This video raises a classic debate I have explained numerous times. The question is whether it is better to be moral or better to be efficient. Is there a trade off between the two, and if so which side should be favored. There is no trade off, for the simple reason that morality and efficiency are mutually implicative. It is a false dichotomy. These are two words for the same concept.
Morality = Efficiency
Anarchocapitalism is both the most moral system and the most efficient system, because morality and efficiency are interchangeable synonyms. Force is less efficient than trade, force is less moral than trade. There should be no fear of another system being either more moral or more efficient, because the two words mean the same thing.
Any time immoral behavior occurs, efficiency is lost in the form of dead weight loss and negative sum games. Whenever an individual or organization behaves inefficiently, they are destroying wealth by mis-allocating resources, which actively causes suffering, and is thus immoral. There is no definitional space between the two words.
Great post, you might want to check out the biggest philosophy show on the Web, run by an anarcho-capitalist - Freedomain Radio...
ReplyDeleteHello Stefan, thanks for commenting. I am familiar with your show, and have enjoyed all the episodes Ive seen.
ReplyDeleteWait, let me make sure I'm not misinterpreting this. You're saying that if an action is economically efficient, it is moral?
ReplyDeleteYes. Economically efficient meaning increasing value for both trading partners and society at large.
ReplyDeleteOnce people have achieved a basic standard of living, why is economic efficiency so important, to the point that ALL morality should be based on it?
ReplyDeleteTheres no such thing as a 'basic standard of living'. Humans are economic agents defined by unlimited wants. Failure to be efficient means that fewer of those wants are being satisfied with available resources.
ReplyDeleteSo you agree that a human's desire for material goods is insatiable, correct?
ReplyDeleteAnd you also agree that there are human drives that are not physical (eg one's drive for serenity, knowledge, satisfaction, love etc), and cannot be satisfied economically (I can't pay for any of those things, in an abstract sense) correct?
ReplyDeleteJust proceed with your argument
ReplyDeleteWell, I wanted to make sure there were no hangups on those two points before continuing.
ReplyDeleteMy argument is (put very briefly) that we should not rely on a system which A. is a poor approximation of value and B. Promotes consumerism (an insatiable desire) over other drives (mentioned earlier).
A. Value is a notion internal to individuals that can be neither determined or even guessed at by others.
ReplyDeleteB. Let us not rely on systems that produce undesirable results. Let us also face reality. Humans want, and they act. No amount of serenity will put food on the table.
Your premise is vague, however leisure certainly qualifies as value. Higher specialization, higher general standard of living, implies cheaper prices for basic goods. So if it were one's intention to meet their fundamental survival needs, and then devote the rest of their time to zen meditation or whatever, it would take less working hours to do so, the more efficient the economy is.
ReplyDelete> A. Value is a notion internal to individuals that can be neither determined or even guessed at by others.
ReplyDeleteAnd so why create a system which shatters one's internal notion of value, and puts a price on everything? Yes, in theory, the price system simply allows resources to be allocated accurately according to their demand, but it can often supersede one's perception of value (ie this has value because it is worth money, not because I value it)
> B. Let us not rely on systems that produce undesirable results. Let us also face reality. Humans want, and they act. No amount of serenity will put food on the table.
Vroman's point was that you can't define "food on the table" - that we should maximize wants beyond those essential to survival.
I'll respond to Vroman's argument at some point. I have to leave at the moment. Sorry if this one is unclear/bad, I kind of rushed through it. I'll get back to it later.
Your criticism of the price system is not unlike saying: "sure cars are supposed to get you where you want to go, but they sometimes break down. What are you supposed to do then, walk?"
ReplyDeleteYes, there are some *very few* people who are dazzled by high prices and enticed to buy. FAR more often, people take their internal preferences, weigh them vs the price of things they want, and get as much as they can. This is utility maximization in a nutshell.
Also, don't blame the price system for affecting people's valuation of things. People determine what they want usually based largely on what they see and what they think they can get. This is true with or without prices.
I'm not sure what you mean by your second point. Let me restate what I meant. People will starve if they do not eat a minimum amount. Almost no one(over a certain age at least) is lucky enough to have someone go out, get food, prepare it for them and put it in their mouth. This is work which every person needs done, and the question quickly becomes: what system will make this process as efficient(using the least resources/human) as possible?
