Alight the Dismal Science!

Many of my peers, I have observed, find the word “feminist” loathsome. While there are surely many factors someone may find to arouse such sentiment, one I find particularly interesting is the matter of history. Further, I find this generalized frustration is also expressed towards matters of class and ethnicity. 

The Tyranny of Men

If you read that subtitle and felt a swelling of anger inside you, this article is for you. I completely understand and empathize with your position. There was a time when I was the one in class proposing that rather than “feminism” we ought to focus on “humanism”, although what I understood then and what I understand now is very different. 

I mean to investigate why some of us take history so personally. The simple fact is a majority of history has been spent under the tyranny of a few white men. Acknowledging this is not condemning the white men of the present.

An Observation

I have observed myself and peers in my economics and philosophy courses assimilate the ideas of the past in stride. From Kant’s theories of morality to Robbin’s disassociation of ethics and economics, without great hesitation. I think that this is pretty normal. If I took Aristotle’s theory of virtue, modernized the language, and told you it was a modern philosopher - you might believe it. And there is no “gotcha” about that. 

But I suspect that this has something to do with why people find analyzing the historical backgrounds of these philosophies so repulsive.

Sympathizing with the Devil

We use many great ideas and philosophies daily to make up our conscience about decisions. We also tend to interact with people who share our sentiments (to borrow from Smith/Hume). As such, I think its natural to be put off by someone claiming your system of thought is borrowed from a kinda sexist philosopher. 

Its like nodding your head in agreement when someone who is expressing anger at tyranny of an oligarchical group, only for someone else to point out to you that this person is a Nazi and referring to Jews. You wouldn’t be very inclined to hang out with the Nazi or the messenger.

We borrow freely from the ideas various historical figures. Yet, when someone casts an unfavorable light on our source, we seem to take it personally. However, offended or not, some systems of thought are developed in hierarchal paradigms (such as sexist, racist, or classist societies) and leave interesting residual problems as such.

Perhaps, on some inner level, we feel personally embarrassed that we did not notice these flaws before hand. Maybe this drives us to marginalize criticism without hearing it out. I believe sometimes we are just trying to save face. We don’t deserve to be “the bad guys” and thus suffer from righteous indignation. However, this all ignores what is least rational of all: we take on ideas of the past as if they are our own.

Understanding that one’s personal value for a good may differ from the market price of that good, I have come up with this idea:

• Friend buys me a gallon of milk
• I am very pleased
• However, I would not be equally pleased if that friend instead gave me $4
• Why? Perhaps because Milk is worth more than $4 to me

Although I could easily buy myself a gallon of milk, this gift is worth more than its market value to me. Alternatively:

• I buy friend an iPad 
• Friend is delighted
• Friend would have been pleased with receiving $499 instead, but not equally as pleased as now holding an iPad 7
• Why? Because my friend didn’t value the iPad as greatly as the market price.

I understand this seems strange at first, but consider that the demand curve also exists to the right of the equilibrium point. This is indicative that others would purchase an iPad if it was less costly. 

However, this is not a budget constraint story. Rather its about decisions. Even a rich woman may not purchase an iPad, despite being able to afford several, because her personal value of the iPad is not $499. By purchasing it for her you are affording her the expense she was unwilling to pay.

The way I see it, consumer surplus helps to explain why gifts can be more satisfying than receiving equivilant cash for both those value the gift more AND less than the market price. However, I understand that there also plenty of other factors that also can go into the value of gift. 

Interesting conversation with my partner illuminated the parrallells of monogamous relationships and capitalism.

The logic:

• Our love enriches our lives.
• Doesn’t everyone deserve rich lives?
• But if we try to share our love, it may diminish.

Replace “love” with “money”

• Our money enriches our lives.
• Doesn’t everyone deserve rich lives?
• But if we try to share our money, it may diminish.

And this is the logic the proponents of capitalism utilize when considering the “losers” in a capitalistic society.

(of course, this is not a comprehensive explanation)

Have you ever considered why you pay for water? May I introduce my favorite economic pondering: Lauderdale’s Paradox, originally thought up only as a vexing puzzle by James Maitland, the eighth Earl of Lauderdale (1759-1839). Lauderdale speculated that there was an inverse relationship between public wealth (anything we enjoy) and private riches (anything that we enjoy but is scarce).

