Cosma Shalizi on turkeys and Pareto optimality. Happy Thanksgiving.
Recent comments
- 160serpentinegmailcom on An open letter from the populists of the 1890s to the populists of today
- 160serpentinegmailcom on Trumpism, local and global
- eric on A wreck by any other name: on the inadequacy of “Great Recession”
- Brad DeLong on A wreck by any other name: on the inadequacy of “Great Recession”
- Alex on Hitchens minor on the English and their history
- David in San Jose on Trump, populism, Hofstadter, Heer.
- eric on What does Paul Campos know that the Public Policy Institute of California does not?
- ari on What does Paul Campos know that the Public Policy Institute of California does not?
- eric on Keeping a finger on gold
- ari on Keeping a finger on gold
- kevin on “Eight schools account for half of all history professors.”
- eric on “Eight schools account for half of all history professors.”
- ari on “Eight schools account for half of all history professors.”
- eric on “Eight schools account for half of all history professors.”
- eric on A life well lived!
This is officially an award-winning blog
Archives
- July 2017
- April 2017
- January 2017
- December 2016
- November 2016
- October 2016
- February 2016
- January 2016
- November 2015
- August 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- January 2013
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- May 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- May 2009
- April 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
5 comments
November 24, 2011 at 9:40 pm
JazzBumpa
Shorter crshalizi, in the words of Paul Krugman: “Economics is not a morality play.”
Would it be taking things to far to say that it is both monstrous and perverse?
Happy Thanksgiving. We still do have a lot to be thankful for.
Cheers!
JzB
November 24, 2011 at 11:04 pm
erubin
I had an economics professor a few years back who railed about how great Pareto efficiency and optimality are. I found it strange that he was essentially advocating putting all wealth in one person’s hands (you know, perfect inequality, Gini coefficient of 1 and all that). Pareto efficiency is still interesting as a mathematical fixed point but of hardly any practical significance. It’s a shame that some economists seem to live by it when it’s really just a way of throwing the more theoretical mathematicians a bone while attempting to legitimize the greedier schools of economics.
Also, while the article suggests a Walrasian auction, I’m partial to the Vickrey auction myself. Saves poor Dives a penny in the end and further sticks it to Lazarus, who offered the same bid.
November 27, 2011 at 1:38 am
Walt
I think Pareto optimality is a minorly useful idea that is widely misused. If economists can identify polices that are Pareto improvements over the status quo, then that is a useful activity. Alan Blinder’s book Hard Heads, Soft Hearts has good examples from the 80s. The Reagan administration imposed quotas on Japanese car manufacturers, where the administration assigned the quota for each manufacturer. Blinder argued that once you fix the supply the right to sell in the US becomes a valuable commodity that the US was giving away — rather the US should auction off the quota. (I suppose this isn’t strictly a Pareto improvement from the point of view of the Japanese.)
The way it’s routinely misused is that economists will advocate a “Pareto optimal” policy that is not a Pareto improvement. For example, free trade with compensation to the losers from increased competition is (in theory) a Pareto improvement. But instead, economists push for free trade and at most pay a little bit of lip-service to compensation.
November 27, 2011 at 8:37 am
TF Smith
Semi-serious question – Is anyone aware of recent scholarly work on autarky, especially in terms of current transportation cost differentials from Asia (Eastern and Southwestern) to North America?
I’ve seen some general media reporting that manufacturing/production costs in the US are becoming more competitive with Asia because of fuel costs, but nothing substantive from an academic perspective – same with extractive energy costs.
I’m curious because I think for a true populist/nationalist to break out from the current “free trade” CW among both Republicans and Democrats, they would have to go there – just wondering if anyone has done any work based on the realities of an economic policy based on nationalism. Might take another election cycle or two and a continuing recession, of course; I don’t think the U.S. is there yet…
The other frame that could go forward would a moral/populist trade policy based on “fair trade” – i.e, no trade outside of the West/”Free World” bloc, aimed at China and its potential allies…which could bring some interesting domestic political alliances in the U.S., in contrast to the current polarization on domestic issues – in effect, exporting the political/economic morality question.
November 27, 2011 at 1:55 pm
Cosma Shalizi
I’ve seen some general media reporting that manufacturing/production costs in the US are becoming more competitive with Asia because of fuel costs, but nothing substantive from an academic perspective
To the extent that the market is North America or (perhaps) Europe rather than Asia itself, this would make producing in the US comparatively more attractive,but I am skeptical about the magnitudes. When some acquaintances got very into Peak Oil two or three years ago, I did some digging into how much of the cost of imported goods here goes into intercontinental transport, and was actually surprised the share was so small. (The number which sticks in my head is about 3%, but I wouldn’t trust that at all.) Even if all of that was for fuel, which it isn’t, for this to matter, costs would have to be very fine balanced to begin with, so lots of other things could shift them as well.