Economics Questions

Re: Mandatory savings

Neodoxy — Sun, 07 Aug 2011 00:59:23 GMT

z1235:

Neodoxy, I felt like we were talking past each other. No biggie, not that important.

Fair deal, people carry on worthless and unprofitable discussion too much

Re: Mandatory savings

z1235 — Sat, 06 Aug 2011 22:21:31 GMT

Neodoxy, I felt like we were talking past each other. No biggie, not that important.

Re: Mandatory savings

Neodoxy — Sat, 06 Aug 2011 22:13:16 GMT

z1235:

Neodoxy, -- I find no profit in participating further in this thread.

Might I ask why?

Re: Mandatory savings

z1235 — Sat, 06 Aug 2011 17:27:03 GMT

Wheylous, I thought we agreed that central planning doesn't have to be "total" in order to be central planning.

But, if it pleases you more, you too, then.

Re: Mandatory savings

Wheylous — Sat, 06 Aug 2011 16:52:51 GMT

Neodoxy, Madmiser -- I find no profit in participating further in this thread.

But what about me, sir? :(

Re: Mandatory savings

Neodoxy — Sat, 06 Aug 2011 15:33:38 GMT

Okay so it is a utilitarian justification that makes sense under certain situations. This is a fine theoretical example although it should once more be pointed out that there is relatively rare. For instance I support the violation of property rights if there is no alternative but starvation but I believe in a modern free market economy this is so rare it's not worth speaking about.

Perhaps you are right on this count, maybe people would have to be fored to save this much, we cannot know a priori, for instance if many of the richest in society saved a massive amount then the goal might be achieved, it depends upon the values of people under the situation, it could become a social norm to "spend your paycheck on the meteor". It should also be noted that people would, all else equal, save more as the meteor came until a few years before the meteor hit the savings rate might reach as high as 80%. It would depend upon the circumstance and I find it easier with such ultimate case-scenarios putting "and people will not save enough to stop it."

Re: Mandatory savings

MadMiser — Sat, 06 Aug 2011 15:30:11 GMT

To z1235: Fixed; I put a bit at the beginning of each paragraph stating who it was to :) And, okay then, thanks for the discussion!

Re: Mandatory savings

z1235 — Sat, 06 Aug 2011 15:01:38 GMT

Neodoxy, Madmiser -- I find no profit in participating further in this thread. Also, please fix your recent posts to reflect who's saying what and who's replying to whom.

Re: Mandatory savings

MadMiser — Sat, 06 Aug 2011 09:34:06 GMT

To z1235: The purpose of that analogy was to demonstrate an ethical framework from which compulsory savings may be argued for. From the standard economic utilitarian perspective, even if compulsory savings does cause greater economic growth and individual opportunity in the long run, it's not justified due to the disutility it causes people in the present by preventing them from spending their money as they choose. From the perspective of maximising utility over an extremely long timespan, however, the perspective of maximising the amount of time humanity exists, then this compulsory savings would be justified if it prevented humanity's extinction. It does relate to the real world, because humanity faces a small chance of extinction, from things such as meteors, supervolcanos, nuclear war, the sun's heat death, failure of their Earth's magnetic field, etc. Every unit of technological growth, reduces very slightly the risk of such extinction, by increasing the chance we'll have the ability to deal with it. For instance, if humanity reached the technological level to settle other solar systems, the risk of extinction would fall to practically zero, since it'd be extremely unlikely for an extinction level event occur simultaneously on every planet we occupied. Hence to someone operating from such a perspective, any decrease in present utility created by forcing people to save would be justified if the increased growth resulting from it decreased the possibility of future extinction (therefore increasing the probability of much higher future total utility) by a sufficient amount to offset the present disutility. To put it simply, arguing for compulsory savings in the name of greater future growth and prosperity is a weak argument, in the sense that people should be allowed to choose to consume more now in exchange for less future growth and prosperity in future. Arguing for compulsory savings in the name of decreasing the probability of the species' extinction is a stronger argument, from a quantitative utilitarian perspective. Not that I'm advocating either of these arguments, mind you, just describing a particular utilitarian framework within which compulsory savings could be considered rationally desirable.

