From: Dan Fabulich (daniel.fabulich@yale.edu)
Date: Wed Mar 25 1998 - 14:55:21 MST
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At 03:22 PM 3/25/98 +0100, Arjen Kamphuis wrote:
>As stated before, I'm not an economist, but I wonder if growth solely
>related to private investments? Or is the businees 'environment' also a
>factor? The educational level of employees, infrastructure, strikes (or
>lack thereof). All these have no influance?
Of course they do... but all of these happen to be forms of investment. :)
Students invest money now in their education so as to be able to get
greater returns on their human capital later, eventually paying off their
scholastic investment. Corporations invest in their infrastructure now to
get greater productivity, eventually paying off their corporate investment.
Laborers sacrifice wages now in the hopes of increasing the wage rate,
eventually recompensing them for their losses during the strike. All come
in the form of private investment.
>I think having some sort of 'support system' increases the stability of a
>society
While stability cannot be measured, I would agree with you that a support
system does increase stability. However, stability and growth may not be
related; they may even share an inverse relationship.
Remember, the only investment which actually improves growth is that which
(at least) pays for itself. When a so-called "safety net" is in place, it
may decrease somewhat the incentive to make certain that investments pay
for themselves. Some economists argue that this is exactly what has caused
the economic crash in Asia: governments were investing in social welfare
projects (and sometimes lining their own pockets) which don't pay for
themselves. Investments of this sort hurt the economy rather than help it.
>because there's no 'underclass' that has nothing to lose.
Isn't that part of the point of a safety net/support system? Making it so
people have nothing to lose? (while still having something?)
>Then the problem becomes to quantify 'good-in-the-short-run' and
>'bad-in-the-long-run'. Is the technical/economic progress gained in 5,10 or
>50 years from now worth abandoning welfare now and letting a part of the
>population slide down to extreme poverty, disease (or maybe starvation)?
>
>Can we attach numbers to these values somehow? So how much technical
>progress is a human life or human suffering worth these days?
These are good questions. Here's my unsubstantiated thoughts on the matter:
The first possibility, already mentioned, is to turn off the welfare
program now and never look back. Other tactics, such as leaving welfare at
its current dollar value and never again increasing it for inflation, might
be a better way to go about it, but in this case we leave the transition to
economic forces beyond our control. A supply shock of any kind during this
period could easily crush the poor.
Another strategy might be to just leave welfare in place until mind
uploading and/or other immortalizing technologies become affordable to
everyone (or at least subsidizable). That way, when we did finally shut
down welfare, no one would die as a result.
While this seems more appealing at first, keep in mind the costs of
implementing this solution: unless/until we develop these technologies,
EVERYONE is going to die, no matter how much they make annually. If
anything, it seems we should take our foot off the brakes NOW so as to
reach immortality as quickly as possible, if our goal is to minimize death.
Ah, well. Hope I've contributed well to the debate.
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