Re: ECON: The Affluent Society

Peter C. McCluskey (
Thu, 21 Jan 1999 22:28:56 -0800 ( writes:
>On practical grounds, shirking is less of a problem when dealing with people
>who enjoy their work. The incentives from welfare or unemployment insurance

Which seems to imply that their incentives are less important, and that the incentives on other people are what should control the choice of how much government to have.
But I question whether "shirking" is a good description of what we need incentives for. Many people are willing to work hard at something, but without the feedback of a good incentive structure, they will fail to choose tasks that are of much value to consumers. Look at a random sampling of freeware on the web (rather than the most successfull examples) and I think you'll find a lot of people who worked hard at producing something others would use, and who failed because they didn't measure the needs of users adequately. Or look at people who design tax shelters, working hard to produce something society shouldn't need.

>So. On practical grounds, private ownership and production are a success, and
>vital to any society, and urgent for any poor one. On practical grounds, a
>wealthy society does not need to be growing at the fastest possible rate,

While it appears that at least in the short term there is a tradeoff between growth and economic safety, you should think about the long-term safety of a country that slows its growth enough that it can't compete militarily with countries that maximise their growth. Even if such fast growth economies are peacefull, there's plenty of ways that they can diminish the economic safety the slow growth was supposed to buy (e.g. causing the most productive members of the slow growth society to emigrate, making the technologies used in the slow growth countries obsolete).

>which is why its members will be buying insurance and engaged in other
>members, not all market friendly, to protect their elemental affluence. A
>wealthy society can afford to sacrifice 1% of GDP growth and buy basic social

Viewing the drag on the economy as a single variable that can be set where we want it obscures the biggest problems with government's influence on the economy. Suppose we assume that income taxes as they existed 5 years ago were imposing a uniform 1% penalty on economic activity. Then assume that the desire to protect this income motivates some government employees to hint that they will harrass companies who implement ways to transmit money electronically that are harder for the government to trace than credit cards. How would you quantify the harm it does by increasing the costs of starting a small business on the web (not to mention the secondary effects of the resulting more-centralized-than-optimum concentrations of power)? Or by preventing the development of an easy to use system for electronic commerce? ( writes:
>We might expect future economists to have learned from the mistakes of their
>predecessors, the way the classical liberals learned from the mercantilists
>and modern economists feel they learned from the classical liberals.

I'm sure there will be economists who have learned from the mistakes of central banks, but the process by which central bankers get their jobs has not shown a clear tendency to select for that kind of person.

>And what do you mean, approaches don't work? Since WWII we've traded low
>inflation and high frequency, intense depressions for (at best) steady
>inflation and milder recessions. Monetary policy can control inflation;
>deficit spending in a depressed economy can restore production.

One could just as easily claim that the milder recessions have been caused by more informed private economic actors, technological improvements which improve inventory management, etc., and that the only trade that got made was low inflation for high inflation.
I suspect that even if you can demonstrate that government monetary policy works better than, say, the gold standard did, you would have trouble arguing that it works better than competing privately issued fiat currencies.

>And again, gov'ts don't leave markets alone largely because people and
>businesses don't want to be left alone in it.

True, but this doesn't distinguish between people who want programs that benefit society and special interests who want to use government to transfer money from the politically weak to themselves.

Peter McCluskey          | Critmail ( | Accept nothing less to archive your mailing list