> Your criticism of the price system is not unlike saying: "sure cars are supposed to get you where you want to go, but they sometimes break down. What are you supposed to do then, walk?"
ReplyDeleteThis analogy makes no sense but I don't think it's part of your main point.
> Yes, there are some *very few* people who are dazzled by high prices and enticed to buy. FAR more often, people take their internal preferences, weigh them vs the price of things they want, and get as much as they can. This is utility maximization in a nutshell.
That's not exactly what I meant. My point (previously) was that the idea of a price system *not affecting* someone's perception of value is flawed. I'm not saying people will go out and buy shiny things because they are expensive, but *will perceive them as more valuable* because they are expensive (both when buying and selling them)
In response to the point you bring up here, where do these "internal preferences" come from? I contend that, very often, people do not act in their best interests (either because they are reckless, or simply aren't capable of doing so). This doesn't mean we should "restrict people's freedom and force them to make better choices" (I'm not even sure how that's possible), but we shouldn't consider economic freedom as the ultimate measure of utilitarianism.
> Also, don't blame the price system for affecting people's valuation of things. People determine what they want usually based largely on what they see and what they think they can get. This is true with or without prices.
Hard to respond to this without knowing what you mean by "without prices".
> Almost no one(over a certain age at least) is lucky enough to have someone go out, get food, prepare it for them and put it in their mouth. This is work which every person needs done, and the question quickly becomes: what system will make this process as efficient(using the least resources/human) as possible?
If that is your primary goal, why capitalism, which, while it has produces endless amounts of wealth, fails catastrophically at distributing it in a manner resembling anything egalitarian?
vroman
ReplyDelete> Your premise is vague, however leisure certainly qualifies as value.
A value which it is *extraordinarily difficult* to put a price on, and which is, depending on the "leisure", often alienating.
Are you including "satisfaction of life through leisure time" under "economic efficiency"? In that case, it seems economic efficiency becomes such a vague term at that point that you're probably better off advocating utilitarianism.
For clarification, are you saying economic efficiency is utilitarianism, and utilitarianism is morality, thus economic efficiency is morality?
> Higher specialization, higher general standard of living, implies cheaper prices for basic goods.
How does economic efficiency *necessarily* lead to higher general standard of living?
> So if it were one's intention to meet their fundamental survival needs, and then devote the rest of their time to zen meditation or whatever, it would take less working hours to do so, the more efficient the economy is.
But such a person would be partaking in extraordinarily inefficient activity (working a minimal amount, producing a minimal amount of goods), would that not be economically "inefficient"? Would a buddhist lifestyle not undermine the "efficiency" that allows it to arise?
Besides, the point that zen buddhists would be "ok" with anarchist capitalist society is pretty much not the point. It's hard to find a society that a zen buddhist is not "ok" with to some extent. The point was not about people who completely reject material desires, but about your "average joe", who, in a capitalist society, is influenced by consumerist desires as opposed to more creative ones, thus decreasing his satisfaction w/life. Just because Joe has the "freedom" to reject consumerist desires doesn't mean that such a society is "ideal" (an ideal society would be one in which Joe doesn't have to fight consumerist desires, where the primary motivators are creative).
The last paragraph probably makes any sense. It's 1 am and I've been covering a lot of topics more or less concisely.
The last paragraph probably doesn't make any sense*
ReplyDelete"leisure is difficult to price"
ReplyDeletenot at all. Does Joe work full time? Does Joe work TWO full time jobs? no? Well if each paid the same $10/hr rate and we assume his day is either Work-Work-Sleep or Work-Leisure-Sleep, then from this we can clearly deduce that the marginal utility of 8hrs of leisure per day is worth >$10/hr to Joe.
In a more complicated labor market, with many combinations of employment and leisure choices, it would be theoretically possible to determine PRECISELY how much each marginal unit of leisure time is valued by Joe. And then doing the same for the population at large, you'd get a bell curve and a mean value of how much leisure is worth to this society.
