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Re: NAFTA, Capitalism and Alternatives, Debate, VIII/1



Dear friends who have been following the controversy:

Again, I hate to sound like the party pooper but creating a "straw man" from 
standard economic analysis by attributing to it things that are NOT STANDARD 
ECONOMIC THEORY and then destroying the straw man is not intellectually 
honest.

Where does it say in any economics book that a higher standard of living 
means access to a larger bunch of commodities, as you so boldly claim it does? 
A higher standard of living means a higher state of hapiness, that's all and 
you know it. Remember that economists talk not about baskets of commodities 
but about baskets of goods. Now goods are not necessarily commodities. Family 
company, being loved by somebody, feelings of pleasure derived from 
altruistic behavior, and living in one's community are all economic goods. 

The differences between an economic system where there is no "central planner" 
who decides what is best for society and a system where individuals are free 
to pursue happiness any way they see fit are obvious. In one, the decision is 
made for the individual. In the other the individual is the master of its own 
destiny. It is very illustrative that most dictatorships on the right or on 
the left claim to be acting in society's best interest. But it is always the 
same: A person with good intentions who thinks he knows what is best for 
everyone. Why, if only people stopped acting foolishly and selfishly everyone 
would be better off he thinks -if only they would listen to me.

Again, I dare you to produce a standard textbook or article that asserts 
that, as you wrote "contemporary economics defines a "healthy" economy as a 
growing one, one that produces more and more stuff to be sold in the 
market --regardless of the makeup of the stuff, regardless of the negative 
side-effects of both production and consumption". Whew, gosh, and golly!

First, most economist have long -very long, as way back as the American 
Institutionalists and even back further to the agrarians- agreed that 
measuring economic growth, with any degree of credibility, is practically
impossible and comparing economic growth between countries downright foolish.
Why? because different individuals value goods differently, however only 
market prices, as opposed to true shadow prices, are discovered. Further and 
more importantly, a plethora of goods are produce outside markets that can be 
measured additively. Things such as family security, love, tradition, etc. 
are all economic goods -they are scarce, we would like to have more of them- 
and yet can not be measured in the aggregate (though they can be measured for 
an individual through revealed preferences). Also, when a family member stays 
at home and does laundy and cooking, or raises corn or chicken for 
self-consumption, his production deos not enter into GNP or other traditional 
measures of output. On the other hand if he buys his corn, chicken, or 
laundry this enters into GNP and as every "standard economist" knows
this corrupts GNP or GDP as measures of growth. 

In response to your question about the adobe house and the status of the 
peasant (why insist on the patronizing use of the word campesino, senor 
Cleaver?). Some people will prefer the warmth and charm of adobe, and some 
will put up with the discomfort of the brick to enhance their status. The 
point is that the ideal system allows them to make their personal choice. Of 
course, to the extent that they are well informed their decision will be 
better, that's why education is so critical for the good operation of a 
system based on free-will. People buy cars which are not necessarily the 
safest, or thriftiest, or most comfortable. Some buy the fastest, and others 
the safest, and do so according to their will putting up with the 
consequences. Let me ask you: Have you ever worn something that was 
uncomfortable, just because you needed to look good? Maybe for that job 
interview, or to get that hot date? If you are like most people you probably 
had, and yet you did what was "rational" (A nice thing about economics is 
the wide latitude to define "rational"), didn't you?.

Now you go about the concept of development. First, most mainline "standard 
economic theory" economists regard "development economics" as quackery. So 
you can kick that straw man as much as you want. Just don't call it 
"standard economic analysis". You are right in your criticism of "developos", 
but they are not "traditional" economists. 

Horacio Soberon.