Reinvigorating the most important battle in economics
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Reinvigorating the most important battle in economics
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Re: Reinvigorating the most important battle in economics
#2I did my undergrad in economics a decade and a half ago, and it could have just as easily been an applied statistics degree with a few classes on the history of politics.
I had to independently go read Hayek, Marx, Rothbard etc...and at the time there really wasnt any research that attempted quantifying value or mapping preferences to anything measurable.
So I'm glad to see this line of study come back into the discipline.
Re: Reinvigorating the most important battle in economics
#3This aspect of economics is critically important as the supposed engine for growth changes from private to public domains. Where I live, the public sector far outweighs the private sector in providing jobs. As such, the voters follow the ever curricular pattern of growing the government to the demise of the private sector.
The subject of this book being the public sector, my interest would be the balance of the private and public. Just how large can the public sector grow ( with their overpaying for outsourcing, as the review stated) before becoming unsustainable?
Another good aspect of this book is it's analysis of healthcare systems. In the US, healthcare is often used as the poster boy for failed capitalism. The fact is that healthcare is overregulated and not at all capitalist in most Western societies. But that would be another book entirely....
Re: Reinvigorating the most important battle in economics
#4The reviews of the book on Amazon are both more succinct and better, I think, than this long-winded article:
https://www.amazon.com/Value-Everything-Making-Taking-Econom...
Re: Reinvigorating the most important battle in economics
#5This aspect of economics is critically important as the supposed engine for growth changes from private to public domains. Where I live, the public sector far outweighs the private sector in providing jobs. As such, the voters follow the ever curricular pattern of growing the government to the demise of the private sector. The subject of this book being the public sector, my interest would be the balance of the priva…
The US health system had managed to merge bad attributes from different systems into a system that’s incredibly bad. Highly regulated, tons of unaccountable bureaucracy, lots of barriers for market entry , protectionist, lack of consumer choices and also highly capitalistic. The problem is that the US can’t decide what it wants so we have a system where a lot of people make a lot of money whole being protected from competition or even scrutiny by customers.
Re: Reinvigorating the most important battle in economics
#6A fundamental assumption of mainstream economics is that market prices are approximately correct. This is more for pragmatic reasons than anything; you need some sort of prices to compare unlike things and it's often easy to get some consensus on what the market price is.
If you want to calculate GDP some other way then you will need to decide what millions of prices "should" be and persuade others with your argument. Coming up with an alternative scheme is probably the easy part. Agreeing on a new standard would be much harder.
Consider also that those millions of prices are also changing, often rapidly.
The problem is that, even within mainstream economics, we know market prices aren't correct. Pricing externalities is something pretty much all economists can get behind, and that's just the beginning. Does anyone really believe health care prices are correct? How about all the other subsidies? Asset prices for things like startups are even worse.
In areas where there are no market prices or the market is obviously artificial, price and value become nebulous. Without any objective standards of value, what things are worth becomes a matter of opinion and politics. I am pessimistic on there being consensus on a better way of understanding value any time soon.
More likely we will muddle through with patches to the system we have. Philosophically, even major changes like a carbon tax or universal basic income are basically just patches to get prices somewhere closer to what we think they should be.
Re: Reinvigorating the most important battle in economics
#7This aspect of economics is critically important as the supposed engine for growth changes from private to public domains. Where I live, the public sector far outweighs the private sector in providing jobs. As such, the voters follow the ever curricular pattern of growing the government to the demise of the private sector. The subject of this book being the public sector, my interest would be the balance of the priva…
The US health system had managed to merge bad attributes from different systems into a system that’s incredibly bad. Highly regulated, tons of unaccountable bureaucracy, lots of barriers for market entry , protectionist, lack of consumer choices and also highly capitalistic. The problem is that the US can’t decide what it wants so we have a system where a lot of people make a lot of money whole being protected from c…
I think that is largely a misconception from people who live in the US and think the US is the worst of all possible worlds (based largely on the politics of the last decade or so)...it isn't. Not even close.
The US is an extreme example of a system that optimizes totally for choice...and it achieves that aim. The UK is an extreme example of system that optimizes totally for access. They both achieve their aims but there is a necessary cost. The most successful systems are mixed ones (Mazzucato is prone to make extremely reductionist statements about this: the private sector has this disadvantage, the solution is all public...in the UK, we know this doesn't work...we have tried it).
Re: Reinvigorating the most important battle in economics
#8Mazzucato is one of the most suspect economists out there. Courts a huge public profile, is apparently an expert on innovation without ever having worked in the private sector, and all the conclusions appeared tailored to win more consulting work with left-wing parties.
Her conclusions also tend to be far too simplistic. The reason why the UK has moved to using the private sector more is because the other way was bankrupting us. She seems to believe that the public sector can innovate...okay, where is the evidence of this? The examples of successful innovation are cases where private incentives have been merged with public funding. All very suspect.
Re: Reinvigorating the most important battle in economics
#9Tl;dr for those who didn't read the book review:
1. Modern economics doesn't try to define "value" objectively. Value is whatever price the market is willing to bear. This logic fuels speculation bubbles.
2. The finance industry is a huge part of a modern market economy. But what value does it provide?
3. Public spending is behind most fundamental scientific research: "research has shown that two-thirds of the most innovative drugs (new molecular entities with priority rating) trace their research back to funding by the US National Institutes of Health."
4. Public spending grows the economy. The effect multiplier is 1.5.
Re: Reinvigorating the most important battle in economics
#10What is output?
That's the big question. What gets measured?
Capitalism optimizes for - something. And what it optimizes for matters. Think of the "free market" as a system for evaluating an objective function. You get what you optimize for. That may not be what you want.
"Externalities" are not in the objective function, which is the cause of many problems.