Technically its not utilitarian, because Im not using abstract "util" units. I am making the stronger dollar denominated case. Basically this is what utilitarianism should be.
"How does economic efficiency *necessarily* lead to higher general standard of living?"
If you make more for less, everybody gets more stuff, lives longer, etc.
"But such a person would be partaking in extraordinarily inefficient activity"
Not really. To take a simple unskilled example, if there are flexible/non-existant labor laws. Joe could say I want to work say one shift/week in your factory, and the foreman just schedules him in. If he has a pool of interchangeable labor and needs 400 man hours done per week, its no difference to have 10 guys work 40hrs or 40 guys work 10hrs each.
"Technically its not utilitarian, because Im not using abstract "util" units. I am making the stronger dollar denominated case. Basically this is what utilitarianism should be."
ReplyDeleteMy question is, how do dollars even vaguely represent util units?
"If you make more for less, everybody gets more stuff, lives longer, etc."
Are longevity and material progress the *only* positive aspects of "standard of living"? (or even the most important ones?)
"My question is, how do dollars even vaguely represent util units?"
ReplyDeleteAssuming a stable currency, then dollars are purchasing power. The more you have, the more comfortable your life, and the more you can afford not to work, and have leisure, family time, whatever.
"Are longevity and material progress the *only* positive aspects of standard of living? (or even the most important ones?)"
I should include "ability to engage in more leisure" on the list. Importance is revealed by consumer preferences.
"Assuming a stable currency, then dollars are purchasing power. The more you have, the more comfortable your life, and the more you can afford not to work, and have leisure, family time, whatever."
ReplyDeleteWork isn't necessarily bad, leisure isn't necessarily good. Someone working a 40-hour week can be happier than someone working not at all.
Besides, if maximization of "leisure" for the greatest number of people is your goal, I would much rather advocate communism than capitalism.
"I should include "ability to engage in more leisure" on the list. Importance is revealed by consumer preferences."
"Consumer preferences"? Where's the Happiness store in the mall? Right between the Serenity store and the Satisfaction with Life store, I'm sure.
What people want, and what they buy in order to achieve those wants is completely different. People *want* happiness, and they simply buy consumer goods in an attempt to *achieve* happiness.
Are you contending that a society in which more of a person's hedonistic desires are filled is a better one?
Nope, because there are diminishing marginal returns income/consumption of goods and services. An economy in which one person who consumes $1 million and one person consumes no goods and starves is morally inferior to an economy in which one person consumes $500,000 and another consumes $499,999.
ReplyDelete@Hanson
ReplyDeleteIncorrect. You provide no context for how these payout structures came to be. if person X makes $1M and person Z makes $0, it must be that Z is refusing to work or otherwise not participating in the economy. And redistributing income would carry some amount of deadweight loss, ie $1 lost to split it.
It doesn't matter how they came to be, but since you asked, I'll make up a scenario. Zeus and Hera were on an island. Zeus controlled the means of production on the island. They gave birth to Hercules. Hercules killed Hera sometime later. Zeus refused to trade with Hercules because he was angry about Hera's death...
ReplyDeleteThe only thing that matters is that the first scenario is on the Pareto frontier while the second is not; it's inefficient. Make up whatever plausible way you think the redistribution occurs. The point is that, because there are diminishing marginal returns of utility for consumption, the inefficient scenario is superior in terms of aggregate welfare. Your view would only be plausible if the welfare returns of consumption were constant and equivalent for all individuals.
You are creating a false dichotomy.
ReplyDeleteOption 1) Zeus refuses to trade with Hercules, who is entirely capable of being productive. Results Z = $1M; H = $0
Option 2) Same as above except some Olympian redistribution is introduced transferring $499,999 to H, and $1 lost.
OPTION 3) Zeus swallows his pride and hires Herc. Result Zeus = $1M, H = $X>0
1) is an inefficient/immoral scenario bc Zeus is reducing everyones welfare by not employing the available labor to increase agregate output.
the moral alternative is not redistribution that reduces the overall pie; its increased trade.
You're getting away from the point. The relevant point is that the redistribution results in welfare gains--even though it's inefficient!-- precisely because there are diminishing returns to consumption. If you want the thought experiment to work, let's say Hercules is a paraplegic with zero productive capacity or property to trade.