The paradox:

Applying the logic provided by Lauderdale to natural resources we find something scary.As environmental resources become degraded, and thus more scarce, private markets appear for them. To obtain the same level of benefit we previously enjoyed from an environmental resource, we must now purchase that benefit from those who control these private markets. (see Herman Daly for more)

The problem: This is easily explained by using the example of plastic water bottles. An obvious necessity, from which we all benefit, that is privatized and rationed at a profit whilst polluting and otherwise harming the environment. One must wonder, if scarcity makes things profitable - what incentive is there to protect them? Indeed, this is what is known as a perverse subsidy. For example: A river runs past one city on its way towards New York City. This other city is brimming with polluters and litterbugs, and all the garbage flows right down the river to New York City. The public supervisors of NYC have two options: spend $3billion on a water sanitation plant, or pay $1billion to the trashy city so that they will clean it up. But they just spent $1billion to receive a benefit they previously received for free! Further, the other city is now being paid for littering.

Consider: What incentive does the Dirty City have stop polluting?

It’s About the Definition of Wealth

In the example above we see how there is an economic incentive to trade public wealth for private riches. However, Lauderdale himself knew not of scarce resources. The 1800’s were a joyous time of thoughtless natural resources exploitation. Even then, in the hay-days of imperialism, Lauderdale postulated this theory. Why? Because Lauderdale saw public wealth, or intrinsic value, as part of humanities total benefit. Under that logic, he assumed that no one would ever accept payingto receive the same total benefit. Unfortunately, in our age we seem to measure wealth in private riches - and completely neglect their effect on public wealth.

Please, let me know what you think. How could the NYC river disaster could have worked out differently?

Kahlil Gibran’s faith in markets is to be applauded, however within his brief philosophical fiction The Prophet unexpected economic wisdom is to be found.  

Ever since my mother revealed to me that my middle name was chosen after the great poet Kahlil Gibran, I poured over his work to unearth what was so inspiring. Rereading The Prophet as a student of economics cast an interesting light on his words. Next time you find yourself betting your retirement on APPL or MSFT consider:

And tomorrow, what shall tomorrow bring to the overprudent dog burying bones in the trackless sand as he follows the pilgrims to the holy city?  …And what is fear of need but need itself? …Is not dread of thirst when your well is full, thirst that is unquenchable? …For to be overmindful of your debt, is to doubt his generosity who has the free-hearted earth for mother, and God for father.

Mind you, I am presenting a highlight reel of what is a larger passage. I see two take-aways in this:

• If you are satisfied, horde not.
• Strangely: There are more important things than money.

Now, I understand this is a pretty liberal way to start off this review -  the first economish chapter in the book is on giving. Why doesn’t the dog understand that the voyage to the holy city is more important than the bones he stores in the ever changing sands? Or - to put this in a little perspective - in the islamic tradition should any man on his pilgrimage to Mecca die along the way, God understands he lived with purpose and will accept him into heaven. If only the willful reallocation of excessive wealth occurred in America as the prophet suggested… See Gini Coefficient

On Buying & Selling

Equity is central throughout The Prophet. Gibran’s philosophical poetry praises markets as the vehicle of obtaining satisfaction, while offering metered warning of their downfalls.

It is in exchanging the gifts of the earth that you shall find abundance and be satisfied. Yet unless the exchange be in love and kindly justice, it will but lead some to greed and others to hunger.

Still starkly relevant to today’s economic issues, it is surprising how beautifully the failures of free-trade can be composed.

On Work

For to be idle is to become a stranger unto the seasons, and to step out of life’s procession, that marches in majesty and proud submission towards the infinite… …For if you bake bread with indifference, you bake a bitter bread that feeds but half man’s hunger.

As a workaholic myself, I find the first quote quite validating, yet the second quote is easily the stronger metaphor. Economic schools of thought, even the popular neo-classical and monetarist, recognize market failures. These are generally occur when a market does not function efficiently. However, economists rarely consider the more philosophical market failure of goods and services not satisfying the people. Understanding that at first this idea may be counter-intuitive (why would you buy something unsatisfying?) and cause outrage among economist, let me elaborate. From the consumer’s perspective, there are goods and services that we purchase because we like them, and those we purchase because we need them. The demand for these goods & services are considered elastic (as with the former) or inelastic (as with the later). Inelastically demanded goods and services we will buy despite the cost, and often despite the quality. What happens when something we need is supplied in less than satisfying fashion? For instance:

• Riding a dirty city bus full of crack-heads to work only satisfies half my pleasure in travel.
• A limited grocery store only fulfills half my pleasure in eating.

This non-traditional market failure also applies to the labor market. In the first quote above Gibran claims labor is inherent, and that denying it is unnatural. Sadly, we must often take work despite the quality of its conditions in order to meet our other worldly needs. Should a man bake bread with indifference because his hourly wage is terrible, the resulting bitter bread is but the by-product of inequity. Albeit from a different chapter in the book, Gibran does warn of deviant employers:

And suffer not the barren-handed to take part in your transactions, who would sell their words for your labour.