Are you arguing that everyone wants stuff? Indigenous peoples have no desire to obtain mattresses until they are taught that it is a limited, valuable resource at which time they covet the item. Just because we live in a consumer-driven society does not mean that all peoples are inherently consumer oriented.

Example: The pilgrims would trade beads for land rights. To the indians land rights meant nothing and had no value but beads (which the pilgrims could manufacture easily) were coveted decorative items. Only after their land was taken away did they seek to possess their land.

The question that you need to address, in my opinion, is not whether we should regulate what societies want but rather if there really is any negotiation that takes place when an economically strong culture "bargains" with an economically weak culture. I would suggest that there is not. only when bargaining parties have equal footing can real negotiation take place. And only through negotiation can we be sure that people are deciding for themselves what they want rather than us imposing their desires upon them.

Posted by: Tyler Hamilton at April 22, 2004 06:56 PM

Can there be negotiation? Well, it depends on the level at which the trade is taking place. Larger transactions with developing countries such as damn building or oil drilling contracts are rarely "fair." The fact that poor countries don't have much leverage, however, does not mean that they are always being robbed.

Now, as far as mattresses and eyeglasses go, yes there's negotiation. Microfinance operations and many businesses (telecommunications is a good example) have found that it is possible to do business with poor people. Even some of the world's poorest populations will show tendencies to save in order to purchase consumer goods or even invest in capital goods such as refrigerators (for a corner market) or water pumps (to progress from sustinence farming). A stable currency allows poor people to negotiate fairly.

And as far a mattress only being desireable because it's limited resource, I say no. I'll use a different product as an example, but I'd say that the same rule generally applies to mattresses. Ever heard of the Kenya Ceramic Jiko? (BTW Tyler, that's a kid's site, so you should understand it ok) The KCJ is a small ceramic stove that allows Kenyans to spend less time chopping down and gathering wood to cook their food. It's also cleaner than woodburning. With less time spent gathering wood and inhaling smoke, its users can spend more time doing other things. Those other things might include educating themselves or they might include relaxing. Either way, they have more time. My point is that some products have value in and of themselves, not solely because they are limited or coveted.

Posted by: Jed at April 23, 2004 10:43 AM

Jed,

I have a number of problems with your assumptions, as usual. First, your suggestion that admittedly unfair negotiations with developing countries in which the countries have no negotiating power do not "rob" these countries is highly dubious. Are you assuming that these powerful countries/corporations are somehow looking out for the little guy? Are you assuming that complete loss of control of their natural resources for far less than market value has some inherent value? I would assume that your argument would be along the lines of providing captitol to cash-strapped nations. But this does nothing to help indigenous populations aside from providing their governments with money.

As to your argument about some items having inherent appeal I would probably agree with you. Things that make our lives more efficient are appealing but somewhat illusory. Your suggestion that Kenyans will have more free time because of new products, however, is, again, extremely dubious. In today's western world, a world of unbelieveable technology and gadgets, people have less free time than nearly anytime in history. Subsistence farming, many anthropologists posit, is the way of life that provides the most free time. So although items may seem appealing because they will reduce our workload, that idea may well be illusory.

Anyway, I think good arguments can be put forth about both of my above claims but in the end I think that the argument boils down to an assumption about future interests. Populations will always make choices that most benefit them, with little thought to externalities (such as future generations). I believe that we should avoid taking advantage of indigenous populations and jeopardizing their future viability as a people because of some ill-advised belief that it is inevitable.

Posted by: Tyler Hamilton at April 23, 2004 02:21 PM

Jed,

You seem bright and willing to learn, and I am encouraged by that. However, I am deeply troubled by your ideas. It seems that you have been caught hook, line, and sinker by the Washington Consensus lie. I say "lie" deliberately and not without some justification, I think.

In your imaginary, theoretical world--again I understand that you are probably just the product of a biased American education system so don't take these comments too harshly--economics reign supreme and all cultures and peoples welcome--dare I say worship--the underlying assumptions upon which these models are based. Did it ever occur to our Fathers of economics that maybe some societies do not accept personal property? Did it ever occur to them that some societies and religions--wait, is Christianity a religion--teach that it is better to seek the interests of others rather than while away their lives in pursuit of monetary gains? Did it? If it did how do they square the idea that a functioning economy requires, yes requires, people to look out for their own selfish interests.