ReplyDeleteThere are many points on the Pareto frontier. Each point expresses a different distribution of wealth. Your view suggests that every point on the Pareto frontier is equivalent in terms of welfare, which is obviously false. AGAIN, the returns to consumption are NOT constant, they are diminishing.
Still don't agree. If Hercules is disabled, there is still mental labor that can be done. The only way H can be completely devoid of economic potential is if hes say in a coma. In which case H gets no benefit from consumption either, and the $500vs$499 split is actually a loss of the whole $500, not just $1.
ReplyDeletePeople who are COMPLETELY unable to trade are also completely unable to consume.
Again, you're too focused on the Hercules thought experiment. It's just an extreme case to demonstrate the point that the marginal returns to consumption are much greater for an individual on the brink of starvation than one who is well off. Your last statement, "People who are COMPLETELY unable to trade are also completely unable to consume", isn't true, unless you want to use a really loose definition of "trade" or "transact". Severely mentally disabled or insane individuals, elderly wards of the state (e.g., with Alzheimer's) produce nothing. Nor do pets. However, they consume a whole lot.
ReplyDeleteSince the last thought experiment didn't do the trick, let me try another one. Let's say you have a bread economy with production possibility max of 12 units of bread/month. There are two individuals in the economy, A and B. In order to not starve to death, each individual must consume 4 units of bread/month. In the current distribution of resources, A consumes 10 units of bread and B consumes 2. Policy C mandates a redistribution of bread from A to B, leading to a state of affairs where A has 6 units of bread, while B has 4 (deadweight loss of 2). Which is a better state of affairs, from a welfare perspective? I would argue that the state in which 50% of the population does not starve to death is superior. The amount of utility B receives from the 3rd and 4th loaf of bread is greater than the utility A receives from loaves 7, 8, 9, and 10.
Net increase in welfare. Net decrease in efficiency. Of course, one must assume diminishing returns, which is apparently controversial...?
"Severely mentally disabled or insane individuals, elderly wards of the state (e.g., with Alzheimer's) produce nothing. Nor do pets. However, they consume a whole lot."
ReplyDeletePets are property, so their consumption counts as their owner's consumption. In the same vein, the only way to accommodate completely dependent people is to treat them as property, where their consumption is folded into the consumption of their benefactor.
However, they have to be EXTREMELY retarded/insane to be totally unable to trade. There are lots of schizophrenic or otherwise severely impaired people who live on the street via dumpster diving or collecting scrap metal, but the point is they live, by their own wherewithal.
"Bread"
Your thought experiments are just fiating economically illogical situations. If B is starving, then they are going to work overtime for A's benefit to get the extra bread. There is no way, assuming that voluntary transactions are fully allowed, that B and A will not come to an agreement of how B can get his 4 loaves.
The only time people actually starve is when there is a severe environmental failure and everyone is in the same boat, or there is some force-based systemic problem preventing market transactions from getting food to the people who value it most.
I reiterate: you are creating a false dichotomy.
Option 1) "For no apparent reason, two economic actors, completely left to their own devices, end up dividing resources such that one of them is unable to meet their most basic needs."
Option 2) "Govt redistributes resources more or less equally with small overhead cost"
You can't say Option 2 is morally superior to Option 1, because Option 1 doesn't exist.
Heres one that actually makes sense:
Option 1) Persons X and Z each make whatever they make and the total is $100. Then X steals everything Z makes, and ends up with $90 to $0.
Option 2) Persons X and Z each make whatever they make, totaling $100. Then govt enforces some roughly equitable distribution, with total of $95.
Ok, here Opt2 is morally superior, because LESS THEFT is occurring. And you can tell because the total is higher, thus more efficient. Then as a libertarian I would propose some Option 3, where free market insurance/defense schemes result in a total of $97 or whatever. But the point is trade ALWAYS results in higher surplus, and between Opt1 and 2 above, more trade is taking place in Opt2.
efficiency = morality is rubbish.
