Economics Questions

Re: I need some help with a 200 level Macro-Econ paper.

z1235 — Mon, 20 Jun 2011 13:42:53 GMT

Smiling Dave:
If the non welfare economy creates more of everything, it is the richer one.

Dave, I get what you're saying, and I agree. I'm just trying to be as rigourous as I can be. Say, the USSR economy produced more steel plants but less chocolate bars per person than the US in some year. How does one pick the richer one without getting into objective value comparisons between steel plants and chocolate bars?

And if we chose 'achieving the intended effect better' as a criterium, isn't that a question of time-frame? The unemployed A is made provably better off at the moment of receiving the benefit. The (valid) point that everyone's made worse off in the long run is not so obvious.

Re: I need some help with a 200 level Macro-Econ paper.

Smiling Dave — Mon, 20 Jun 2011 02:39:31 GMT

I thought of another possibility of deciding whether a welfare program is good or bad, similar to what Mises used when discussing Socialism. If a welfare program results in the opposite of its stated objectives, then it is bad.

Re: I need some help with a 200 level Macro-Econ paper.

Smiling Dave — Mon, 20 Jun 2011 01:23:15 GMT

Good question, z, and let me suggest an answer. Though we cannot read people's minds or feel their feelings, I think it fair to say that people prefer having more goods and services available to them to accept or reject than less. Sure, a certain type of person would prefer to live in squalor and filth and cold than in a warm clean roomy house, but even he would enjoy having the option of choosing one or the other over being forced to live homeless under a bridge. So that the economy that produces more goods and services than the other, more of everything, more Ferarris and A/Cs and leisure time opportunities, is the richer one. So that if an economy with a welfare program will create more, it is to be considered the richer one. If the non welfare economy creates more of everything, it is the richer one. [Of course if Economy A produces 5 of everything, and B produces 5 of everything else and 6 Ferraris, then B is also the richer economy].

Re: I need some help with a 200 level Macro-Econ paper.

John James — Mon, 20 Jun 2011 00:40:12 GMT

z1235:
Dave, how do you compare the objective aggregate 'wealth' in one economy vs. another? By the number of Ferrari's? A/C's? Hours of leisurely contemplation per day per person? Or by summing the non-cardinal individual subjective valuations of each participating agent?

Of course that's not an easy one, but when I think about these terms I think first about how people vote with their feet. I don't think there's a better indicator of living conditions. Where do people try to emigrate from, and where do people try to immigrate to? Second I would consider the approximations of people and the comfort conditions of the habitat they reside in. Of course there are personal preferences, but by and large I would think it's safe to say, by and large, people prefer to live in a shelter where they can control the climate and the lighting, and the easier it is to do those things, the better. Another example of something like this would be the availability, variety, and cost (in terms of marginal time and resources) of food. How easily and quickly can someone aquire, prepare, and consume how much and of how many varieties of food? Another might be how much time most people spend doing remedial tasks they would rather not do...and even a step farther, how much time doing tasks they would rather not do for which they do not receive compensation (i.e. washing their clothes, preparing meals, maintaining their shelter, etc.).

There are some who would consider this a Western-centric view, and claim that there are plenty of people who prefer a more "simple lifestyle" without modern technology and convenience. And while that may be true that there are people who fit in that category, there are virtually none who forgo all comforts afforded by the modern world and I would argue that most people would prefer more of such conveniences as opposed to less. The vast majority of those who have the opportunity to live in what we would consider "modern developed conditions" do so...and even those who romanticize about the simple lifestyle still only "visit" such an existence through camping trips or safari excursions, as opposed to actually raising their children in it on a permanent basis. And even still many of those who do live in an outdoor wilderness by choice still utilize the clothing, tools, and other conveniences of the modern world.

What I (think I) know is that: (1) voluntary exchange, by definition, makes each participating agent 'richer', i.e. better off than before/without it, and (2) every coercive exchange (such as taxing B to give 'benefits' to A) prevents a potential voluntary exchange from taking place.

1) Don't forget about fraud.

2) Not only does it prevent a voluntary exchange from taking place, it means at least one party is worse off...and his individual liberty as been infringed.

Re: I need some help with a 200 level Macro-Econ paper.