Anthropocentric, entrenched power mongers. That is what modern economics comes from. Now, that is where we inevitably march. And why? So that we can have another Big Mac? So that I can buy another Barbie for my daughter--learning that only anorexics are valuable in the process? No. There is more to us than that.

Indigenous communities are special for the very fact that their underlying assumptions are different than ours. We should not force them to accept our assumptions. They do not force us. It is just like Zshegel said: "They neither fight us, nor resist us, why do we dishonor them?"

Love your website, keep it up.

MM

Posted by: Molly McUsic at April 23, 2004 02:41 PM

Tyler and Molly,

Thanks for your comments, I'm learning from both of you. Before I offer my rebuttals, I want to wish Tyler the best of luck on this year's tour, I think you've got what it takes to win, although I'd like to see Lance break the record.

Tyler. First of all, I think you misread the original post. I did not intend this to be a discussion of macroeconomics, but was instead focusing on the importance of consumer good. Nonetheless, I'm happy to continue the discussion.

You said:
...your suggestion that admittedly unfair negotiations with developing countries in which the countries have no negotiating power do not "rob" these countries is highly dubious.

In response to which I quote myself with additional emphasis:
"The fact that poor countries don't have much leverage, however, does not mean that they are always being robbed."

I never made the suggestion that you attribute to me. Should we assume that most large transactions are like unto robberies? I don't know, but I'd assume that most aren't. Those who negotiate on behalf of the thirds world aren't ignorant and aren't going to be duped easily.

You asked:
Are you assuming that these powerful countries/corporations are somehow looking out for the little guy?

I'm assuming that they're looking out for their bottom line. Do you assume that they're looking to hurt the little guy? I assume that many little guys will be hired by foreign corporations. I'll also assume that some of these corporations will be interested in hiring managers from foreign countries, often subsidizing educational initiatives to bolster their stores of human capital.

Then you asked:
Are you assuming that complete loss of control of their natural resources for far less than market value has some inherent value?

Of course not. Then again, I don't know of any countries who have ceded total control of their natural resources to a foreign entity. What makes you think that I might assume this?

Then you said:
I would assume that your argument would be along the lines of providing captitol to cash-strapped nations. But this does nothing to help indigenous populations aside from providing their governments with money.

You're right. Poor local governance often prevents foreign investment and even relief from reaching those who most need it. Nonetheless, I wouldn't say that it does "nothing." The channels through which financial investments or relief pass are often flawed and inefficient. To me, that indicates that they should be reformed, not that we should cease using them all together.

You posit:
In today's western world, a world of unbelieveable technology and gadgets, people have less free time than nearly anytime in history.

This is a comment that John Stossel would categorize under his list of "Lies, Myths and Downright Stupidity." Not having a mustache as beautiful as his, I'll just say that I'm not prepared to make such a definitive statement.

First of all, I imagine that the average American male could cram more free time into his WHO forcasted 74 years of life than the average Kenyan could into his 50, this logic also debunks the idea that we have less time than "nearly anytime in history," as life expectancies have done nothing but increase worldwide over the past 200 years. Secondly, I'll just quote Stossel: "If [American's are] so stressed for free time, it's hard to explain how 36 million people can find time to golf, and 65 million go camping, and hundreds of millions go to the beach, the movies, and sports events." It might be worth distinguishing between free time, and time spent laboring.

You believe:
I believe that we should avoid taking advantage of indigenous populations and jeopardizing their future viability as a people because of some ill-advised belief that it is inevitable.

I don't understand what it means to jeopardize one's viability as a person. My point is that I believe that people are capable of making decisions for themselves. If a Basque teenager wants to focus more on Spanish or (gasp!) English than on Euskara because it will help her find a better job, let her. I don't think anyone is taking advantage of her, she's planning for the future. Now, let's assume that my "ill-advised belief" that "it" (economic expansion) is inevitable is correct, what would you do to hold it back? Do you believe it should be held back?

Molly, thank for reading.

You said:
It seems that you have been caught hook, line, and sinker by the Washington Consensus lie.

It seems to me that you and I subscribe to different propaganda.

In your imaginary, theoretical world...

A world in which the industrial revolution marked a sharp upturn in life expectancy, proliferation of the arts, and individual liberties, none of which are imaginary.

Did it ever occur to our Fathers of economics that maybe some societies do not accept personal property?

Maybe it didn't. It occurs to me that the many 20th century socialist societies managed to starve or slaughter millions of people. This requires another debate, one that will continue to rage all over the world for the rest of our lives.