ReplyDeleteefficiency's morality is contingent on the purposes to which it serves. if your talking about efficiency in creating wealth then your claim is that wealth maximisation is moral. This is a utilitarian theory that replaces 'welfare' (which at least includes non-wealth related goods, like familial relationships) with wealth. Utilitarianism of any sort has been widely rejected because it doesn't respect the distinctness of persons. It assumes that 'utils' (wealth, welfare) are actually measurable between people, who are reduced to being uniform vessels for utility.
Is the situation where A has £200, and B, C, D, E have £1 more 'moral' than the situation where each have £40? Because wealth is maximised in the first situation?
If you're an anarcho-capitalist you have to say yes by the way.
ReplyDeleteI need to hear more context how this distribution came about. If A has generated $200 worth of value, and B-E have done next to nothing, then of course the first situation is better.
ReplyDeleteIf A is stealing from B-E to get his 200, then I assert its impossible the payouts could be such that there is more aggregate wealth in the non-trading scenario.
"It assumes that 'utils' (wealth, welfare) are actually measurable between people, who are reduced to being uniform vessels for utility."
Yes. All else being equal, you would rather have more than less.
It doesn't matter how the distribution came about. It is more efficient for A to steal from B-E, because 'you' [does 'you' mean society as a whole? or one individual? thats the point behind the objection, when 'you' refers to one person, more is better than less, but when 'you' is a society, more might not be better than less if the 'more' is immorally distributed] would rather have more than less. That is if A stealing from B-E leads to more total wealth, it is more efficient.
ReplyDeleteBy showing a concern for how the distribution came about, you are suggesting that there is more than efficiency that is relevant to the morality of any given distribution.
"That is if A stealing from B-E leads to more total wealth, it is more efficient."
ReplyDeleteYes, if it were the case that A stealing from B-E led to more total wealth, it would be more efficient and hence more moral. However, thats impossible. Theft always reduces aggregate wealth. Thats how we know its theft.
If B-E are only getting 1, and no one is stealing, its bc B-E are producing very little.
If everyone gets 40 and no one is stealing, then everyone is producing the same mediocre amount, but slightly total less value is being generated, so yes this is worse.
If everyone is making 40, and then A tries to steal as much as possible, he will end up with less than 200, not more. The act of theft is not production, so there can't possibly be more than 200 units available to take, and there will be deadweight loss from B-E working (but failing) to protect their existing assets, rather than making additional assets.
Ok, what if A stole money off of B-E and then invested in a way that was more efficient than B-E's use.
ReplyDeleteWould his more efficient investing justify his theft, that was a necessary part of reaching the more efficient distribution, and personal majority holding of the wealth?
If theft is the offending element of my argument. Then consider the following essentially identical question.
ReplyDeleteThere is a certain amount of resources. If A's use of those resources is always more efficient. Then, whether by theft or by force, (I don't think a tax system is consistent with anarcho-capitalism, but essentially any re-distributive action) you are arguing that A should, as a matter of what is morally correct, that is, it would be 'good' if A had all of those resources and B-E had nothing.
If A can compound resources faster than B-E, its in his best interest to borrow money from B-E, pay them interest and pocket the difference. This is what happens in the stock market and savings and loan. If you have $100 that you don't need to spend right now to live, and you don't have any good ideas yourself on how to turn that money into more money, you can buy say a corporate bond. Because you think the company is good enough at their job they will be able to make enough to pay you back the purchase price, pay you interest on the bond, and still make enough for themselves that they will want to continue doing this in the future. Investors recognize there are always people out there who are better at making money than they are, and are happy to let these people use their money, to mutual benefit.
ReplyDeleteTo bring it back to our abstract example:
Lets say in a given year A can turn 100 into 150, and B-E can only turn 100 into 110. So if everyone had 200 to start, B-E each loan 100 to A, he has 600, at the end of the year has upped that to 900, pays back 125 to each, so now A has 400 and B-E have 235 (110 they made themselves and 125 in interest+principal). Total wealth is
1340 (400+4*235).
If everyone had kept their money, then at end of the year, A would have 300 and B-E each would have 220. Total wealth is 1180.
