RE: charlatanism
John Hull wrote: Example 3: Subjective Utility Most of the utility 'functions' occurring in neoclassical microeconomics...are not well defined--as Henri Poincare pointed out to Leon Walras. In fact, the only conditions required of them is that they be twice differentiable, the first derivative being positive and the second negative. Obviously, infinitely many functions satisfy these mild requirements. THIS OFTEN SUFFICES IN SOME BRANCHES OF PURE MATHEMATICS BUT THE FACTUAL (OR EMPIRICAL) SCIENCES ARE MORE DEMANDING: HERE ONE USES ONLY FUNCTIONS THAT ARE DEFINED EXPLICITLY...OR IMPLICITLY. Finally, experimental studies have shown that preferences and subjective estimates of utility and risk do not satisfy the assumptions of expected utility theory. In short, THE USE OF UTILITY FUNCTIONS IS OFTEN MATHEMATICALLY SLOPPY AND EMPIRICALLY UNWARRANTED. Now, rational choice models make heavy use of both subjective utilities and subjective probabilities, as well as of the simplistic hypothesis that selfishness is the only motivation of human behavior. Not suprisingly, NONE OF THESE MODELS FITS THE FACT. Hence, although at first sight they look scientific, as a matter of fact they are pseudoscientific. My only comment on this is: it is a silly, uninformed criticism of economics. Economics may or may not be pseudoscientific, but not for these reasons. First, it has been shown long ago, by Gerard Debreu and others, that utility functions are not needed in order arrive at many of the important results in microeconomic theory. Second, the claim that economists use the hypothesis that selfishness is the only motivation of human behaviour is simply wrong, wrong, wrong. Finally, yes, economists often use models that are false and don't fit some data. So do physicists when they assume away the existence of any frictions. Is physics also a pseudoscience for this reason? Alex
RE: North on ideology
Kevin Carson wrote: I haven't read the Pipes book. He's a neoconservative, isn't he? I don't know what the term neoconservative means, nor do I understand why that particular label is relevant to this discussion. I've read Bethell's book in parts, and skimmed through most of it. It strikes me as a very ahistoric view of property: taking the contemporary, Lockean/capitalist model of private property as some kind of Platonic ideal, and then judging history as it progressively approximated that ideal over time. If you had actually read the book carefully, you would realize that your assessment couldn't be more incorrect. Alex
RE: North on ideology
Kevin Carson wrote: As for socialism, its defining characteristic is not necessarily the absence of private property rights. Tucker simply defined socialism by two criteria: the beliefs that 1) all value was created by labor; and 2) that labor should get 100% of its product. In his view, exploitation was possible only through the state's coercion, by which it enabled legally privileged classes to extract a premium in unpaid labor. If such privilege were eliminated, the free market would cause wages to rise to 100% of value-added. I haven't read Tucker, but I've always thought that Von Mises is correct when he says that the essential mark of socialism is that one will alone, acts, irrespective of whose will it is (Human Action, p 695.) To me, this essential mark implies an absence of private property rights. Alex Robson
RE: Public support for farm subsidies
David Levenstam wrote: Far more people support the general idea of freedom of speech than support many specific unpopular examples. The analysis of bundling issues and logrolling has a long history in the field of public choice, but an interesting recent paper on this topic is: Saari, D. and K. Sieberg (2001) The Sum of the Parts can Violate the Whole American Political Science Review, 95(2): 415-433. Alex Dr Alex Robson School of Economics Faculty of Economics and Commerce Australian National University Canberra ACT 0200. AUSTRALIA Ph +61-2-6125-4909 -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] On Behalf Of [EMAIL PROTECTED] Sent: Wednesday, 31 July 2002 2:15 PM To: [EMAIL PROTECTED] Subject:Re: Public support for farm subsidies Hi, I'm new to the list, having just moved here after 11 years in the Field of Farm Subsidies (Iowa), so I hope it's alright for me to reply. Living in Iowa I observed tremendous support for agricultural subsidies, including both price supports (which legislation under the Contract With American began to phase out) and ethanol subsidies (a form of ADC, or Aid to Dependent Corporations, in particular to Archer Daniel Midlands, which bills itself as Supermarket to the World but which might just as well call itself Airline to Bob Dole). Even many self-proclaimed conservatives supported ag subsidies during the Iowa Caucus seasons, and I saw some of them unabashedly