Why every state should be a welfare state.

I don't have to make a counter-argument because you aren't making an argument. You are saying it's "too technical" and "unsuited to a debate forum." You say there are such things as public goods and that they have a optimal level of supply that you can determined. So I'm asking you to prove this. You say it's too technical to prove. So I don't believe you. I don't believe that you have any way to calculating the optimal level of any good of any kind, and you refuse to show me that you can.

OK. So what is the optimal number of lighthouses in the world?

Why does that make it better? "Longitudinal analysis" is just your overly and needlessly fancy way of saying it follows the same people. That doesn't show that there are fewer poor families in the United States. It only shows that the families they tracked grew in prosperity until 1973 when they stopped growing in prosperity despite, again, the fact that your welfare state was running full blast the whole time.

 

How about a logical example instead. Two people own two businesses right next to one another, they each want a way to get people from the town to their businesses. They both expend X resources to each build their own road. 2X resources has been used. Now instead lets take a portion of each of their resources .75(X) and combine them to build a single highway that meets the needs of both businessmen. We've objectively used less resources to fulfill the demand. We can say objectively that resources in the second scenario were used more efficiently.

Again, doesn't matter whether they go exactly what they wanted or not, that's subjective I can't prove that. What I can prove is that an alternate combination can be more efficient. Again, we're not talking utility or preference only efficiency, I even included it's definition earlier.

I completely disagree and I hope this doesn't end with you telling me only one car can fit on a road at a time.

Nope, but it can determine whether or not output could be increased by altering how resources are used.

Another simple metaphor: Two kids have a bucket of lego's. They put them together and use every single lego to create a castle, I come buy later and remove some of the lego's from places that you can't see and aren't need and put them back in the two boys buckets. We can say objectively that both children have had their lots improved, they still have the castle and now they also have some lego's leftover to keep playing with.

Whether their satisfied or not with this modified castle isn't relevant, we're just talking about how much stuff there was and how much there is now.

I understand just fine, I don't see any reason to be angry about it though. I disagree with what you've said and I feel that you're misunderstanding the concept and it's application.

What stops them is first, one of them will have to police the well, or hire someone to do so to prevent anyone who didn't contribute from using it (which is a waste of resources) and second the water is bottomless so no scarcity exists, as we know price is derived from scarcity so technically... market forces ought to force the price to zero. Thereby ensuring that neither person is able to capitalize on their investment.

We aren't talking value though, we don't care what specifically they wanted, value/utility is subjective. Output however can be measured objectively, if output can be increased then we know we haven't found the optimal arrangement of resources.

I'm trying my hardest but I'm not a professional economist, the fellows in the podcast are so when I'm struggling to explain something to someone I like turning to people more informed than myself.

 

You don't know it, but I've destroyed your position. You're attempting to argue that optimality cannot be determined. All you've managed to do is actually advertise the substantial literature into how that optimality is measured in practical policy. As I said, it can be summarised in terms of cost-benefit analysis. Your confusion with more general underprovision issues (as shown with the issue of positive externalities) demonstrates that you need to do some reading! You might then achieve some relevancy.

Deliberate misrepresentation again! I've merely referred to the technical nature of cost-benefit analysis. There are numerous issues that an economist will have to control for (which I've already indicated!), but that's merely a side-issue (i.e. it just means an empirical analysis into a specific public good takes some effort and computing power)

Bit obvious really: for longitudinal analysis we need to ensure consistent definitions. A panel dataset will ensure that. Most countries will therefore provide such data.

 

How'd I know you'd glob onto this stupid example... I really wish you hadn't.

Two or one, the underlying assumption is that either option was adequate to handle the traffic and that the objective could be achieved with less resources from both parties.

Mowers are excludable and rivaled, my cutting the grass prevent you from doing so. You've forgotten (or ignored) the definition... again.

 

All your logical examples require the use of that mathematical formula you have yet to provide or explain.

How do you know that the one road is more valuable to the businessmen than two individual roads? If they both would prefer to share a road than have separate roads, what on earth is stopping them?

And I can argue that had the maker of a shoe made a shoe with a different material, he would be able to make more, and that the shoes would even be of higher quality. That doesn't mean he should, or the fact that he chooses another material is somehow a market failure.

