From: ald@clipper.ingr.com (Al Date)
Newsgroups: talk.politics.theory,sci.econ
Subject: Re: Pollution, profits and the theory of general utility
Date: 16 Apr 92 18:56:04 GMT
Organization: Intergraph Advanced Processor Division - Palo Alto, CA

In article <1992Apr7.022046.16791@yang.earlham.edu> davidv@yang.earlham.edu (Live from the Twilight Zone) writes:
>In article <1992Apr1.191929.1940@clipper.ingr.com>, ald@clipper.ingr.com (Al 
>Date) writes:
 
>> Capitalism provides what people *think* they want, regardless
>> of whether they are rational or not.
>
>	Even if people did always act rationally, this is not synonymous 
>with maximization of utility/profits/whatever, no matter what the 
>disciples of Adam Smith and Milton Friedman might say.  Game theory 
>exercises such as "The Prisoner's Dilemma" demonstrate that individual 
>actors, each acting in order to maximize their own well-being, can arrive 
>at a final result that is injurious to all of them.

This cuts to the crux of the matter.  The question I would ask is:
To what extent do Prisoner's Dilemmas represent the real world?

It seems to me that in the real world, in the vast majority of cases,
people tend to maximize utility in their own lives, and that this
generally adds up to greater utility for the whole of personkind. 
Certainly there are exceptions, ecological and otherwise, but these
exceptions can be dealt with as such.  That's why there is some 
theoretical justification for regulation--to handle the exceptions, with
full knowledge that it will cost us some utility. 

I certainly think it is a major error to throw out the premise that
people tend to maximize utility as a part of living just because a few
exceptions can be found or hypothesized.


>	True, awareness of the nature of the Prisoner's Dilemma and 
>similar problems can allow individuals to make the correct decisions, and 
>not take what seems to be the "rational" path.

That's right.  People can be made to realize that it is better for all
of us if we each do what we can not to destroy the ecosystem of the 
planet, for example.  


>	But, in addition to the problem of free and sufficient 
>information, taking this solution also requires a willingness to trust 
>every other participant in the exchange- for if one person sells out the 
>rest, that one person can make an incredible profit at the expense of all 
>the other participants.  Laissez-faire approaches encourage competition, 
>not trust.
>

Perhaps, but competition cannot be accomplished without a great deal
of cooperation, and life does not resemble a Prisoner's Dilemma (very
often).

>
>> Although people do not always act rationally, they ultimately are
>> responsible for their own actions, as they will reap the rewards or 
>> the suffer the consequences.  If they find themselves strung out on drugs 
>> and they want to stop damaging themselves, there will be profits to be made by
>> providing treatment programs, as now widely exist for alcoholics 
>> and nicotine-addicts.
>> 
>	The problem of informed consent steps forward again.  Can it be 
>ethical to allow individuals or firms to provide the means and social support 
>(through advertising and the like) to endanger someone's life and 
>well-being for profit?  

All issues of informed consent can be resolved by simply demanding
truth in advertising as a way to stop fraud.  But I can also see 
some utility in restricting the advertising of re-legalized
recreational drugs to the confines of the drug store.


>And how ethical is it to require payment for 
>someone's trying to put their life together after they made a 
>self-destructive decision based largely on misleading information 

Well, we pay for everything in this society, and we even pay some
people to give things away to the needy.  The only issue here is
whether the tobacco company committed fraud in their advertising,
and if they did, they should be subject to both criminal and
civil prosecution.


>(look at 
>a cigarette advertisement, one of those "cigarette smoke contains carbon 
>monoxide" ones, that is dominated by healthy rich people enjoying 
>themselves and tell me that the rank-and-file of society will appreciate 
>the risks involved in smoking)

Well, the number of smokers in the US is declining yearly, so I guess
people are smarter than you give them credit for.


>	On the other hand, I also believe that there is, or ought to be, 
>the fundamental "right to be wrong".  At some level, these matters are 
>also a matter of conscience and/or real informed decision.

Hear hear.


>> The fact that all information is subjectively tainted by the
>> perceptions of the sender and of the receiver is inescapable.
>> You must choose between open communications and a Ministry of
>> Information.  I myself have more faith in the truth getting out
>> of thousands of muck-raking tabloids and back-stabbing corporations 
>> than from the bowels of 1 political institution.
>> 
>	The press isn't free.  The press costs money.  

Virtually everything which requires human effort costs money.  
To confuse that with "freedom of the press" is
pretty stupid, if you will excuse my saying so.

People need to get their hands on the TRUTH, so that they can 
make informed decisions, to help them maximize their own happiness,
or maximize utility in some other way.  The TRUTH has value, so there is money
to be made providing it, as untainted as possible.

There is also money to be made providing outrageous fiction, but
so what?  People know that what they read in the Enquirer is less
likely to be true than what they read in the CS Monitor.


>On the other hand, 
>a Ministry of Truth is an unappealing prospect too.  Better, I think, to 
>give the press and corporate society a rival, in the form of some sort of 
>governmental news source- not the same as a governmental monopoly.  This 
>provides an economically-motivated and a politically-motivated source of 
>information that can keep an eye on each other, and the citizenry can 
>choose which to believe based upon prior performance; in other words, 
>through a market force.
>

Umm, well, gee this idea really sucks.  Why?  Because a govt news source
is not subject to market forces.  


>	What do you do with people who take advantage of the freedom 
>inherent in a freedom-oriented philosophy to argue against that philosophy?

You give them all the air time they can afford, and you let them stand
up in front of as many people as possible and make total fools of
themselves.  It is so easy to see the hypocrisy that a 10 year
old could point it out.

>

>	The government can also support long-term thinking, by sponsoring 
>investment tax credits, indexing capital gains to inflation, linking the 
>tax rate on capital gains to the maturation period/life of the asset, and 
>so on. 

All the things you have mentioned as ways that the govt can encourage
long-term thinking could be accomplished if govt simply got smaller
and let people keep the money that they made.  But thanks for 
pointing that out. (8-)


>The government represents a pool of capital and labor that can be 
>directed to influence the economy in a certain way.

No.  The govt represents organized coercion which should be strictly
limited to handling public goods which the market fails to provide.


>	And before you condemn economic planning out of hand, remember 
>that the Japanese economy is highly planned.  Remember that the largest 
>free-market companies determine the allocation of resources among their 
>branches by planning and not market forces.

The Japanese economy is a mixture, and to the extent that it
IS centrally planned, it is a disaster for Japanese consumers.
The great successes of the Japanese (like Honda and Sony) have been
entrepreneurial successes.  The great disasters (national railroad,
rice restrictions, govt-subsidy of commodity production) have been those
of the mixed economy.

>> 
>	I'd disagree with you about anti-trust laws, but you have hit the 
>problem.  Much of American fiscal policy amounts to nothing more than 
>politically-motivated transfer payments.  This is not a function of the
>governmental role in the economy per se, but the constitution of the 
>government and the problem of rational decisions by pressure groups 
>leading to a less-efficient allocation of resources.

Well, I dont see how you can separate "the govt role in
the economy" and "the way that the govt has become constituted in that
regard."  Please enlighten me.


--Al Date
Xref: sparky talk.politics.theory:1982 alt.war:655