demand from Phil and Wendy Gramm continued ag subsidies even as these conservatives applauded the Gramms' opposition to government subsidies. Having grown up in Chicago and lived in Denver I saw virtually no support whatsoever from urban residents, even statist-liberals, for ag subsidies. Of course I am speaking anecdotally, and not statistically, but I try to recall that the wording of a poll can substantially alter its results. Imagine, to take what seems like a clear example, the difference we might see between a poll that asked do you support cutting welfare? and one that asked do you support cutting welfare if it would cut payments to starving single mothers? or even one that asked simply do you support cutting welfare if it would cut payments to single mothers? Many people who would in general support cutting welfare might think twice when confronted directly with the possibility that a cut in welfare could reduce welfare payments to single mothers. To take an example that Milton Friedman has I believe used over the years, imagine the difference between asking whether people support freedom of speech and whether they support the freedom to say nasty things about Bill Clinton (or George Bush, or the Pope, or whomever; Iowa has a large percentage of Catholics in the population, many of whom take a dim view of criticizing the Pope). Far more people support the general idea of freedom of speech than support many specific unpopular examples. In our ag subsidy poll, imagine the different between asking Canadians (or indeed Americans) whether they (we) support increasing ag subsidies and asking whether they support increasing ag subsidies if other countries' governments already provide higher subsidies. Contrasting Canada's low subsidies with the subsidies of other governments plays, as Eric suggests, on Canadians' xenophobia; in the case of Americans, we have seen Pat Buchanan (and Ralph Nader, though he would deny it) playing likewise on American xenopobia. I've personally seen herds of conservatives who would otherwise at least claim to oppose Big Government stampeding after Buchanan (Pat again, not James) as he tried to lead them over the Big Government cliff of protectionism. Yet I cannot imagine that in any national poll that asked simply, do you support higher ag subsidies that Americans, even typically subsidy-sympathetical statist-liberals, would in any large percentage say yes. Does anyone see any evidence that outside of areas in which farming plays a large role Americans support higher (or indeed continued) ag subsidies? Sincerely, David B. Levenstam In a message dated 7/30/02 3:07:14 PM, [EMAIL PROTECTED] writes: This question has been bounced around on the armchair list for a while...here's a bit of evidence on the question. It's from Canada, but I doubt that American results would be that much different. The vast majority of Canadians support farm subsidies for the indefinite future. The question keys into a bit of standing Canadian anti-Americanism, but change the question wording to reflect American farmers receiving lower subsidies than the French, and I think results of an American poll would be quite similar. The poll, taken August 2001, can be found at: http://www.canadianalliance.ca/hotissues/viewby/index.cfm?DoID=756readartic le =1dirlevel=2category=4department=37 Eric -- If you found out that Canadian farmers receive less subsidies than American or European farmers, which of these two statements would come closer
RE: Q for environmental economists
Chresten Anderson wrote: Lomborg's primary problem is not accepting the economics behind his claim; that we are not running out of ressources. And without the understanding that a market is necessary to price the environment he does not get the reasons why the environment is getting better rather than worse. My reading of the book suggests that this is not completely true, but maybe I'm reading more into Lomborg than I should. To take just two examples, consider Lomborg's take on water resources (p 156 of The Skeptical Environmentalist): It is likely that more sensible pricing will both only secure future water supplies but also increase total social efficiency and Adequate pricing turns out to be the main issue for water problems. When water is a free resource - as it typically has been throughout the ages - we consume as much as we can (given our private costs). Or, consider his view of private property rights in China (p 67): The crucial change occurred when the Chinese leadership initiated economic reforms in the 1970s...Equally significant was the fact that they now allowed people to own property and sell goods: China's production potential was set free and it experienced a drastic increase in production. It sounds to me like he understands economics just fine. Alex Dr Alex Robson School of Economics Faculty of