Your definition of efficiency is that more people benefit without more being harmed. But benefiting is just another way of saying "getting what they want." Your reasoning is circular. How do you know objectively people are benefiting? You can't.

No, it ends with me telling you to prove your point with an argument rather than just saying you disagree with no explanation.

The value of an output is subjective. Even if there is more output, there is no mathematical way to measure if that output is desired.

I come by and remove 1 fraction of a penny from every electronic bank account in the US, an amount that people cannot see. I then use that money to improve my lot. Nobody is harmed, and I benefit. Clearly, electronic bank robbery is a more efficient way of running the economy.

Your example with legos is just as absurd as mine.

Furthermore, are you now trying to claim legos are public goods?

And there are just as many bricks as there were before. You only made more bricks available by ripping pieces off an already existing piece of wealth that had used them as the kids decided was best.

I know you disagree with what I have said. You simply have yet to refute anything I have said with a valid argument.

This is literally no different than the lighthouse example, my responses to which you have still not actually refuted. Do I really need to apply the exact same logic to wells?

We are talking about value, because you cannot assume that all output is valuable. The only way to know what output is desired is through understanding how people value the output. You cannot know what is Pareto efficient without knowing how people value things, because what is more beneficial and what is more harmful is an entirely subjective value judgment.

Ok. Still doesn't refute the notion that public goods don't exist.

 

And admitting your own examples are stupid is supposed to prove your point how exactly?

 

It's really not important for understanding the concept, sadly your whole goal it appears is to be contrary and avoid the point. I'm tired of making long posts trying to prove the sky is blue. You've made an error in terminology and I've tried patiently to correct that error, if you wish to ignore the meaning of words no problem but all that does it make it impossible to have dialog because we can't even speak the same language. You've adopted a position of ignorance and I quite honestly expected better.

If you want to discuss how governments do a poor job of correcting market failure, please let me know it'd be a much more interesting topic than bickering over something that can be settled with a dictionary.

http://www.economicsonline.co.uk/Market_failures/Types_of_market_failure.html
http://www.becker-posner-blog.com/2011/09/market-failure-compared-to-government-failure-becker.html

 

No, the counter factual was stupid, but you knew that. This is just more intellectual dishonesty.

Public goods don't exist now either, sheesh you've gone completely off reservation.

Here, an online tutor: http://tutor2u.net/economics/content/topics/marketfail/public_goods.htm

Educate yourself so we can have a quality discussion.

 

Your argument that public goods exist simply because they are a term with a definition is just as absurd as saying fairies exist because they too are a term with a definition.

The reality is you have no response--you have no arguments, you have no mathematical formula, and you have no economic reason. You have mere assertions. That is clear for all to see.

 

Your whole post routine is based on ignoring the economics and making ludicrous statement. All you have is the premise that 'pure public goods' do not exist. That would be a red herring. You merely twin that, like with the other fellow, with 'noise' based on ignoring economic validity

 

We both understand what a fairy is, we could discuss fairies and their characteristics.

The market isn't something tangible either and yet we both agree on what it is and what the word means. You're being obtuse and ignoring economic reality to fuel a rant. It's boring and completely divorced from economics.

 

Are you saying you believe in the existence of fairies? If you answer no, then my denial of public goods is no more invalid at the face than your denial of fairies.

 

Obviously not, what I am saying is that something can be conceptual and people can agree on words that describe this conceptual phenomenon. Typically experts in a field are the one's who create the terminology, such is the case here.

Market failure is a phenomenon, really only one school denies it's existence, but in doing so also abandon pareto efficiency. I don't agree, but I also don't think it necessarily means government is going to provide a better solution, in fact often... yes, the market solution isn't efficient, but the government solution is sometimes worse.

We both object to it, I object to the solution, you object to it's existence. I disagree but just don't find it terribly important.

No one who does economic denies that public goods exist. It's also universally understood that there's no such thing as a pure public good. To say otherwise is to choose ignorance, and that's not a good route.

 

It seems very easy to find market failure where one wants to. For example, it might be argued that two separate houses represent a market failure because a duplex would require less resources to provide the same living space. Or two houses each having their own driveway is a market failure because two houses could just as easily share a single driveway. It sounds as if market failure is not as objective as it is made out to be, but is rather a judgement call and shorthand for "you didn't use your resources as I think you ought to have."