Did it ever occur to them that some societies and religions--wait, is Christianity a religion--teach that it is better to seek the interests of others rather than while away their lives in pursuit of monetary gains? Did it? If it did how do they square the idea that a functioning economy requires, yes requires, people to look out for their own selfish interests.

Well, perhaps you might like to visit Adam Smith's Theory of Moral Sentiments, a book that he published before the seminal Wealth of Nations.

If you don't have the time, take a gander at this Short History of Economics As a Moral Science by a New Zealand professor named James E. Alvey.

Here're a few lines (emphasis mine):

"In the presentation of his system of morals Smith discusses a wide range of virtues. This list includes the lower, commercial virtues of "prudence, vigilance, circumspection, temperance, constancy, [and] firmnesss." In this context Smith speaks of the lower of two types of prudence: "the care of the health, … fortune, … rank and … reputation of the individual." This sounds like the type of rational calculation that is the focus of mainstream economics and the positivistic interpretation of Smith. But for Smith, prudence is not a "fact" or datum; it is one of the lower virtues within his broad moral system. The prudent man, Smith tells us, must sacrifice present pleasure for future pleasure and this "self-command" is approved of by Smith's "impartial spectator," the judge of moral sentiments. Even within The Theory of Moral Sentiments, capital accumulation—which is a central feature of Smith's Wealth of Nations—is discussed and placed within a moral framework.

Another virtue that Smith discusses in The Theory of Moral Sentiments is justice. His view of justice is restricted to commutative (not distributive) justice. This type of justice is not that demanding, hindering us "from hurting our neighbour," but it is essential for the preservation of society. Breaches of justice require punishment..

Finally, the highest virtue for Smith is benevolence."

Short answer: yes, it did occur to the fathers of economics that it is better to help others rather than waste their lives in search of monetary gains. The thing is that Smith managed to figure out that a healthy self interest actually allowed one to better care for one's neighbor. Greed is a problem, as it always has been. With more individuals managing their own wealth and resources, we're less suceptible to the despots of ages past upon whose greed or benevolence rested the fates of millions.

Anthropocentric, entrenched power mongers.

Anthropocentric? To which centrism should economists subscribe? Gaiacentric? I'd agree, but I'm certain that most economists have always understood that the earth and its diversity is a good which needs to be protected. Some do not, but you should have no problems with a truely anthropocentric economist.

So that we can have another Big Mac? So that I can buy another Barbie for my daughter--learning that only anorexics are valuable in the process? No. There is more to us than that.

So you mention two consumer goods that you find distasteful. Great. I'll name 500 that you would have a hard time living without. No, instead I'll tell a story about what I did last night. I went and saw Israel Vibration perform in Virginia. The concert could be defined as a product, a consumer good that I enjoyed for $24 (a bit pricey, but I think they're allowed to charge extra, read on to find out why). The concert was the sum of myriad other consumer goods that soveriegn people bought in order to make the concert possible. First of all, band members Cecil Spence (Skelly) and Lascelle Bulgin (Wiss) were both stricken with Polio in their youth. The product that they learned how to make was music, they have great voices and love to write songs that people will pay money to listen to. If it weren't for their ability to produce this product, they might not be alive today as they wouldn't be able to afford the medical attention that they require (the Jamaican state would probably not have been able to provide sufficient care). They both use braces to walk and stand on stage, a simple enough device, but a consumer good nonetheless. The band's instruments and amps are consumer goods, made affordable and accessible by advances in manufacturing and shipping (both requiring capital goods). The theater was made out of bricks and mortar by a construction company. I could go on forever. The fact is that I was able to listen to great live music performed by two guys who would likely be dead if they didn't have consumers willing to pay to listen to them sing. There's certainly more to me than my enjoyment of last night's concert, but enjoying it doesn't make me less of a human.

So what if I like Big Macs? (I don't)

Don't buy Barbies for your daughter.

Indigenous communities are special for the very fact that their underlying assumptions are different than ours.

Agreed and agreed, I will discuss this more next week.

We should not force them to accept our assumptions. They do not force us. It is just like Zshegel said: "They neither fight us, nor resist us, why do we dishonor them?"

No we shouldn't force them to accept our assumptions. Similarly we shouldn't discourage them from accepting them if they seem inclined to. I posit that it's quite dishonoring to assume that a person who chooses to adapt a western mindset is doing so because they're too gullible to know better.