Economics and Commerce Australian National University Canberra ACT 0200. AUSTRALIA Ph +61-2-6125-4909 -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] On Behalf Of Chresten Anderson Sent: Friday, 19 July 2002 4:11 AM To: [EMAIL PROTECTED] Subject:SV: Q for environmental economists Being from Denmark I have been able to read the two previous books by Lomborg. The first is essentially the same as the sceptical environmentalist and the second is an answer to some of the attacks on him by the Greens. In his English version he has updated the first book and incorporated some of the valid points from the greens that he acknowledged in the second. However both versions of the Sceptical Environmentalist are essentially updated versions of Julian Simon's The Ultimate Ressource (both versions), but without the explicit theoretical framework. Lomborg is pro-government and does therefore not present the pro-market arguments that explain why the state of the environment is as it is. As understood by Chresten Anderson -Oprindelig meddelelse- Fra: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]Pa vegne af john hull Sendt: 18. juli 2002 07:14 Til: [EMAIL PROTECTED] Emne: Q for environmental economists Howdy, As ad hominem arguments fly around the internet, I seem unable to get an impartial opinion. Would those who study the envirnment give me the straight dope on The Skeptical Environmentalist by Bjorn Lomborg? His economic arguments seem pretty sound, and this statistical methods, from what I can tell (not much?) seem good. However, I would really enjoy an unbiased review (however brief it may be) from someone more knowledgeable than me. Sincerely from a barefooted, gap-toothed mouthbreather, -jsh = ...for no one admits that he incurs an obligation to another merely because that other has done him no wrong. -Machiavelli, Discourses on Livy, Discourse 16. __ Do You Yahoo!? Yahoo! Autos - Get free new car price quotes http://autos.yahoo.com
RE: limited liability
Jason DeBacker wrote: What is the economic argument for limited liability of corporations? Can anyone suggest some readings on this? For starters, I would recommend: Easterbrook, Frank and Fischel, Daniel (1991) The Economic Structure of Corporate Law, Harvard University Press. After that, you could read the papers referred to in this book. Alex Dr Alex Robson School of Economics Faculty of Economics and Commerce Australian National University Canberra ACT 0200. AUSTRALIA Ph +61-2-6125-4909 -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] On Behalf Of [EMAIL PROTECTED] Sent: Thursday, 18 July 2002 11:40 PM To: [EMAIL PROTECTED] Subject:limited liability What is the economic argument for limited liability of corporations? Can anyone suggest some readings on this?
Criminal Sanctions for Price Collusion
Armchairers, Australian regulators are currently pushing for jail sentences to be imposed on those found guilty of price collusion. Their claim is that custodial sentences will act as a more effective deterrent against this kind of collusive behavior, and they cite the US and Europe in support of their claims. My question: is anyone on this list aware of any US or European empirical studies which actually show that custodial sentences have been more effective than monetary fines as a deterrent against these kinds of crimes? Dr Alex Robson School of Economics Faculty of Economics and Commerce Australian National University Canberra ACT 0200. AUSTRALIA Ph +61-2-6125-4909
RE: General Theory
John Jernigan wrote: I remember reading someplace that someone had written what was essentially a line-by-line response to Keynes General Theory based on libertarian grounds. Does anyone know what I'm talking about and is it any good? The reference is Henry Hazlitt (1959) The Failure of the New Economics: An Analysis of the Keynesian Fallacies New York: Arlington House. Hazlitt (a journalist, not an economist) is a great writer. This book, along with his Economics in One Lesson make very good reading. Alex Robson School of Economics Australian National University Canberra ACT 0200. AUSTRALIA
RE: Excessive drinking
Ed Lopez wrote: In a Forbes article last year, a professor of health at Indiana University notes that since the increase in the legal drinking age to 21 (1987), total amount of alcohol consumed dropped but the incidence of EXCESSIVE drinking increased among 18-20 year olds. 1. any takers on why? It's an obvious point, but do the Indiana professor's findings control for other factors, such as price of alcohol, price of substitutes complements (including changes in legal sanctions for consuming other drugs, police enforcement etc), income, and so on? Without knowing about what is being held constant and what isn't, how can we say anything about the effect of a particular law at the margin? Alex Robson Australian National University