 

Why keep making the same mistake? Market failure only exists as it relates to public goods. Public goods are goods that are nonrivaled nonexcludable.

You'd have to be pretty extreme to fit homes into those two criteria. It's a shame you're trying so hard to avoid understanding this, I empathize though... I think I made this same argument once upon a time.

 

How about another example, one that occurs because of property rights (or the lack thereof): Fishing.

Because no one owns the ocean and the incentive is to over fish, which would lead to no fish eventually, we have a problem called tragedy of the commons. There are many ways to solve that problem without government, but if you support local limits on hunting and fishing, then what you support are regulations imposed to correct for market failure.

Maybe the term is a poor one, since the problem is that markets aren't performing well, but the reason they aren't is because they're missing the things that make markets work: competition and property rights. Do any of you believe that markets (individuals making free exchanges) can exist in a world with no property rights?

 

Then my claim that public goods do not exist is equally valid and one that deserves discussion. If it is so obvious the concept is useful and applies to goods in the economy, it should be incredibly easy to prove they exist. Saying they do "by definition" is no more logical than saying fairies exist "by definition."

 

We know that there are thousands of economic papers studying the nature of public goods. This is a decidedly diverse literature that includes- for example- definition issues, the history of economic thought, interaction of public goods with economic development, determination of optimal provision, voting models, experimental economics and rent seeking (And that's the tip of the iceberg). In comparison, you've come out with low brow statements alien to the economic research. Perhaps you can inform us of one economic source that supports your position? Your choice (or dodge) will be revealing

 

I don't have to argue that optimality cannot be determined. I don't have to because you won't show me how it can. You only assert it.

Well, use that effort to tell me how many lighthouses the world needs.

Well, longitudinal analysis shows that the welfare state has failed. According to it, the poverty rate hasn't maintained a decline since 1973.

 

I don't.

 

You've been informed that it merely requires a cost-benefit analysis. You've also been informed of the origins of the analysis (via Samuelson's rule) and the additional complexities that are naturally considered. You've destroyed your own position, whether you will realise it is a different issue.

I would have to undertake a cost-benefit analysis. Sorry chum, but I'm busy making money instead. The point is that, in practical terms, the determination of the optimal result is a technical issue that- except for the computing power (given, for example, the need to control for possible negative or positive spillover effects)- is a straight-forward proposition.

The US doesn't have a strong welfare state. Longitudinal analysis, however, does show that in the past the US welfare state was more effective at reducing poverty. You've ignored that reality in order to peddle deliberately untruths

 

I don't agree with that. As Reiver mentioned, analysis into public goods is extensive, quite unlike fairies. You'd have to claim that virtually every economist in history is irrational since they've decided to spend any time analyzing why certain goods don't behave the same in a market environment as others.

I'm saying that public goods are goods with a specific characteristics. What's the counter claim? That some goods aren't nonrivaled and nonexcludable? That's the case you've have to make. I welcome you to try but I can tell you now the task is a fools errand.

That some goods have these characteristics is indisputable, clean air for example, you can't exclude anyone from using it and my use of it doesn't prevent you from using it. Can you prove otherwise?

Of course not, we all know the reality is you've chosen willful ignorance, but for what reason I can't understand.

Excellent! That's one of the reasons market failure can exist.

As I said, it's not a great term for what's happening; the market is absent the characteristics that make it vaible so calling it market failure is strange. The official terminology for this condition nevertheless is market failure.

Why I think you two want to reject this so desperetly is because you believe it necessarily means that government must step in and fix it, and that's not at all the case. It may be the option that is often chosen, but it's certainly not the only option.

 

Given sufficient computing power, can the optimal number of lighthouses in the world right now be calculated?

Well, it more effective when it was weaker then.

 

I've made it abundantly clear that measuring optimal provision is not particularly difficult. The only debate is over, for example, spillover effects. Any public good, through cost-benefit analysis, can be determined.

That is another untruth.

 

Part of that analysis assigns weights to externalities and the benefits of the policy, correct? What prevents those weights from reflecting the subjectivity of those doing the analysis. There's a risk for confirmation bias as well if those doing the analysis have a dog in the hunt.

Further, we can know whether social welfare is increased, but it may ignore individual welfare, where individual and public welfare differ.

CBA like anything else has flaws, but I'm not aware of a better alternative.