DanielMuff — Mon, 20 Jun 2011 00:23:01 GMT

Good vs bad is a false dichotomy. But if you argue about it being a false dichotomy, then you're not addressing the professor's question, so, you'll probably get marked down for doing so.

Re: I need some help with a 200 level Macro-Econ paper.

z1235 — Sun, 19 Jun 2011 23:53:38 GMT

Dave, how do you compare the objective aggregate 'wealth' in one economy vs. another? By the number of Ferrari's? A/C's? Hours of leisurely contemplation per day per person? Or by summing the non-cardinal individual subjective valuations of each participating agent?

What I (think I) know is that: (1) voluntary exchange, by definition, makes each participating agent 'richer', i.e. better off than before/without it, and (2) every coercive exchange (such as taxing B to give 'benefits' to A) prevents a potential voluntary exchange from taking place.

Re: I need some help with a 200 level Macro-Econ paper.

John James — Sun, 19 Jun 2011 23:12:16 GMT

The one thing I think EinTraining gets right is that you'll definitely want to address the question directly and define the terms. Asking if something like unemployment benefits are "good or bad" sounds like a prompt out of a 1st grade homeroom assignment. You'll need to define and be specific as possible about what "good" and "bad" are and how something qualifies. As touched on in these previous posts, what one person may consider "good" (because he benefits), everyone else consider's bad (because it is at their expense).

You'll need to set up a thesis that doesn't just claim benefits are "good or bad" (I mean, they call them benefits)...but instead explain exactly what these kinds of programs do and then make a case for why you consider that to be good or bad.

Seriously that question reminds me of this:

(Please visit the site to view this media)

Re: I need some help with a 200 level Macro-Econ paper.

Smiling Dave — Sun, 19 Jun 2011 22:47:02 GMT

z, He might want to add a longish footnote discussing whether the economy as a whole will become richer or poorer from those benefits. And a second one about how unemployment results in broken homes, without taking a stand on whether that is good or bad.

Re: I need some help with a 200 level Macro-Econ paper.

z1235 — Sun, 19 Jun 2011 22:06:54 GMT

Erock:

"Are unemployment benefits good or bad?"

They're good for the beneficiary, and bad for the person or business who's taxed to pay for them. Values are subjective and there are no objective aggregates of 'goodness'. I'd just stop the paper right there.

Re: I need some help with a 200 level Macro-Econ paper.

Erock — Sun, 19 Jun 2011 20:39:36 GMT

Maybe I will just upload my paper for you all once i'm done. Its a short one thanfully. 2-4 pages.

Re: I need some help with a 200 level Macro-Econ paper.

Smiling Dave — Sun, 19 Jun 2011 19:58:39 GMT

Not sure if E. in Training's take is the Austrian one.

Re: I need some help with a 200 level Macro-Econ paper.

EconomistInTraining — Sun, 19 Jun 2011 19:47:24 GMT

If you want my advice its probably better to come down on the side of "unemployment benefits increase structural unemployment" whilst laying out alternatives to unemployment benefits that might be used to decrease structural unemployment (which is no doubt a good thing) such as job retraining programmes and the link. Of course, if you could give empirical evidence that unemployment benefits will actually increase structural umemployment as well as examples of the alternatives (I think for example, that the UK tried something like job retraining programmes for the unemployed).

As in any university level paper, its always advisable to give a fair but brief overview of the other sides arguments and explain how your solution addresses the issue raised. Obviously, the big issue behind unemployment benefits is simply that even in a free market there will be some proportion of the population who are out of work and unable to find it and nobody is going to appreciate "addressing" this issue by letting them starve (and assuming that private charity will cover it is something of an unfounded stretch).

So, no matter what your beliefs its probably not a wise idea to come down completely against them. Instead it might just be a better idea to advocate reducing them and changing the incentives in place (lump sum transfers to the unemployed, limits of time that one can collect them as in the UK) whilst complementing them with programmes to help the unemployed find work.

I need some help with a 200 level Macro-Econ paper.

Erock — Sun, 19 Jun 2011 19:22:11 GMT

So the paper topic is basically "Are unemployment benefits good or bad?" You can already guess what side im on haha. Unfortunetly I only get 4 pages, double spaced to write it. In your opinion what is the strongest argument possible against them? Is it the moral hazard of disincentivizing people to go back to work?