Comments on: The Opportunity Cost of the Bailouts

By: uknowbetter

uknowbetter — Sat, 21 Mar 2009 23:35:27 +0000

Most politicians have never taken an economics course in their lives.

It would be a good question to ask them if they could define 'opportunity cost'. I doubt many members of Congress could and I doubt Obama could.

By: uknowbetter

uknowbetter — Sat, 21 Mar 2009 23:33:32 +0000

I'll have to look into that more. Though it's not as if people are completely shielded; they still put time, money, resources into a company they form and stand to lose those.

By: uknowbetter

uknowbetter — Sat, 21 Mar 2009 16:35:27 +0000

Most politicians have never taken an economics course in their lives.

It would be a good question to ask them if they could define 'opportunity cost'. I doubt many members of Congress could and I doubt Obama could.

By: uknowbetter

uknowbetter — Sat, 21 Mar 2009 16:33:32 +0000

I'll have to look into that more. Though it's not as if people are completely shielded; they still put time, money, resources into a company they form and stand to lose those.

By: LarryM

LarryM — Fri, 20 Mar 2009 04:51:36 +0000

Obviously at this point we aren't much in diagreement – about this, anyway – but I'd hardly call the artificial creation of a fictional entity that shields its owners from liability a “simple law dealing with the existance of companies.” One can argue that it ultimatley is only a small distortion of the free market, and defend it on utilitarian grounds, but it is pretty hard to justify on any kind of big L libertarian gounds.

By: uknowbetter

uknowbetter — Fri, 20 Mar 2009 04:16:38 +0000

I don't disagree with much of that. Many libertarians don't have a problem with the government creating and enforcing some simple laws dealing with the existence of companies.

Big business does tend to benefit more from government interference because they hire the better hookers (ahem, 'lobbyists') to get the government to write anti-competitive regulation or give them subsidies and tax-breaks.

By: LarryM

LarryM — Thu, 19 Mar 2009 15:39:05 +0000

Regarding growth and welfare, there is an additional argument. Even without adopting the more extreme doom and gloom predictions of environmental catastrophe, there is, at least, an open question as to whether high high rates of growth are sustainable indefinitely. It's certainly possible that there will be technological fixes to various environmental/resource issues, but it seems somewhat dangerous to just assume such fixes. That's part of what I meant in a previous comment when I mentioned the magical thinking that soem libertarians seem to have regarding the benefits of the free market. One can have a healthy respect for the power of free markets (especially relative to governmental solutions) without fetishizing the free market.

Or, to put it another way, assuming that enviromental and resource problems will have a technological fix is as big an error (and the same kind of error) as ignoring the possibility of such fixes.

By: LarryM

LarryM — Thu, 19 Mar 2009 15:12:57 +0000

And to further elaborate upon the banality of the Florida quote, while many blog commenters may not understand the concept of opportunity costs, I would suspect that our policy makers do. Now, they may not be properly weighing such costs, but if one wants to make the argument that they aren't … one should make the argument, rather than just asserting it (or, in Florida's case, implying it).

(And did I say England rather than Florida in my prior comment? Ugh, I need to do a better job of editing my comments.)

By: LarryM

LarryM — Thu, 19 Mar 2009 15:03:11 +0000

Re Florida, my beef with him is not that his observation is wrong, but that it is banal, and that he punts the hard questions. I mean, not to beat a dead horse, but saying that history will determine “[w]hat better and more effective things might have been done with these trillions” is a cop out of major proportions.

Re growth and welfare, it's a little of both, though I'd frame the issues differently. For the former, I'd say “while money and happiness are highly corrolated, they aren't corrolated on a one to one basis,” for the second, I'd say that “economic growth tends, all else being equal, to benefit some people disproportionately; whatever one thinks about the justice of this, it is a reason why maximizing economic growth does not maximize welfare.” Of course, that leads to a whole host of additional questions and issues, but as I said, serious engagment of them is beyond the scope of a blog comment.

By: lyca

lyca — Thu, 19 Mar 2009 14:27:04 +0000

Me too -- I think we should ameliorate recessions, if we can, and if it's worth it. Florida's point is that we shouldn't be indifferent to the effect on growth, but yes, I'd be willing to sacrifice a sufficiently small amount of growth to prevent a painful recession today.

Not sure which reasons you have in mind for growth = welfare. Do you mean the "money can't buy happiness" sort of arguments or the "high growth can still leave people in poverty" arguments? Or something else I haven't thought of?

And, yes, you're right about climate mitigation and growth going in opposite directions, at least for a while.