Re: EOpriv: OWNERSHIP: Aggregates and Ownership

[Karen May <kmay@igc.org>]

John,
I think you might enjoy a book written by Paul Ormerod (sp?), called
Butterfly Economics.  In fact, there is plenty of evidence that the
"nonlinear dynamics" of markets and economies do impact the thesis that
competitive general equilibrium will always prevail; in other words,
there may be multiple equilibria that the economy MAY tend to, depending
on the "initial conditions" of the distribution.  It is indeed an
extremely important variable that impacts how economic policy should be
designed and implemented.  Unfortunately most policy makers have not
caught on to this fact, or are so invested in the current paradigm that
they deem it too much of a risk to change their assumptions.  I am a big
fan of the work of Sam Bowles, an economist from U Mass Amherst who now
chairs the Economics Research Program at the Santa Fe Institute.  I
attended a workshop last year at which these ideas were explored, both
in current and historical contexts.   Check out the proceedings of the
"Poverty Traps" workshop at www.santafe.edu .  Evidence now shows that
the "convergence" of developing economies is not bearing out, at least
according to what those "aggregate" calculations should have predicted. 
Please let me know what you think of these sources--I very much
appreciate the spirit of your question.

best,
Karen May

John Médaille wrote:
> 
> At 04:03 PM 9/24/2002 +0000, Don Ward wrote:
> 
> >John: On aggregates and ownership. I have a son who while not an economist
> >has that degree from the Air Force Academy. He emailed your note to his
> >former academy advisor who has a PHD in economics, left the academy for a
> >liberal arts college as a professor of economics and has now returned to
> >the academy as a civilian professor. The fellow is very bright and may
> >shed some insights on your questions.I am a retired businessman who
> >studied economics 50 years ago. My sons training ended in 1989. Since then
> >he has been a figher and now airlines pilot.We both sense that you might
> >be trying to find  a model using a combination of economics and a social
> >consience. They might be unrelated and such a model may  not exist. We
> >both do  believe though that there is a crossover point where even a free
> >market economist would cheer Keynes. That is the point at which enough
> >wealth is shared, created by pump priming or whatever, so that there there
> >is a level ! of  consumer  purchasing power in the economy to sustain a
> >GNP. level or grow it.   Services provided by government, to the extent
> >that the taxes to support them,  do not exceed the cost of purchase on the
> >open market - frees up resources to create other purchasing
> >power.  Another is lower taxes and rebates.Another is to  is to pay higher
> >wages. Another subjective element is an employment level to create
> >consumer confidence. It could be based on a free market or as I saw in the
> >old Soviet Union an inefficient ( in my businees terms) planned economy
> >with "full" employment.
> 
> Don,
> 
> Thank you very much for your comments. I hope Air Force can come to the
> rescue here; certainly somebody has studied this issue and some material
> must be available. However, It is not that I am trying to find a
> combination of economics and conscience, but I am asserting that one always
> exists, namely, the income distribution curve. This curve is always,
> willy-nilly, society's concept of distributive justice in a form that all
> may read. The real question is whether one particular curve, which is to
> say, one particular idea of justice, is more "practical" than the others.
> Can we read, in the numbers that make up the history of economics, a curve
> that seems to betoken a better and more stable business environment than
> others? Can we see changes in this curve that correlate to downturns or
> upturns? And can we read, in the economic history of other nations, whether
> extremes of wealth and poverty bode well or ill for business, or whether
> more equal distributions have any impact on the health of a nation from a
> purely business perspective? If this is not the case, that is, if economies
> can be described in terms of aggregates without regard to distributions,
> then we must conclude that economics has no relation to justice; if,
> however, we see correlations, then justice cannot be ignored on as a matter
> of purely "practical" economics.
> 
> If, as I think, that different distributions describe totally different
> economies, then the economist who cannot consider justice simply fails at
> his chosen profession. His descriptions, based on aggregates alone, will
> never actually describe anything. Or at least not anything in the least way
> useful. I have not sufficient training to examine the issue in detail
> myself, but every instinct in me tells me that aggregates are not enough,
> and that justice and sound economics are intimately related. In any case, I
> think it would be a matter of supreme concern to all the members of the
> COG. Perhaps there is someone here who can direct me to the proper
> materials or studies on this issue.
> 
> >I personally see this idea  being applied to globalization. While no doubt
> >the  goal to create wealth for the multinational corporations , and maybe
> >their investors is prime.- At least for the GE's and Walmarts who need
> >among other things consumer purchasing power so that they can sell their
> >productsor services - there needs to be a population which has either cash
> >or credit to buy them in whatever country they want to expand.
> 
> Well exactly. Its hard to build a consumer economy without consumers. But
> if globalization is merely a way of reducing labor rates, it will
> eventually fail. If the only real commodity traded is labor, then
> globalization is counter productive and will drive the world closer to ruin
> and bankruptcy. But if countries really are trading surplus products, the
> effects cannot but be good, on balance. However, I suspect that the former
> is the case rather than the later.
> 
> >So it would seem that it is in their best interest to see that happen. I
> >imagine that they are bright enough to have figured it out I know of no
> >such examples. However, someone did a good job of providing TV sets to the
> >residents of the river slums in Bankok. This was 15 years ago and
> >hopefully by now those sets are being manufactured there.  I hope our
> >friend can help you and thank you for the question.It created an
> >interesting discussion different that the usual "what the Cincinatti
> >Bengals have to do to win a football game."We !  live in Louisville,
> >KY.  Don Ward.
> 
> Well? Did the fans come to any conclusions?
> 
> John C. Médaille
> 
> "A dead thing can go with the stream...
> but only a living thing can go against it."
>          -G. K. Chesterton
> http://www.medaille.com/distributivism.htm
> john@medaille.com