Posted by: Jed Sundwall at April 23, 2004 05:15 PM

Jed,

Thanks for replying to my ramblings. I see that we have opened many lines of discussion so I will try to focus the conversation a little. I think that anyway you slice the argument we have a fundamental disagreement about the efficacy of basing cultural/political/societal decisions on economic theory and it is to this end that I will try to express my thoughts.

I believe that economic theory is an extremely useful tool in many aspects of law and governance. In just the last twenty years it has radically altered how we look at our own political system. It has greatly enhanced our understanding of democracy and democratic institutions and for this we are better off.

But I also think that the apparent universal nature of economics as well as it's numerical (somewhat scientific) nature of inquiry has led it to be accepted as the preferred standard in many areas in which it may not be the ideal standard.

The basic idea of functionalist economic theory (as I understand it, and that is admittedly of a very limited nature) is that we should choose the path that "increases the pie" so to speak; the path that creates the most wealth for society as a whole. The idea is to take all externalities into account so that we can accurately predict the choice that will lead to the most monetary gain for the most people. While this idea is quite sound in theory it fails somewhat in practice, namely in two respects.

First, and I think of main import, is the problem of monetization of non-pecuniary items. It is difficult to fix a monetary value on a way of life, or a moral, or an emotion, or a tradition or an idea but true functionalist economic thought requires that we do exactly that. Even more to the heart of the issue is the problem of placing a monetary value on a future risk or future loss and deciphering the chance of that loss or risk occurring. Although economics often poses as true science I have yet to see a standard deviation, or more colloquially, a margin of error in an economic argument even though many margins of error in economics would be so large as to make the calculation (or decision) scientifically untenable. Basically the economic dream of monetizing all externalities cannot be accomplished to any acceptable, scientific degree of certainty.

Second is the problem of wealth distribution. I would actually classify this problem as a corollory of the first problem but I mention it here because it has an emotional power that the first argument often lacks. The basic idea here is that economics looks to increase the pie but doesn't look to see that everyone is getting enough pie. Let me take NAFTA as an example. Since it's inception the Mexican economy has improved significantly and a large amount of people no longer live below the poverty line. But that often masks other facts such as the fact that many of the extremely poor are now even poorer and the gap between the rich and poor has dramatically increased. So while more aggregate money is in Mexico the distribution of that money has become less evenly distributed. One could argue for days about whether this is good or bad but the hard fact is that economics itself does not give us the answer. The answer must be supplied externally, from some source outside of economic theory. Most of the rich North Atlantic democracies have chosen the economic ideal of aggregate wealth but this is a choice made externally of the theory itself; said differently, for economic theory to work you have to accept that aggregate wealth is the goal one wishes to acheive. Many of the Scandanavian social democracies have chosen societal economic minimums as the ideal and again this is a choice made externally to economic theory. The argument that economics proves that one choice should be made over another (such as NAFTA) is circular because it rests on the premise that aggregate economic wealth is the goal you want to acheive.

Much of the above discussion was a simplification of the issues presented due to space restrictions: we don't live in a purely market (or economics based) economy and few countries survive on a purely socialistic one either. But it is important that we recognize the limitations that economic argument inherently possesses.

Posted by: Tyler Hamilton at April 24, 2004 02:19 AM

Tyler,

I think we agree more than we disagree, but it's obvious that our concerns differ.

But I also think that the apparent universal nature of economics as well as it's numerical (somewhat scientific) nature of inquiry has led it to be accepted as the preferred standard in many areas in which it may not be the ideal standard.

I agree 100%. Economic theory has its roots in moral and social philosophizing. It is not a science, although it's apparent that many refer to it as a set of natural laws. What's unfortunate, is that some interpret economic "law" in a efforts to justify negligent or unjust behavior. People looking to justify their nefarious acts by referring to a set of laws is nothing new to our era. You're right that the seeming universality of it lends it more influence that it should possess. But I think it's one of the more just philosophical systems that the world has seen, as it attempts to distribute resources throughout the world's population in the most efficient way possible, rather than identifying heathens or determining manifest destiny.

I'll add that just because economic theory was borne of moral philosophy by no means indicates that we are worse off now that it is perceived as a science. Economic theorists might have had more balanced perspectives in Adam Smith's time, but that doesn't mean that they were effective leaders or lawmakers. It seems to me (I'm just guessing here), that a greater percentage of the world's population has access to education and healthcare today than they did in Smith's time. I'm also going to venture that, on average, people live longer. It's possible that treating economic theory like law might not be all that bad.

