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Confusing supply and stock is easy to do (thinking of you, @Scoresby).
We do in fact produce more nature when we build infrastructure that makes it easier to access, ironically reducing the total stock of nature in the process.
See my math comment above.
The trouble when using verbal argumentation is people use words with overloaded and flexible meanings (e.g. supply) to talk about things that are better understood as specific mathematical objects.
I don’t see how math helps with the actual interesting parts of this: nature is a valued thing that is basically unownable by definition.
What set of non-arbitrary rules can provision the optimal amount of it, when we can’t use profit and loss?
I think you're referring to existence value, or perhaps some unknowable option value from biodiversity or natural preservation. But I don't think that's what the book is debating. I think the book is sorting through the question of how to assign value to something that just exists, but also has to be transformed to be brought to market. (That's my read of it anyway).
In which case, you write down a model that has the thing that exists as an object, as well as the transformation process as an endogenous outcome. You write down the model of the agents' behavior, and derive equations that are plausibly defensible as value measures, and see how the natural objects enter in.
Of course, the exercise is purely descriptive. The model doesn't (and can't really) make any normative claims. However, looking at precise definitions of value within the model can help us think more carefully about what increases or decreases the model's version of value, which helps us to think morally about more universal values that come from outside the model.
Also, I think forcing the Natural Dividend authors to write down a model where value can only accrue to people, and the government is some function of human decision making, may be clarifying for them and perhaps limit some of their claims. (I don't really know, because I haven't read the book carefully, but @denlillaapan insists that they're off their rockers)
For some of their applications, I think the answers are trivial and uninteresting. If someone has to incur costs to extract a resource through any sort of transformation, it just ceases to be nature.
The more interesting ones are things like recreational value tied to a lack of intentional transformation.
I agree the authors would benefit from formalizing their thoughts but they’d also benefit from being berated by Den for saying dumb things that don’t actually grapple with current economic thinking. I’m agnostic as to which would help them more but have a strong preference for the latter.
The more interesting ones are things like recreational value tied to a lack of intentional transformation.
I agree, that's an interesting one. It'd probably touch on the economics of the commons and public goods, though. Which inevitably brings in the gubment. Which is where these thinkers always head.
I don’t grant, absent a compelling argument, that creating an organization to initiate violence against peaceful people can be logically derived from an enjoyment of nature.
It brings us back to an internal critique of econ that we've both had, which is that economists stop too quickly at "therefore, gubment." The math doesn't save us if we decide to stop applying the math when God (aka benevolent social planner) appears.
sorting through the question of how to assign value to something that just exists, but also has to be transformed to be brought to market. (That's my read of it anyway).
Yes, ish. That was my hope in reading it, but they seem waaaay more aggressive and ideological about the unfairness and unequal distribution from the fact that someone develops/uses nature (for free) and brings its "value" to market without paying for it
(And they should pay us, the people, because all your nature are belong to us)
I believe people used to be thanked for going out into nature and bringing back useful shit.
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Do you believe that math is useful for econ now, and that not using math makes your brain wander off into fanciful territory? It's super easy to understand the role of nature in the economy if you use a model.
Here's a simple model with nature:
- Consumers choose to maximize their utility, subject to the conditions imposed by nature, :
- Producers choose to maximize their profit, subject to the conditions imposed by nature, :
- Nature may impose some required relationship between and :
Ok, we're done. Nature's role in the economy is now understood.
Nope.
What about this modelling exercise is some sort of relevant revelation?
I understand that algebra is clarifying to some people, but what exactly do you think this example illustrates that words about dynamics/market pricing/subjective value/optimization don't?
It's not about what it can illustrate that words can't. it's about what it can't illustrate that words can (wrongly)
Not following. Maybe try a graph to get your point across?
(See what I did there!)
Forcing people who think about economics to formalize their thoughts catches bad logic and sneaky assumptions. It eliminates arguments that might sound reasonable when using words, but becomes untenable when you try to formalize it. You accused the authors of this book of faulty logic, well the purpose of formalization is to gatekeep the faulty thinking.
From the snippets you've posted about The Natural Dividend, the thing I'd ask them to formalize is their definition of value in this system of decision-makers, where nature is a force that imposes conditions, but isn't an acting agent. Value can only be defined with respect to the acting agents.
I don't suppose they'll see that any more clearly with a mathematical formula.
Put differently: you can always make a formula/arrange the algebra so your favoured idea comes out, no?
I don't suppose they'll see that any more clearly with a mathematical formula.
Perhaps they don't want to see clearly and would give up if asked to formalize their arguments ^_^
Put differently: you can always make a formula/arrange the algebra so your favoured idea comes out, no?
Sort of but not really. You can get a model to say whatever you want, but it may also require transparently dumb assumptions, and you'd get called out for it.
but it may also require transparently dumb assumptions, and you'd get called out for it.
That's true, and useful... but I can also just call them out for "transparently dumb assumptions" in plain text
slavery w extra steps, etc
It got worse later in the morning reading... @Undisciplined
Economics of commodities are wrong, no upward-sloping supply curve for natural resources.
Like what... I know these guys don't understand neither "scarcity" nor "resource" but holy mother of flying fucks, are you insane?? Is your brain on crack cocaine?!
We explore for/extract/produce more oil when price is high and expected to be high; mines go on overtime when commodity prices are high.
The physical quantity of e.g. iron in the ground (in the universe?!) obvs doesn't change, but that's economically irrelevant