> I don't know enough about economics to judge this piece.... any
> insights offered on the list would be greatly appreciated!
I quite possibly know less about economics that you do, Barry, but
I'll venture an opinion (albeit more or less tangential) anyway.
>From the article:
Adam Smith's "invisible hand" provided invaluable guidance to
markets and did an excellent job of allocating resources in a less
connected world. As long as the markets were local, externalities
less important, and moral and government authority policed
unsavory behavior, there was no better system.
Gregory Bateson once posed the rhetorical question,
"How is it different when you kick a ball or when you kick a dog?"
or words to that effect.
An economist (well, a doctrinaire economist, anyhow) would say that
they're just the same. Any differences in the ballistic behavior of
the ball and dog are due to externalities.
Another aphorism from the 60s is, "There is no such thing as 'away'."
That's in the sense of "throw it away". Externalizing costs is an
attempt to throw them away. As far as I can tell (note my ignorance
remarked upon above), the entire derivatives ball of wax is a strategy
to offload costs or potential costs onto somebody else. The notion is
that the person accepting potential costs is engaging in a classical
"transaction", acquiring something of value and an agreed price with
agreed attendant risks. That may be true if all the players are
experienced financial heavies but that isn't good
enough. Inexperienced players make a much more attractive target.
So now it is (I'm making an inference here) a basic strategy of
business and finance to design "products" (tangible or not) in such a
way as to "externalize diseconomies" onto players who don't know
enough to avoid it or onto people completely unrelated to or
uninvolved in a transaction.
Do they teach this explicitly as a tool in MBA programs yet?
Privatization of such social matters as medicine, education or prisons
is a way quickly to externalize the only loosely defined social objectives
of healthy people, intellectually capable people and rehabilitated
wrong-doers. Those objectives can be replaced by rigidly specified
"outcomes" or "performance". The costs of unremedied illness,
ignorance and criminal behavior are externalized to the community.
So we might pose the question: How will the connectivity of the new
electronic age allow Us to counter that kind of manipulation? At the
same time, we should ask: How will that same connectivity further
empower the already entrenched forces pursuing the "externalize
internal diseconomies" strategy and how can we use it to defeat Them?
- Mike
--
Michael Spencer Nova Scotia, Canada .~.
/V\
[email protected] /( )\
http://home.tallships.ca/mspencer/ ^^-^^
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