To z1235: You say if a long-term doom was known ahead of time "then it's almost certain people would save independently". What is your reasoning for this? Say for instance, it was known with 99.999% certainty that a gigantic meteor was to hit Earth in 2050, that the only way to deflect it was with a giant laser, and for people to save enough to create this laser they'd have to reduce their standards of living by half. Whether or not they did this would depend on their preferences: much as someone can rationally choose to smoke, deciding that the pleasure it gives them makes up for the reduction in their lifespan, people could rationally choose that they'd rather live a prosperous life and be killed by a meteor than live a poor life in exchange for surviving a few years longer. The only way to be certain people saved enough to build the laser, destroy the meter and prevent extinction, would be if savings rates were determined by someone for whom surviving the meteor was of greater importance than having a high standard of living from now to 2050.

Re: Mandatory savings

Neodoxy — Sat, 06 Aug 2011 06:00:54 GMT

MadMiser:

To z1235: Imagine there's a sudden ice age, and the eskimos can no longer catch fish.

Exactly what is the purpose of this analogy? What do you see its relation to reality? It has nothing to do with your original statement which revolved around increased investment causing economic growth and individual opportunity. The only purpose I can see is a potential justification for SOME cases of mandatory savings when the alternative is long term doom, which is also something that we could not have known ahead of time, or if it was then it's almost certain people would save independently.

So is it just theoretical or is there some actual connection you're trying to make?

Re: Mandatory savings

MadMiser — Sat, 06 Aug 2011 05:35:36 GMT

To z1235: Imagine there's a sudden ice age, and the eskimos can no longer catch fish. The village with the "emaciated but "rich" lucky survivors" is the only one that survives, due to the large stockpile of fish that was built up, which they can live off until the ice thaws. They might have been cursing the wise chief through the teeth for half-starving them, but after the ice age they'd be grateful to him for forcing them to save, as if he hadn't then none of them would have survived. Equally, their children and children's children would also be grateful to the chief, as would the children's children's children, and children's children's children's children (all of whom wouldn't have been born if not for the forced savings). Hence, if someone believed the 'utility' of those future generations (who wouldn't have been born without the savings) made up for the 'disutility' of the half-starved earlier generations being forced to save, then they could argue that the chief's policy was justified.

Re: Mandatory savings

Neodoxy — Sat, 06 Aug 2011 04:43:29 GMT

z1235:

? It most definitely depends on your opinion (and not on my values) if I have no choice but to submit to your benevolent program.

The fish oil intervention was your idea not mine, and we're talking about your point of view, not mine. Only the individual himself can assess the value of any action proposed or performed. I would not consider making the individual to swallow fish oil or have force used against him worth the possible health benefits. That is not the issue, if you read my post then I put a lot of qualifications upon the actual benefits of the intervention but that's not the issue anyway, the issue that I was dealing with was the actual implications of the intervention itself, this does not call for an attack based upon the fact of force involved.

Because value is subjective you cannot say that what is eventually brought about in the end has less utility to the individual in the long term, you're quite right that this cannot be measured however.

We cannot measure utility, indeed the idea of more or less utility is nothing more than a theoretical concept therefore we cannot say if utility is lost or gained due to our actions.

With this being said all generations in the future will be better off materially than they otherwise be all else equal and therefore the person valuing the two actions could consider the long run more important.

As I wrote in a previous post in this thread:

"Imagine an eskimo village where each person catches 8 fish a week, eats a fish a day, and saves a fish a week for a rainy day. Then the wise chief descends upon the villagers and forces each to save FOUR fish a week (smoked and stashed into a storage igloo) for the "long-term". Imagine also that such policy was implemented for the next FOUR generations. You'd end up with four generations of emaciated but "rich" lucky survivors."

The chances of anyone being that held back by a manditory saving policy is quite slim. The fact is that if perfectly imposed there will be increases in long term growth and a decrease in current consumption. Whether or not this is good depends upon the feelings and beliefs of the individual in question.

I am now certain that you don't know the meaning of "subjectivity of values". Person A can not "subjectively" value neither the short nor the long run in Person B's stead. Person B is the only one that can subjectively value anything concerning Person B.

