I agree. More practically, I'd love to see an initiative that asked high profile economists to sign on to a statement like this - and see who refused or dithered. Arnold's propositions strike me as well-crafted statements such that an economist who refused to sign on to them would put his integrity as an economist into question. Given that there is tremendous pressure among progressive academics against conceding to some of these propositions, it would be interesting to see who comes through and who doesn't.
I think the statement: "Losses cause firms that make inefficient use of resources to disappear." is a very important factor and bankruptcy is the key to making market systems actually work. Monopoly organizations evolve over time to become more self-interested independent of the reason for existence as they can always obtain monopoly profits or tax payer money for government organizations.
Economic growth per capita is an evolutionary system of many improvements/failures and like the natural evolution of life-forms with natural selection, it requires death to improve.
Even nonprofits that don't receive donations act on the impure motives of their employees. The organizations themselves may not be motivated by the drive to profit, but the motives of the employees might not be so pure.
The example that strikes me is a credit union in my corner of the world. It regularly runs ads on the radio in which a tired-sounding woman's voice declares that she badly needs a vacation, but doesn't have the cash for it. A second voice then urges her to take out a home-equity line of credit through the credit union to fund the vacation.
Urging people to tap into their home equity to pay for ephemeral pleasures hardly seems like sound financial advice. One could understand it coming from a greedy for-profit bank, whose owners place their desire for interest income ahead of the well-being of their customers. But why would a nonprofit member-owned credit union do such a thing?
The only explanation I can conceive is that the managers of the CU expect increased benefit for themselves from an increased volume of business. This could take the form of higher salaries, justified by the greater volume. Or it may just be that they're seeking increased prestige within the banker or non-profit-manager community, in which those who deal in larger sums of money enjoy higher status.
What you wrote is very logical but unfortunately the damage of marxism is not much about society as a power struggle but to seed the idea of being envious and that creating wealth doesn’t require risk and hard work. Success is always attributed to privileges in the minds of many people that struggle to accept meritocracy and the simple facts that we have different talents.
I have worked as a full time consultant and as a full time employee. Right now I am a full time employee. I just went through a review cycle and part of the review was going over the raise and the benefits. My last job was full time consultant (just 2 weeks vacation). I always adjust my consulting pay rate to offers I get for full time. I come damn close to matching - even with inflation. I prefer a straight wage. Workers paying benefits is blindingly obvious, once you consult.
Various institutions play large roles in voluntary cooperation: markets, households, barn-raisers, clubs, leagues, churches, and so on.
What differentiates the market among these institutions? Perhaps the price mechanism?
What comparative advantages do markets have? Perhaps scalability? Voluntary cooperation among strangers? Voluntary cooperation between very different cultural groups? Particular kinds of efficiency?
Formal organizations (e.g., firms) are crucial top-down coordination institutions among subsets of economic actors within a market economy. (See Ronald Coase.) Nonetheless, economists analyze "internal labor markets" within the firm. Similarly, economists analyze "the marriage market" and "the economics of the family," even though the price mechanism plays little explicit role. My point here is that there are subtle, but fundamental issues around the nature and scope of markets.
I'm wrestling with your definition if economics and finding the wrestling useful. I had much more to say and then I started thinking. On the whole, that represents improvement and since it was spurred by your article, I thank you.
I think this is missing a huge aspect of how economics is generally taught, and the implicit suggestion behind how it ought to be taught: economics is a function of politics and ideology.
While it’s important to understand economic machinations themselves in isolation from a scientific perspective, and useful to understand its application in a social context from a sociological perspective, this necessitates an understanding of economics as a political function. Economic analysis often contains philosophical and ideological underpinnings of how market and labor relations and actors should be treated.
Your reading of sociology as being latently Marxist is also quite generous. While I would agree that there is a slant towards postmodern interpretations of Marxism (which is not-quite-Marxism historically and substantially speaking) in postsecondary education institutions in regards to sociological interpretation, that is wildly different than scientific Marxism or the presentation of sociology as a field of scientific study.
I don't care all that much about chatGPT so I've struggled to continue following this substack. So be it. But I'm glad I've mostly persevered. This is a jewel. It succinctly says so much.
"What sociology ought to be is a more nuanced study of societies. Human beings do not just play a zero-sum power game. They play many different types of games, some of which are positive sum, in that many people end up better off."
It's unfortunate if his paragraph is less clear that conservatives and libertarians are somewhat if not similarly bad at recognizing the negative-sum power games. But at least they tend to recognize some of the power games involving govt, although typically far from all, and way less of the ones not directly involving govt.
Homo-economicus might pay workers either $50 or $40 + $10 in benefits and many times it works that way. But lots of times it doesn't. I think these times are at least as important. In the short term profits often go down and prices may go up. In the longer term prices more often go up and sometimes there is substitution for labor. For very low wage workers, they may lose their job but pay rates can't go down much, sometimes not at all.
Add this to your list: Corporate taxes are paid for by consumers and/or workers. They are not paid by shareholders. Shareholders don't pay operating expenses.
Arnold says what needs to be said so simply and elegantly, that it would be easy to carve it into stone. As it should be.
