Also in the manpower essay I mentioned in the last post. This is indirectly related to why demand policies are more sensible than supply policies on this stuff:
"There is no Single Well Defined End (SWDE) of Society, measured in bushels or gollops or even dollars. There are a great many different ends of a great many different people, some of which are competitive, some complementary, and some independent. Moreover, there is no such thing as manpower, save as a hot abstraction to be handled with long tongs. Not Manpower, but Men - with this cry I propose to arouse the populace to the threat which menaces them. I repeat, not manpower, but men: men in their infinite variety and sacredness, in their complex personalities and unfolding desires. Man as Manpower is all very well for a slave society, where man is a domestic animal, to be used for ends which are alien to him. But in a free society man is not manpower; he is not a donkey chained to a great churn for the production of SWDE. He is a free being, the lord of society and not its slave, the creator of demand as well as of supply. In these days we are all in danger of being overcome by the great Feudal myth of Society, a frowning overlord to whom we are all too subservient, even if he has the impressive title of Lord National Interest or even Lord Social Interest."
The point that he makes later on is that simply increasing a factor of production is not going to achieve the private or social goals that we may have. He starts with an oversimplified picture of the market - then he outlines where that breaks down, focusing particularly on externalities as a justification for public or social demand for certain things. But he makes the point that you don't satisfy that demand by artificially generating more factors of production. That is (1.) distortionary, (2.) an affront to a free society, and (3.) a misunderstanding of the economy as some simple machine where if you put in more inputs you automatically get out some "Single Well Defined End" as he puts it. Generating more manpower doesn't automatically produce this "Single Well Defined End" - the market will respond to demand for that "Single Well Defined End". This is the point he makes with respect to conscription - if there is a social need for military (he sees few - he's a Quaker), Boulding argues that armies should be financed, not conscripted. Soldiers should be bid for on the market by the government so that the labor market isn't distorted and forces of supply can respond to demand. It doesn't work the other way around. This "manpower view", applied to the science and engineering labor force, suggests that if we just generate more and more scientists and engineers the United States will be in a better, more innovative, more competitive position. This is (generally) not my view. I think some supply policies make sense of course. Diversity is a major problem in the scientific workforce, and those sorts of policies are good. Strengthening science education is never a bad idea. But trying to produce outcomes that you want by widening the pool of scientists and engineers is unwise. If there is a legitimate social demand that the market is not satisfying due to externalities or whatever other reason, then by all means, demand that outcome. Offer to pay for it. That's how the market achieves objectives - it satisfies demands. Simply increasing the factors of production, crossing your fingers, and hoping your desired outcome will come out the other end is not going to produce very good results. If we want world-class transportation, make an investment in transportation - don't double the amount of engineers and hope a transportation network will materialize. If we want a colony on Mars, make an investment in a colony on Mars - don't double the amount of aerospace engineers and astro-physicists produced per year. The market works, and it works by satisfying demand. So if there is a social demand that is not being met, go the market and demand it. The reallocation of factors of production in response to that demand generally functions pretty smoothly.
Saturday, June 11, 2011
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How exactly does one determine if a "social demand" is not being met? What's the mechanism for that exactly?
ReplyDeleteJust for the record, I have no "social demand" for a colony on Mars or for "light rail" and other various transportation boondoggles either.
I think we've been over this countless times.
ReplyDeleteSocial demand or demand for something that provides net social welfare derives from benefits enjoyed by a wide variety of people from a decision that they are not a party to.
There is no great way to determine it exactly. No one claimed there was.
A good way to get at it seems to be getting a bunch of people together and talking intelligently about what would benefit their community but which might be hard to guarantee as an individual in an individual transaction with no way to guarantee the outcomes of the transactions of other people.
Ok, there is no such thing as an "individual transaction." That is a rather silly abstraction at best.
ReplyDelete"A good way to get at it seems to be getting a bunch of people together and talking intelligently..."
That isn't really the way people normally interact nor is it how they learn. People interact and learn from one another by their behavior; what they do with regards to one another. Only an academic would say, well, first we've got to get the "stakeholders" together so that we can talk this out.
"...but which might be hard to guarantee..."
What the heck is this "guarantee" word doing there exactly? Why exactly would want to "guarantee" an outcome? If this were any useful process it wouldn't be ends driven; it certainly wouldn't be looking for guarantees of anything. Indeed, where is the prospect of failure in all of this?
re: "Ok, there is no such thing as an "individual transaction." That is a rather silly abstraction at best."
ReplyDeleteOf course there is. I had one this morning at CVS. There was nothing abstract about it. I gave them money and they gave me goods.
re: "Only an academic would say, well, first we've got to get the "stakeholders" together so that we can talk this out."
Well obviously not only an academic because I'm not an academic and I just said it. Again, what are you talking about? My mother in law's neighbors talked with a bunch of her neighbors about the best way to deal with a new one-stop-shop store that came into their neighborhood and flooded their lawns from the construction site. That thing you always bring up in the comment thread on here even when no one was talking about it (government) is people getting together and talking about how to address problems that impose social costs or benefits. This stuff happens every day, Gary.
I don't even understand your last sentence. Guaranteeing the satisfaction of individual costs and benefits is easy - the market is excellent at guaranteeing that (contingent on the stability of property rights and ability to pay, of course). The same is not true of social costs and benefits, which is the whole point of what we're talking about. What is your problem with the word "guarantee". All I'm saying is that there's a fairly reliable way of seeing to individual welfare - this is not true of social welfare.
Daniel,
ReplyDeleteAnd how did CVS get the stuff you got? And how did you get the money? It is part of a web of interactions in a market system. It is quite social and think of it as an "individual transaction" discounts the rich, voluntary social networks involved in such.
You are an academic; you work for a think-tank and you're going to graduate school in the Fall. Yeah, you're an academic alright.
"My mother in law's neighbors talked with a bunch of her neighbors about the best way to deal with a new one-stop-shop store that came into their neighborhood and flooded their lawns from the construction site."
That's a very different process.
"That thing you always bring up in the comment thread on here even when no one was talking about it (government) is people getting together and talking about how to address problems that impose social costs or benefits."
That's how they describe it in a political science 101 course certainly (hey, I've got a degree in political science, I ought to know); that's not actually how government works.
There are no guarantees in the marketplace; that's sort of the point I'd say.
re: "And how did CVS get the stuff you got? And how did you get the money? It is part of a web of interactions in a market system. It is quite social and think of it as an "individual transaction" discounts the rich, voluntary social networks involved in such."
ReplyDeleteWhat the hell are you talking about? When did I say it wasn't a part of a web of interactions in the market system? An individual transaction allocates the resources exchanged in that transaction efficiently. Of course we take a broad network of other transactions into account when we bring out preferences to that individual transaction.
Webs or networks have nodes after all, Gary. There's no need to be difficult - you know precisely what I think of the market as a network of transactions, and you know (at least at a layman's level) about the efficiency properties of individual transactions. Stop being so difficult.