I know exactly what subjective values are thank you, and I apply the concept much more doggedly than many around here who take ethics seriously. And no, first of all I can value the actions of person B and what person B does, I might be more adept at predicting what will actually bring about the most utility to person B, on a national level I accept that this is so improbable that it isn't worth speaking about because it works at a personal level, but also the individual can value the actions of others and generally estimate and consider his own utility. If the manditory savings practice is enacted then let us say that it will take two decades for the standard of living to overtake what it otherwise would (we have to look at not only what the standard of living originally was but also the growth that the economy would otherwise experience) then from that point on the vast majority will be better off than they would otherwise be, and after another decade or two practically everyone would be better off than they otherwise would have been. So if you value the increased utility and material progress of all following generations more than the forced short run suffering then all else equal you will have to support the manditory savings intervention.

Not the Mises I know. Source?

Then I'm not sure what Mises you know. Possibly Mises the social theorist, not the economist?

"It is logically impossible to reconcile the point of view of the economist and that of the interventionist. If prices are uniquely determined by the market data, they cannot be freely manipulated by government compulsion. The government’s decree is just a new datum, and its effects are determined by the operation of the market. It need not necessarily produce those results which the government wants to realize in resorting to it. It may happen that the final outcome of the interference is, from the point of view of the government’s intention, even more undesirable than the previous state of affairs which the government wanted to alter."

"The notion of right and wrong is a human device, a utilitarian precept designed to make social cooperation under the division of labor possible. All moral rules and human laws are means for the realization of definite ends. There is no method available for the appreciation of their goodness or badness other than to scrutinize their usefulness for the attainment of the ends chosen and aimed at."

"State and government are not ends, but means. Inflicting evil upon other people is a source of direct pleasure only to sadists. Established authorities resort to coercion and compulsion in order to safeguard the smooth operation of a definite system of social organization. The sphere in which coercion and compulsion is applied and the content of the laws which are to be enforced by the police apparatus are conditioned by the social order adopted. As state and government are designed to make this social system operate safely, the delimitation of governmental functions must be adjusted to its requirements. The only standard for the appreciation of the laws and the methods for their enforcement is whether or not they are efficient in safeguarding the social order which it is desired to preserve."

"As is the case with every other variety of government interference with the price structure, the results obtained not only are contrary to the intentions of the government but produce a state of affairs which, in the opinion of the government, is more undesirable than conditions on the unhampered market."

"The problem of interventionism is not a problem of the correct delimitation of the “natural,” “just,” and “proper” tasks of state and government. The issue is:.... Can it realize those ends which people, in resorting to it, want to attain?"

Human Action in the section "the government and the market".

The basis for all praxeological critiques MUST by necessity be a critique of the means, not the ends, because value is indeed subjective. One end is no more or less rational than the other unless it is impossible to achieve it. Most people would be willing to live in a forceful society for a prosperous nation. Otherwise the libertarian ideal would be the easiest thing in the world to reach.

Re: Mandatory savings

Wheylous — Fri, 05 Aug 2011 18:54:42 GMT

I meant central planning of economic production and major transactions.

As in the communist Bulgaria once forgot to order factories to make toothbrushes and the poor nation had bad breath that year.

"total" central planning is not an absolute term (it is left to interpretation), but what I describe as "total" central planning is definitely more far-reaching than your central planning of X, which may just be central planning of the rock in front of 123 Main Street. The extent of the control makes the difference between mere regulation and full out central planning.

I think

Or do they ... O.o

Re: Mandatory savings

z1235 — Fri, 05 Aug 2011 18:47:42 GMT

What's "total" central planning? Even North Koreans still get to sleep and pee whenever they want, I think.

Re: Mandatory savings

Wheylous — Fri, 05 Aug 2011 18:42:19 GMT

Yes, central planning of X, but when you omit said X from the discussion, you make it seem like you are talking about total central planning. And in your post you drew on the general knowledge of the members of this board of the arguments against total central planning, but was instead applying it to central planning of X, which results in an unfair acceptance of your argument.

It's like saying "violating the NAP is unjustified" and having everyone cheer, while you were actually talking about violating NAP after proper judicial proceedings, which is acceptable.