[hrothgar]

luke warm, on Oct 6 2006, 09:40 PM, said:

Quote

Nice little assertion that you are making there

well i wasn't asserting a fact... i wrote, "a lot of what rand wrote rings both true and effective" ... the term 'rings true' means "seem genuine" and implies opinion

my reply to the rest might be off the wall, because i'm not sure exactly what you're saying...

Jimmy you stated the following:

"when a person, group, city, state, country works in their/its own best interest, the best interest of the majority is served"

I presented a series of counter examples that share a common unifying theme: In each of these example, a rational self-interested individual acting in his own best interest will not serve the interest of the majority.

Pollution is probably the easiest case to consider. Suppose I won a factory that produces widgets. Each time I produce a widget, I release pollution into the air that makes people sick. Furthermore, I - the owner of the plant - don't bear the entire cost of the pollution. As the owner of the plant, I chose what quantity of widgets to produce with the goal of maximizing my profits.

I claim that the presence of the externality (pollution) means that the profit maximizing solution for the individual involves producing more widgets (and more pollution) than the profit maximizing solution for society as a whole.

I'd be happy to provide a detailed mathematical example for any or all of the cases that I specified in the my original posting. I'm also happy to relate these theoretical examples back to the "real" world. it should be quite easy to see the linkage between the pollution example and many of the real world debates going on right now.

[mike777]

Profit maxing can be tricky to do. It may be that creating pollution or "too much" pollution does not maximize profits. On the other hand it may if it create another business opportunity for us.

Look at all the issues WalMart has to deal with. One the one hand many hate the company for paying low wages and benefits. On the other hand more than 85% of American families shop there and 30,000 applicants apply for 300 jobs in Chicago.

Walmart stops promoting lowest prices all the time and sales slacken overall but they try going up scale in some areas and sales seem to increase.

In any event as China shows once aqain as the Middle class grows demand for "other" things such as clean air grows and the political class follows suit. I still think market/profit driven improvements to pollution will improve all our lives. Call it faith in the buck and some innovative/poor/genius driven kid trying to get rich?

[hrothgar]

mike777, on Oct 6 2006, 11:55 PM, said:

Profit maxing can be tricky to do.  It may be that creating pollution or "too much" pollution does not maximize profits. On the other hand it may if it create another business opportunity for us.

Thats a great idea...

We'll go out and sell cigarette's to children, get them all addicted, and give them cancer.
Then when they're hacking up pieces of their lungs we have a business opportunity selling them expensive patented drugs.

As I understand matters, we were discussing whether there is an appropriate role for collective action. Personally, I think that these types of market imperfections justify the existence of a government. I want to be appeal to appeal to the judiciary and legislature to deal with issues like pollution.

There is some truth to what you are saying. Formally, a clean environment is an example of what economists call a "luxury". [Luxuries are prodcuts/services where the percent of income spent on the good increases as income increases. For example, lets assume that people who make 100,000 a year spend 5% of their income on travel. If we increase their income to 150,000 and they now spend 7% of their income on travel, then travel is designed as a luxury good]. As the income of a country grows, they tend to spend much more money on environment abatement and protection. However, this spending is rarely sufficient to compensate for the dramatic increases in consumption of raw materials and energy and associated production of pollution and garbage.

[luke warm]

Quote

I presented a series of counter examples that share a common unifying theme: In each of these example, a rational self-interested individual acting in his own best interest will not serve the interest of the majority.

yes you did... i was just questioning whether or not your examples were meant to show efficiently operating markets... this medium lends itself to easy misunderstandings, but it's the one we're using so we do the best we can

as for the widget example, all i can say is that the consumers who buy your product are not working in their own self interest by doing so... but objectivism does make the assumption that rationally functioning minds are determining this self interest, and it's a pretty large assumption... take mike's walmart example... he's right, people bitch all the time about walmart causing businesses to fold, limiting competition, etc... but it's always packed... so consumers are a little schizo imo, and often not very rational (me included)

[hrothgar]

mike777, on Oct 5 2006, 04:15 AM, said:

What right does the USA have to act in it's national interest? We can all debate what that is and how to achieve it but what right do they have?

