It is time to stop quivering in our boots in pointless fear of the future and just roll up our sleeves and build it.
- Ray Pierrehumbert

Saturday, July 9, 2011

My Economic Theory in a Nutshell

The graph of globally aggregated economic activity vs globally aggregated welfare is concave downwards.

Under present circumstances, the harder we collectively work, the less we will collectively prosper.

3 comments:

Steve L said...

Not sure what to think of this. The only semi-smart thing I can come up with is: "Working hard at something loved doesn't reduce our welfare, whereas wage slavery diminishes everyone's." On the other hand, maybe that's not even semi-clever ... if it misses the point.

Paul Baer said...

Do you mean that additional output is making us less well off? (A point hypothesized, though not proven, by Herman Daly, and called "uneconomic growth)? If that's so, I think what you're really saying is that the graph is monotonically decreasing (first derivative is negative). A graph can be concave downward (second derivative negative) but in fact be monotonically increasing (like a log function); this would just mean that each additional unit of output is making us less well off than the previous one, but not necessarily worse off.

Pangolin said...

This is really a rather odd position since there is an ongoing and massive labor...surplus. There is global surplus capacity in any production area where the prime input is human labor.

Certainly there are bottlenecks in information, training, environmental inputs and energy access but where labor is the input global trade products are cheap. There are surplus humans everywhere.

If we are working hard it is because labor's access to marketable skills or employment is limited. It is not because there are no people available to train or employ.