sketchpad WHAT MAKES AN ECONOMIC SYSTEM ACCEPTABLE?

After reading essays or essay portions from Adam Smith, Karl Marx, John Kenneth Galbraith, Milton and Rose Friedman, and Robert B. Reich in World of Ideas, I have arrived at the following measure of acceptability:
  • An acceptable economic system encourages human capacities to thrive, while it simultaneously restrains human evil.
Smith and the Friedmans were most acceptable by this measure and Marx was least acceptable.
  • Smith’s economics encourages human capacities by providing opportunities for wealth and by understanding work as purposeful living. It restrains evil by allowing for the natural consequences of sin.
  • The Friedmans’ economics encourages human capacities by reducing obstacles and insuring freedom. It restrains evil by maintaining small government and eliminating enslaving elitism.
  • Marx’s economics fails to encourage human capacities by maintaining a form of thriving without purpose or freedom. It fails to restrain evil adequately by denying inherent sin, yet it correctly sees history as repairing some evils.
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17 comments:

  1. Off the top of my head, I suggest an acceptable economic system:
    - ensures a reasonable distribution of wealth
    -- avoids structural poverty
    -- minimises structural unemployment
    -- avoids extreme divergence between rich and poor
    - ensures that basic human needs are affordable to those on minimum wage, this includes:
    -- basic housing, basic healthcare, education
    - is ecologically sustainable
    - ensures the the resource consumption footprint is not larger than the land occupied

    And why is government evil?

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  2. Andrew, a few comments and questions:

    > ensures a reasonable distribution of wealth
    - personally, I would restate this to be something more like access to wealth producing activity. I don't think I want the government, for example, taking the money I earn and spreading it around

    >avoids structural poverty
    - agreed

    >minimises structural unemployment
    - agreed, I think. Can you elaborate?

    >avoids extreme divergence between rich and poor
    - How? Are we talking "on average" or "at all"?


    >ensures that basic human needs are affordable to those on minimum wage, this includes: basic housing, basic healthcare, education
    - I agree, but again return to how this might be accomplished, for example, by rewards for maintaining low costs or by law?

    >is ecologically sustainable
    - agreed...this is part of our task as imago Dei

    >ensures the the resource consumption footprint is not larger than the land occupied
    - as above

    >And why is government evil?
    - I think my shorthand mis-communicated. I do not believe government is evil. Rather, leaders are put in place by God. I do believe, though, that government should work within limits that protect individual and community responsibility. For example (speaking from a USA perspective..the only one I have), a federal government should only take care of those things that states cannot; a state should only take care of those things that counties and cities cannot; and on down the line.

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  3. A basic driver of economic processes is greed.

    An acceptable economic system incorporates check and balances to mitigate the negative effects of greed.

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  4. That's odd - 6p00d8341cd88a53ef is actually me. I tried using my (new) TypePad Profile URL as identity when posting the comment. Looks like it is still seriously beta ....

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  5. Andrew, Glad to know it's you. When I first saw the ID in my email, I was all ready for a spammer or the like. Then I saw the comments and decided it was a person of some wisdom. Alas, I was correct. :-)

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  6. Laura,

    Do you have a channel to Blogger Support in which that odd treatment of my ID can be reported? I wrote this to TypePad Customer Support:

    " I tried using my TypePad Profile URL as OpenID when commenting on a Blogspot blog. It worked except that my identity on my comment shows up as an alpha numeric code 6p00d8341cd88a53ef. See the permalink of the comment: http://lauraswritings.blogspot.com/2008/12/sketchpad-what-makes-economic-system.html?showComment=1228890900000#c1481540944762006328 "

    And they responded with:

    " Hi Andrew, Thanks for the note. This is due to how Blogger renders the information in your profile. You'll need to contact them about displaying the nickname in your profile other than the username (this is what 6p00d8341cd88a53ef is), which they are using now. Since this change needs to be made on their end, they should be able to assist you further. I hope this helps. Please let us know if there is anything else we can do for you. Thanks, Kymberlie "

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  7. Andrew, I configured the blog to accept registered and OpenID commenters. Try it now.

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  8. In a civilised society there should not be structural poverty.

    An acceptable economic system ensures that structural poverty is eliminated and an acceptable political system contributes to this goal by ensure education is available to and used by all.

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  9. Na, I still show up with the internal identifier from my TypePad profile.