If A just stole 100 from each, lets say B-E spend 20 to try to protect their wealth but fail, and A spends 25 each to overcome their defense. Then at end of the year A has 800 and B-E each have 90. Total wealth is 1160. This is the worst of all outcomes. In reality the deadweight loss of theft is even more extreme, often with 99+% losses. Think about a guy who breaks your car window to pawn your stereo for $20. The replacement cost of all that could easily be $500. Or on the other end of the scale, the federal bailouts: some bankers are personally enriched a few million, but the overall economy suffers billions in malinvestment.
So bottomline, if A is most efficient at making money, it makes sense for B-E to voluntarily put more assets in A's hands and reap the benefits of his superior skill. If A commits theft to get his working capital, he will always grossly cause more damage to society at large than he personally benefits.
Even when theft is conducted in a "civilized" fashion via redistributionist tax system, the beneficiaries will, by definition, benefit less than those paying in are harmed.
If A is most efficient at making money. Why shouldn't A be given all the money?
ReplyDeleteIf A is given the 1000, he turns it into 1500. This is more efficient at creating wealth than your suggestion.
In year 2, A should be given the 1500, to turn into 2250.
B-E are left with nothing, but thats the moral situation?
Maintaining the line that B-E can only make 10% returns, compared to A's 50% returns. It would be inefficient, and therefore immoral for B-E to ever have anything more than 0.
ReplyDeleteI know you're not necessarily suggesting that it would ever be possible for B-E to have nothing, but you are suggesting that the most moral outcome that we could hope for in this 5 man world is one where B-E have nothing. Sucks to be B, C, D or E. I suppose they should just get better at investing? Unless they can't?
What, asking a moral question, should be the distribution if they can't?
You are shortcutting around an important part of the point. B-E, recognizing they are not as efficient as A, should hold as close to zero as they can stand -in the short run-, so that A can maximize value, but then they get paid interest in excess of what they could have earned on their own!
ReplyDeleteNo one is expected to voluntarily give away their resources, and theft has egregious deadweight loss. Within this reality, the most efficient option is for B-E to invest in A.
The 'morality = efficiency' assertion comes with the obvious caveat that humans are self interested value maximizers.
2 Questions; one regarding 'as close to zero as they can stand.' One regarding 'in the short run.' I hope I'm not shortcutting this time.
ReplyDeleteWhy should B-E hold 'as close to zero as they can stand,' and not zero? For every amount above 0 that they hold, the system is less efficient. Is the ideal system under your morality = efficiency theory one that gives B-E nothing? If not, why not? (I think that in recognising B-E should hold as close to nothing but not nothing you might be recognising that an inefficient system, even only a slightly inefficient system is the 'right' one).
Why should B-E hold as close to zero as they can, (or zero), only in the short run? Isn't it true that under your model, and applying your theory, that the efficient, and therefore moral thing to do is to not pay B-E any interest, ever, but for A to carry on re-investing nearly all (or all) of the money?
Well if B-E hold actually zero, I'm presuming that means they are starving. If any of them die, the world becomes worse off, because as we've established, each of them are capable of getting 10% return on resources, so are positively contributing to overall production, even if they make no loans. We definitely value these people, even if they are not the most efficient.
ReplyDeleteSince there can't be perfect information, B does not know with certainty that A will actually get 50% return and pay the 25% interest to B. It is rational, given assessments of risk, for B to hold some amount of his resources on hand, in case his investments all go bad.
They should hold near-zero only in the short run, because the only reason they are willing to forgoe consuming their whole 200 supply, is because they expect to be able to consume more in the long run. This is called time preference. The longer one's time preference, the longer one is willing to underconsume now in order to get proportionally bigger payoffs down the road. However, if forgoing that last bit of consumption means you starve, then your time preference for THAT unit becomes very low. Theres no amount of interest that could be paid down the road that would convince you to give up the last bit. This is why I say they would hold near-zero, not zero, since everyone's time preference goes to zero at some point based on how many more units they have left, at which point they are unwilling to make any more loans at any price.
