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Tag Archives: welfare

Is Another Economics Possible–This article attracted my attention because I have been thinking, for a couple of years now, that another economics is necessary.

Disappointment followed as I read through the article. The views described are those of the World Social Forum, “based on more cooperative, sustainable, egalitarian and democratic institutions than those favored at (the World Economic Forum in) Davos, Switzerland.”

Textbook economics treats individuals as selfish optimizers, unconcerned about the welfare of others. Only recently have economists begun to explore the importance of fairness, reciprocity and altruism, and to consider the possibility that incentives to behave selfishly can undermine both moral norms and altruistic preferences.

Textbook economics also largely ignores worker-owned businesses and consumer cooperatives, although these are geographically widespread in the United States. Recent research suggests that many workers would like to play a larger role in the management of their companies and that “shared capitalism” works remarkably well.

Of course these views are only valid for a superficial sort of economics. In real economics, being a “selfish optimizer” includes our desires to help our friends and communities.

While I like the idea of encouraging cooperative enterprise and egalitarianism, those are not new ideas and there is not a new economics being introduced. only old ideals reborn.

A new economics needs to explain how the world’s markets are working, and how government policy can help or hurt social welfare. My opinion? We need to get away from the Keynesian measures of growth and employment. They are not the best measures of welfare and happiness and satisfaction with our lives. Ultimately, those are much more important than how much money and stuff we have.

Alpha Inventions Ranking


The Battle Over Taxing Soda is a rare glimpse at politicians applying legitimate economic concepts to real world problems. Taxing goods with negative externalities can improve social welfare and raise tax revenues all at the same time. Now that it is pretty well established that Cokes and Pepsi and lots of other drinks carry negative externalities, let’s tax soda-pop.

Cities and counties, desperate to find money to pay for schools and roads, are starting to see a soda tax as a way to raise revenue. The tax also appears to be one of the most promising ways to attack obesity, given the huge role sugary drinks play in the epidemic.

“It’s wrong for the government to stand idle in the face of an epidemic of obesity that’s hurting the quality of life and the health of our residents,” says Mary Cheh, the Council member who has proposed the tax, “when we have policy choices in front of us that can materially affect the problem.”

Of course the drink manufacturers are not going sit on their hands and wait to see what happens. Industry lobbyists have already defeated soda tax proposals in New York and Philadelphia, now working their magic in Washington.

The soda industry, of course, is fighting back with newspaper and radio advertisements, among other things. It says a tax would most hurt “hard-working, low- and middle-income families, elderly residents and those living on fixed incomes” and would destroy jobs. Ellen Valentino, an industry official, recently told The Washington Post that companies would spend “whatever it takes” to make their case.

It is true that a soda tax would probably be extremely regressive, but–like with taxes on alcohol and tobacco–people still have the choice to pay or not.

Alpha Inventions Ranking

This is a great story for perspective on the current economic crisis. It proves only to be a crisis for the developed world, but with steady growth for much of the world.

Putting aside the United States, which ranks third, the four most populous countries are China, India, Indonesia and Brazil, accounting for more than 40 percent of the world’s people. And all four have made great strides. Indonesia had solid economic growth during the entire decade, mostly in the 5 to 6 percent annual range. That came after its very turbulent 1990s, marked by a disastrous financial crisis and plummeting standards of living.

Brazil also had a consistently good decade, with growth at times exceeding 5 percent a year. There is lots of talk that the country has finally turned the corner, and, within its borders, there is major worry that its currency is too strong — a problem that many other countries would envy.

Elsewhere in South America, Colombia and Peru have made enormous progress and Chile is on the verge of becoming a “developed” country; it will soon be joining the Organization for Economic Cooperation and Development.

Of course the United States and Europe may complain that globalization and free trade have made things difficult, the real story is that free trade has made things better for much of the world.

To be sure, in Africa, there is still enormous misery. Nonetheless, overall standards of living rose in a wide variety of countries there, with economic growth for the continent as a whole at more than 5 percent in most years. Many basic essentials, like water, sanitation, electricity and especially telephones, are more commonly available.

It seems to me that the policies of the World Bank and the World Trade Organization–and the IMF too–have done exactly what they wanted to do, and that is a good thing. Free trade is positive for the welfare of humanity, even if some of the privileged suffer a small bit.