I think that there is a clear analogy between the the behaviour of indivudals within a state and the behaviour of nations on the international scene.

I don't think that anyone here would argue that I have the right to steal from my neighbors. Nor would anyone argue that I should be allowed to kill at a whim. None of these arguments involve concepts like self-interest. Rather, they are framed in terms of my violating the rights of others. This type of behaviour is considered inappropriate within a civilized society.

If we move to the internation scene, things aren't quite so clear. The US is a hegemon. Accordingly, we have enough muscle that we can (temporarily) push the rest of the world arround. We can go out an overthrown foreign governments at our whim because there is no one big enough to stop us. However, I would argue that we have the ability to do, but not the right.

I'd also argue that doing so is a major mistake. Right now, the US is probably in the strongest position its ever been, however, I don't believe that this position is sustainable for long. Right now, the responsible thing for the US to do is to act and build/strengthen international organizations that will be able to protect us as our relative strength declines.

[mike777]

Hong Kong just ended it's policy of 50 years of "positive noninterventionism". The new current leader announced he wants government to only intervene "when there are obvious imperfections in the operation of the market mechanism"

Milton Friedman says the policy over 50 years "provides a lasting model of good economic policy for others who wish to bring similar prosperity to their people." He hopes simple inertia will likely keep Hong Kong prosperous for many years to come.

[hrothgar]

luke warm, on Oct 7 2006, 02:18 AM, said:

as for the widget example, all i can say is that the consumers who buy your product are not working in their own self interest by doing so... but objectivism does make the assumption that rationally functioning minds are determining this self interest, and it's a pretty large assumption...

The standard formulations that economics use do not require irrational behaviour on the part of consumers. (Indeed, most economic models assume that folks are rational and engage in profit maximizing behavior)

The problem with pollution is that the benefits and costs are distributed asymmetrically. The individual who generates the pollution enjoys an enormous benefit. The individuals who suffer from the pollution incur a very small cost. Unfortunately, this cost is distributed across hundreds of thousands, if not millions of individuals and the cumulative total adds up...

There is too much friction in the system for folks to be willing to change their behaviour.

[helene_t]

hrothgar, on Oct 7 2006, 01:22 AM, said:

I think that there is a clear analogy between the the behaviour of indivudals within a state and the behaviour of nations on the international scene.

While this may work out ok in the particular case we are discussing here, I'm not fond of this analogy in general.

As Todd said, people do stupid self-destructive things (such as drug abuse) and it is nobodies business to prevent that. The integrity of the individual is a primary moral imperative.

The integrity of a country, while often a practical principle, is not a primary moral imperative. It is certainly somebodies business to prevent the governement of Sudan from killing its own people. (Of course, it is not always easy to say whose business it is and how far the mandate goes.)

[Winstonm]

Quote

I think that there is a clear analogy between the the behaviour of indivudals within a state and the behaviour of nations on the international scene. 


While this may work out ok in the particular case we are discussing here, I'm not fond of this analogy in general.

As Todd said, people do stupid self-destructive things (such as drug abuse) and it is nobodies business to prevent that. The integrity of the individual is a primary moral imperative

Countries also do stupid self-destructive things. The U.S.S.R. tried to keep pace with the U.S. in an arms race with an economy that could not sustain it. The U.S.A. suffered in Vietnam and now again in Iraq. Your example of the drug user is not unlike these government actions, as drug abuse doesn't cause instant death (unless an overdose) but instead causes a steady decline in health that shortens natural life.

[Winstonm]

The detainee bill. Now Bush and Co. have provided a self-pardon for violations of the Geneva Convention:

The bill shields U.S. officials from prosecution under the War Crimes Act retroactively to 1997, when the original law was passed criminalizing violations of Common Article 3 of the Geneva Conventions.



Copyright © 2006, Chicago Tribune