First, and I think of main import, is the problem of monetization of non-pecuniary items. It is difficult to fix a monetary value on a way of life, or a moral, or an emotion, or a tradition or an idea but true functionalist economic thought requires that we do exactly that.

Once again, 100%. As I've come to terms with the fact that I live in a capitalist society and that my role in this society is to contribute to growth, I've been reminded many times by many experiences that there is indeed --to echo Molly's words-- more to me than that. Peter Hubbard really said it best when he pointed out that being a productive capitalist might make me a better capitalist, but it doesn't make me a better human. It's essential to bear in mind.

As you point out, applying basic economic analysis to our personal relationships, moral systems, and emotions can have disastrous results. I believe that I should avoid subjecting my loved ones to cost-benefit analysis, nor should I calculate the rate of diminishing returns that I receive from spending time (note how we say "spending" time) with someone. Nonetheless, I do it. I think we all do to an extent. It's evident in terms like "emotionally bankrupt" or "I'm spent!" I think it's hard to avoid borrowing ideas from economic theory when examining our lives, but that doesn't mean we shouldn't try to balance it out. Economic thought fails to quantify or explain compassion, mercy, and love. Applying strictly utilitarian or economic thought to such things might make us into infanticidal maniacs like Peter Singer (good ol' Ivy League).

Basically the economic dream of monetizing all externalities cannot be accomplished to any acceptable, scientific degree of certainty.

This is true because, as I said before, economics is not a science.

The basic idea here is that economics looks to increase the pie but doesn't look to see that everyone is getting enough pie.

I'm not so sure that this is true. It seems to me that a sound economic system would ensure that people are adequately remunerated for their work. I suppose, in that sense, that people might not get "enough" if they don't work "enough." There are many reasons why people might not receive the slice they deserve or why they might not be able to sustain themselves (if they are disabled, for instance). Peter Singer might think that the disabled should be killed off, but I'm sure that you don't. I don't either. There is something else to consider, the pith of this whole discussion: my query as to "what people really want."

What is this enough pie that you speak of? Is it more years to live? Is it more time with one's family? Is it peace? Happiness? Sega Genesis? What? No one can answer that question. I posited, however, that things/products are really important to people. Shelter, food, medicine, art, and education might be respectively found in caves, on trees, in herbs, and through oral traditions, but our ability to make bricks, bread, aspirin, paint, and books has enabled us to greatly expand people's access to these and other important things. I think that modern economics has helped us quite a bit.

I'm disturbed that this assertion was immediately met by Ms. McUsic, an accomplished Harvard Law professor (reveal yourself), with scorn. I see great danger in the mindset that indicates that we should discourage people from bettering their lives with consumer goods solely because there's more to life than being a consumer. I imagine that we should allow people to buy blankets before we demand that they discover the true peace that one feels while doing the downward-facing dog.

Let me take NAFTA as an example. Since it's inception the Mexican economy has improved significantly and a large amount of people no longer live below the poverty line. But that often masks other facts such as the fact that many of the extremely poor are now even poorer and the gap between the rich and poor has dramatically increased.

In what way are the extremely poor even poorer? Has their quality of life decreased? With a stronger economy, Mexican lawmakers are now able to focus on strengthening Mexican rule of law. Good courts are a public good that might not have been imaginable in Mexico without NAFTA. You're caught in the trap that you've warned me to not fall into. The answers to the world's problems lie in things other than income.

As far as the widening gap between the rich and poor, it doesn't concern me. In the time it's taken me to write this, Bill Gates's assets have made him richer. I'm three glasses of water, a banana, and some cookies poorer. The gap has widened. I'm not so concerned about Bill being rich. His increasing wealth does not make me poorer and I don't see why a wider gap between us is a cause for concern. It may alienate us from one another, but I'm more put off by the fact that he's a huge dork. I doubt I'd get along with him even if we made the same amount of money.

The argument that economics proves that one choice should be made over another (such as NAFTA) is circular because it rests on the premise that aggregate economic wealth is the goal you want to acheive.

I assure you that many economists are concerned with more than aggregate wealth. We're lucky to live in a country in which economists have to clash with politicians and the public to figure out how to best ensure that people get what they need. There are certainly problems and I'm sure we're regressing in some arenas, but I choose to believe that we're progressing overall. History seems to indicate as such. But hey, if I'm wrong, sue me.

Posted by: Jed at April 25, 2004 04:19 PM