My "ideal" system is one in which everyone is allowed to pursue their own best interest as they see fit. The efficiency comes from maximizing value, based on the choices and abilities available. If I could use the hand of God to costlessly transfer all resources to A, yes that would maximize output. But my point is that B-E would never do this willingly, and so any real world redistribution would incur their resistance, and hence deadweight loss. Thats fine, they are entitled to keep what they have! Recognizing people want to keep what they have, will fight to keep it, and always want to get more, is acknowledged in the system. The only way to convince B-E to let A use more resources is to make sure B-E get MORE than they started with. Only voluntary trades can increase overall wealth.
In summary:
ReplyDeleteForceful redistribution from B-E to A will always cause more destruction of wealth than A can generate.
While its true A is the best at using resources, he can only use as many resources as he is able to convince B-E to forgo short term consumption of. If A can guarantee 25% interest, then B-E will loan A resources, up until the point where its not worth an extra 25% to them to not use their remaining resources themselves.
Thus there is no efficient system where B-E get zero resources at the end of the day. They will never agree to loan away 100%, due to diminishing time preference, and if anything is taken from them by force, overall wealth goes down, disproportionately fast.
Let me see if i can understand what you've said.
ReplyDelete1) We value B-E because they can make 10%, even though they are not the most efficient. We don't want them to die.
2) We don't have perfect information. (Well 'we' do, but A-E don't)
3) Time value of money works such that your preference for current consumption increases as you get closer to starvation.
4) If you could use the hand of God to transfer all resources to A, that would be the most efficient outcome.
5) B-E won't want to give up what they have, trying to take it from them without their consent will incur their resistance and deadweight loss. I think this is the same as saying, "only trades can increase overall wealth."
6) B-E should be 'convinced' to let A use more resources, and by making sure they get more than they started with, they will be convinced.That is they will be pursuing their best interest as they see fit, by giving money to A.
Can we assume that A-E do have perfect information? I know its a horribly unrealistic assumption, but I don't think it affects any of your other points.
I understand all the economics behind what you are saying. I agree with all of 5), including that tax, like theft, will incur deadweight loss. This is accepted as fact by every economist worth his weight. I also agree that trade increases overall wealth, (via specialisation).
I also agree with 3) to the extent that, as B-E get closer to starvation they will value current consumption very highly.
I also agree with 6). Worthwhile investments should be encouraged. (As an aside, I think good contract law, such that the promises are actually enforced, helps encourage investments. Don't know where the money would come from in an anarcho-capitalist society, or what would replace contract law. This isn't really relevant here because this point doesn't say anything about morality = efficiency, because my argument could mean that the existence of contract law valuable only because it is efficient. I think it might preclude me from believing in anarcho-capitalism though).
This leaves 1) and 4). Both are dealing with value judgments. What should, (not what is, or what could) be the case.
ReplyDeleteMay I confirm that, in an ideal world, if you were God, you would want a system that is as consistent with morality as possible?
4) A having everything, if it could somehow be achieved without deadweight loss, would be the most efficient outcome. It would therefore also be the most moral outcome. 'The right thing to do.'
I disagree wholeheartedly with this. Even if it could be done without deadweight loss. I think it would be immoral if B-E have nothing, regardless of whether it is efficient or not. But I believe that if morality=efficiency you have to accept 4).
1) B-E are valuable, even though they are not the most efficient.
I agree with 1). As you may have guessed from my answer in regarding 4). I would agree that B-E are valuable even if they lost 10% of everything they had.
Can you see that 1) and 4) are irreconcilable statements? 4) says they should have nothing (and die). 1) says they are valuable, and shouldn't die, even though they are inefficient.
If you believe morality=efficiency. Then inefficiency is not moral. B-E are not moral, they are not 'good' at all!
To summarise;
The most efficient system we have may be one in which only voluntary trades are allowed (though as I suggested, the necessity of contract law to make that system of voluntary trades work might need some involuntarily obtained funding, this point is essentially irrelevant though).
This, the most efficient system, can not be the most moral (I would say it is actually immoral, but again that is irrelevant), because it forces us to say that if the situation were to arise, we would not feel bad, we would feel moral, we would feel good, that B-E had all died.
I've put a lot of effort into this, I'm exhausted actually! Please do me the courtesy of reading it carefully. I, as always, look forward to your reply!
I started a new post.
ReplyDeletehttp://unpopularideasclub.blogspot.com/2010/05/morality-efficiency-debate.html