    And now that you have changed the settings I can't enter my name and blog URL - I have to use an OpenID or a GoogleBlogger ID. Before there were two more options (I think).

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  10. An acceptable economic system is sustainable. This means, among other things:

    - it does not wastefully exploit finite natural resources
    - it does not exploit labour by paying such low wages that the education and health of the population is restricted

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  11. An acceptable economic system promotes innovation:

    - de facto monopolies are restricted and are punished for snuffing new technologies

    e.g. the internal combustion engine was amazing new technology for the 19th century, but it is the de facto monopoly of the auto industry and the oil industry that have kept us encumbered with it into the 21st century

    e.g. the Wintel PC architecture. The grip that Intel and Windows have gained on the PC industry has inhibited innovation and kept prices high. Microsoft has a practice of buying up innovative software companies in order to kill them off. The mobile phone industry learned that lesson and prevented them getting the same sort of grip on mobile phone system architecture.

    e.g. sustainable energy - the oil industry has been inhibiting the development of sustainable energy technologies by buying up innovative companies and killing them off.

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  12. An acceptable economic system needs an acceptable system of democracy as governance.

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  13. "depends on" is probably better than "needs"

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  14. Jacques Elul lists "76 questions to ask about any technology" (http://www.thewords.com/articles/ellul76quest.htm), but a quick glance found many that are applicable to this question:

    - What are its effects on the health of the planet and of the person?
    - Does it empower community members?
    - How does it affect our perception of our needs?
    - Is it consistent with the creation of a communal, human economy?
    - What are its effects on the least advantaged in society?
    - Does it reduce, deaden, or enhance human creativity?
    - Does it depress or enhance the quality of goods?
    - Does it depress or enhance the meaning of work?
    - Does it concentrate or equalize power?
    - How does it affect the quality of life (as distinct from the standard of living)?

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  15. I was reminded of this post and the comments again by this part of a summary of articles in this week's paper edition of 'The Economist':

    "SIMPLY STAGGERING

    "JOHN THAIN'S departure from Bank of America continued to reverberate.
    Mr Thain stepped down as head of the bank's global banking and wealth management division after it emerged that Merrill Lynch, which he once led, made a $15 billion loss in the fourth quarter, causing BofA to ask for more state aid to fund its acquisition of the Wall Street firm. It also surfaced that Merrill accelerated some $4 billion in bonuses to staff before the completion of the government-backed takeover.

    "Meanwhile, Mr Thain admitted that spending $1.2m on REFURBISHING HIS OFFICE last year was "a mistake in the light of the world we live in today". A $1,400 waste-paper basket was on the list of new items. - See article
    http://news.economist.com/cgi-bin1/DM/y/eBjSD0OPWWG0Mo0FYbA0E7

    "New York state's comptroller said that BONUSES paid by Wall Street firms to their New York City employees (residents and commuters) fell by 44% in 2008, costing the state $1 billion in lost tax revenues and the city $275m."

    Despite the fact that greed is a basic driver of the economic process, an acceptable economic system must somehow restrain extremes of greed. And, of course, this raises the problem of determining the boundary between acceptable greed and extreme greed. It seems clear that these bankers are extremely greedy.

    But if we compare your comment above "I don't think I want the government, for example, taking the money I earn and spreading it around" with my situation where almost 50% of my gross salary goes in taxes and social welfare premiums to the government and funds established by the government. I have reasonable confidence in the Dutch government and its social welfare processes. From my perspective your position (just for the purpose of discussion!) might appear in the 'extremely greedy' area! ;-)

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  16. "From my perspective your position (just for the purpose of discussion!) might appear in the 'extremely greedy' area! ;-)"

    You point is well-taken. Capitalism can indeed be greed run amok. On the other hand, being that a goodly percentage of my income goes to the needy and to gospel proclamation, capitalism can also an effective means of spreading the wealth around without the staggering overhead.

    As for the Wall Street / Banking folks getting bonuses, I am compelled to ask (and I apologize for yelling), BONUSES FOR WHAT? Given our current economic situation, it would seem they failed in their duties. True capitalism would not give them bonuses (nor would it give their companies bailouts). It would let them fail.

    Gotta go to work now, but maybe more later.

    Thanks for the nudge.

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  17. I exaggerated a bit. It's about 50% at the margin. Overall it's more like 43%.

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