Skip to main content

View Diary: Morning Feature: Animal Spirits, Part IV - Conclusion and Critique (Non-Cynical Saturday) (91 comments)

Comment Preferences

  •  What's really strange is that economists (6+ / 0-)

    keep extolling risk and praising the risk-takers, yet all their prescriptions are aimed to create stability.  So, the investor's argument that because I was willing to take a risk, I deserve a guaranteed profit strikes them as entirely reasonable.

    My attitude towards investment starts from a different point.  Assume that someone has a surplus (more than he can use himself at the moment) and consider his alternatives.  In my book, he can either lend the surplus to someone else to use or let it go to waste.  (Or, if its a consumable, he can gorge himself and get sick).  Those are the logical alternatives.  Now, lending that surplus to someone else is obviously better than letting it go to waste and there's a risk that the borrower won't make good use of it.  On the other hand, the borrower may produce an even greater surplus, enabling him to return what he borrowed plus a fair share of his surplus--both borrower and lender come out ahead.  But, even if the borrower only returns the loan, the lender comes out better than if his surplus had gone to waste.  So, by what logic can he claim a guaranteed profit on his loan/investment?  Other than that it's become a convention in the West.

    The role of waste as an alternative to production, consumption, investment and savings (under the mattress) has been entirely ignored in economic calculations.   Even now, waste only shows up when disposal options are turned into a profit center and "one man's waste is (again) another's treasure."  On its own it doesn't count; it has to be transformed into something else.  Almost like the labor/reproductive effort of women.

    Perhaps it's just a matter of what man doesn't want not being taken into account.  Is economics a male-centric science?  Is that where it founders?
    If economics is concerned with the management of the household, is the householder presumed to be male and is that why "work moved out of the house" when men took factory jobs, but not when young women did so before them?  (We forget that the industrialization of American enterprise got its start in the spinning and weaving mills of Massachusetts where, for the most part, women went to work.  Then, when the machinery got more sophisticated and easier to manage, men took over).

    How do you tell a predator from a protector? The predator will eat you sooner rather than later.

    by hannah on Sat Jul 11, 2009 at 05:47:55 AM PDT

    •  Something that just is what it is and is valuable (2+ / 0-)
      Recommended by:
      Orinoco, winterbanyan

      is an asset.  Its not thought to be valueless by economist, it just isn't counted by measure that measure production.

      Economics ISN'T interested in the management of the household, it is interested in how society organizes scarce resources.  
      The rest of your post I didn't really understand.

      •  Economy comes from the Greek for (4+ / 0-)
        Recommended by:
        bink, Orinoco, DBunn, NCrissieB

        household management.  It may well be that the modern economist's disregard for the household accounts for most of economic predictions turning out to be wrong.

        Households deal with material quantities, so it should be possible to come up with accurate measures, even when they're translated into ones and zeros.  That they don't suggests that they're measuring the wrong stuff.

        Like measuring the unemployed as a sub-set of the formerly employed and leaving out the never employed.  

        How do you tell a predator from a protector? The predator will eat you sooner rather than later.

        by hannah on Sat Jul 11, 2009 at 06:22:39 AM PDT

        [ Parent ]

    •  Very insightful post. (6+ / 0-)

      By ignoring the possibility of capital (resource) wastage, a profit on capital becomes the baseline for analysis.  That was essentially plf515's point in his comment above: if investors can't get a profit in one place, they'll get it somewhere else, so if we want them to invest in us we must make it profitable.  The argument ignores the possibility of wastage, assuming there is some profit to be made, somewhere, somehow, always.

      Good morning! ::hugggggggggs::

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site