolutions to succeed. Besides, the poor are told that they live in the "best" nation on earth. "If you can't make it here, you can't make it anywhere.".
Until various economic hypotheses have solved the problem of poverty, they are incomplete. There is no economic theory that can claim superiority to any other because of factors other than material considerations. The economic theories' components are not axioms, but are merely conjecture. Top economists are those individuals who are best at selling a nation's style of economics back to that nation's people. They style of economics across nations is in reality of one type: those with the advantage exploit the disadvantaged.
I think I understand the problem - just as the existence of "creation" doesn't imply a (divine) creator, the existence of a distribution doesn't imply a (state) distributor.
Only in certain rhetorical constructions. Self interest does not mean owning everything you can without regard to consequences. Greed is indicated by doing whatever you have to to get More, even when the consequences are ultimate loss of everything, as in the inevitable burstings of bubbles that are driven by greed. I think they know very well the difference and use the terms accurately.
Why do economists keep talking about "greed" when they mean "self-interest", which not necessarily greed?
That sounds good, but just about all revolutions are aimed at the freedom to Have Something being denied. The American revolution, regardless of its other qualities, was very much a propertarian revolution (you will not tax us without due representation) and was started and largely fought by hopeful landowners and entrepreneurs. A middle class revolution, in other words, which makes it unique among revolutions and perhaps one reason it has rarely if ever been duplicated. The vast majority of Central and South American revolutions, going all the way back to the early 19th century, are based in land reform. Unequal distribution of "liberty"---however you care to define it---has always manifested as inequitable distribution of resource. Gaining the ability to say "This is mine and you can't have it" underlies all revolutions. (Including England's Glorious Revolution, which resulted from a question of patronage tied to taxes and the succession.)
Your phrasing---"If liberty is freedom to do what you wish, while accepting whatever consequences the land may require.."----implies the freedom to act materially. "Doing things" requires resources.
Sounded to me like a legitimate question about your position.
You’d like to imagine that we could eventually get to a point where we really are post-scarcity. But it’s a hard road. John Maynard Keyneswrote an optimistic essay called “Economic Possibilities for ourGrandchildren” [PDF] in the ’30s where he talked about once theworld was four times or eight times as rich as it was when he waswriting, at that point we would no longer be concerned about materialthings and we could get past all of this striving and greed."
Well, why not look at some actual statistics to evaluate the situation? For example, here is a nice site that reviews retirement in the U.S.:
http://eh.net/encyclopedia/...
We see that, prior to 1880, roughly 75 percent of people 65 and older were still working. In other words, there was no retirement. People worked until they became completely disabled, or died.
In 1930, 58 percent of those 65 and older were still working. By 1940, it had dropped to 44 percent. By 2000, only 17.5 percent of people 65 and older were still working.
Add to that the fact that, in 1950, a man at age 65 could be expected to live 13 more years, and now he can expect to live 18 more years.
Add to that the fact that the hours worked each year has gone down.
In short, despite all the "striving and greed," people in the U.S.work a considerably smaller portion of their lifetime than whenKeynes wrote his essay.
What does material equality have to do with liberty? If liberty is freedom to do what you wish, while accepting whatever consequences the land may require... then we all have liberty, no matter how totalitarian the state.
And even then, we're not talking about material equality. I believe material equality and liberty are independent qualities--the level of one has no bearing on the level of the other.