I agree. More practically, I'd love to see an initiative that asked high profile economists to sign on to a statement like this - and see who refused or dithered. Arnold's propositions strike me as well-crafted statements such that an economist who refused to sign on to them would put his integrity as an economist into question. Given that there is tremendous pressure among progressive academics against conceding to some of these propositions, it would be interesting to see who comes through and who doesn't.
I think the statement: "Losses cause firms that make inefficient use of resources to disappear." is a very important factor and bankruptcy is the key to making market systems actually work. Monopoly organizations evolve over time to become more self-interested independent of the reason for existence as they can always obtain monopoly profits or tax payer money for government organizations.
Economic growth per capita is an evolutionary system of many improvements/failures and like the natural evolution of life-forms with natural selection, it requires death to improve.
Social Darwinism at its finest
Even nonprofits that don't receive donations act on the impure motives of their employees. The organizations themselves may not be motivated by the drive to profit, but the motives of the employees might not be so pure.
The example that strikes me is a credit union in my corner of the world. It regularly runs ads on the radio in which a tired-sounding woman's voice declares that she badly needs a vacation, but doesn't have the cash for it. A second voice then urges her to take out a home-equity line of credit through the credit union to fund the vacation.
Urging people to tap into their home equity to pay for ephemeral pleasures hardly seems like sound financial advice. One could understand it coming from a greedy for-profit bank, whose owners place their desire for interest income ahead of the well-being of their customers. But why would a nonprofit member-owned credit union do such a thing?
The only explanation I can conceive is that the managers of the CU expect increased benefit for themselves from an increased volume of business. This could take the form of higher salaries, justified by the greater volume. Or it may just be that they're seeking increased prestige within the banker or non-profit-manager community, in which those who deal in larger sums of money enjoy higher status.
What you wrote is very logical but unfortunately the damage of marxism is not much about society as a power struggle but to seed the idea of being envious and that creating wealth doesn’t require risk and hard work. Success is always attributed to privileges in the minds of many people that struggle to accept meritocracy and the simple facts that we have different talents.
I have worked as a full time consultant and as a full time employee. Right now I am a full time employee. I just went through a review cycle and part of the review was going over the raise and the benefits. My last job was full time consultant (just 2 weeks vacation). I always adjust my consulting pay rate to offers I get for full time. I come damn close to matching - even with inflation. I prefer a straight wage. Workers paying benefits is blindingly obvious, once you consult.
Various institutions play large roles in voluntary cooperation: markets, households, barn-raisers, clubs, leagues, churches, and so on.
What differentiates the market among these institutions? Perhaps the price mechanism?
What comparative advantages do markets have? Perhaps scalability? Voluntary cooperation among strangers? Voluntary cooperation between very different cultural groups? Particular kinds of efficiency?
Formal organizations (e.g., firms) are crucial top-down coordination institutions among subsets of economic actors within a market economy. (See Ronald Coase.) Nonetheless, economists analyze "internal labor markets" within the firm. Similarly, economists analyze "the marriage market" and "the economics of the family," even though the price mechanism plays little explicit role. My point here is that there are subtle, but fundamental issues around the nature and scope of markets.
Arnold;
I'm wrestling with your definition if economics and finding the wrestling useful. I had much more to say and then I started thinking. On the whole, that represents improvement and since it was spurred by your article, I thank you.
I think this is missing a huge aspect of how economics is generally taught, and the implicit suggestion behind how it ought to be taught: economics is a function of politics and ideology.
While it’s important to understand economic machinations themselves in isolation from a scientific perspective, and useful to understand its application in a social context from a sociological perspective, this necessitates an understanding of economics as a political function. Economic analysis often contains philosophical and ideological underpinnings of how market and labor relations and actors should be treated.
Your reading of sociology as being latently Marxist is also quite generous. While I would agree that there is a slant towards postmodern interpretations of Marxism (which is not-quite-Marxism historically and substantially speaking) in postsecondary education institutions in regards to sociological interpretation, that is wildly different than scientific Marxism or the presentation of sociology as a field of scientific study.
I don't care all that much about chatGPT so I've struggled to continue following this substack. So be it. But I'm glad I've mostly persevered. This is a jewel. It succinctly says so much.
"What sociology ought to be is a more nuanced study of societies. Human beings do not just play a zero-sum power game. They play many different types of games, some of which are positive sum, in that many people end up better off."
It's unfortunate if his paragraph is less clear that conservatives and libertarians are somewhat if not similarly bad at recognizing the negative-sum power games. But at least they tend to recognize some of the power games involving govt, although typically far from all, and way less of the ones not directly involving govt.
Homo-economicus might pay workers either $50 or $40 + $10 in benefits and many times it works that way. But lots of times it doesn't. I think these times are at least as important. In the short term profits often go down and prices may go up. In the longer term prices more often go up and sometimes there is substitution for labor. For very low wage workers, they may lose their job but pay rates can't go down much, sometimes not at all.
Add this to your list: Corporate taxes are paid for by consumers and/or workers. They are not paid by shareholders. Shareholders don't pay operating expenses.
Excelent points! Thanks, Arnold!