Economics: PayDay Loans- Bastards or Black Sheep?

[Hanarchy Montanarchy]

I am a little curious why economic reasons are somehow walled off from morality and 'how society should behave' reasons.

Economics should be focused on how to best allocate limited resources with alternative uses. It’s not about morality or interpersonal/group behavior beyond how these factor in to the division of scarce resources.

Now, maybe economics comes up with some answers that we find odious for moral or emotional reasons. That’s fine. There’s no law saying an economic answer is the best overall answer for any given group of humans. But it should provide the best answer for resource allocation.

If the group of humans don’t want to implement what’s economically best - cool. Don’t implement it. But it can’t hurt your decision making to be aware of what is economically best, and to be aware of the trade offs associated with taking a different path.

That’s just informed decision making.

The best allocation of limited resources sounds like a moral question. Most efficient, most egalitarian, maximizing freedom between buyer and seller, or even trying to maximize comfort? The 'why' for all of these 'best allocation' options will bring you back around to ethics.

I don't think you get to just claim an economic description, and side step the moral implications. It is tempting to try and compartmentalize ethics and economics, but economics, for better or worse, is much more humanity than science, so I am not sure it is really possible.

[DrYouth]

I really like this podcast series... it's a few years old now.
http://www.cbc.ca/theinvisiblehand/episodes/

It's a short series that punches above its weight.
It does a great job of busting myths invoked by "anti-capitalists".

I recall the key issues in economics to be aware of when thinking about policy implications were... There are episodes for each of these.

Moral Hazard... where economic forces have implications for human behaviour that can be concerning... but are sometimes necessary.

Perverse Incentives... where good intentioned economic policies have unintended consequences that are concerning.

Externalities... How the economy does not account for certain costs that end up being born by others and have local, regional or global impacts.

[DBTrek]

The best allocation of limited resources sounds like a moral question.

It's not. It's mathematical. The best economic answer is the most efficient allocation of resources. Inefficiency makes waste, and waste lowers quality of life. That's why the USSR had a staggering amount of natural resources, but their inefficient, centrally-planned economy, led to a dismal standard of living for most Russians.

I don't think you get to just claim an economic description, and side step the moral implications. It is tempting to try and compartmentalize ethics and economics, but economics, for better or worse, is much more humanity than science, so I am not sure it is really possible.

This sounds, to me, like an excuse to muddy the waters with dogma when numbers don't work out the way you'd hoped. The economics I've presented in these threads are like mathematical story problems where we can examine cause/effect of tinkering with the inputs and looking at the outputs of a hypothetical (or historical) situation. I doubt you believe that the "moral implications" of a mathematical story problem can't be "side stepped". Yet you're fundamentally claiming that here.

Closer to the truth, I suspect, is that economic realities contradict some deeply held political or social beliefs that you prefer not be challenged. Being an intelligent guy, when you begin to process that the economics of a situation aren't going to line up with your socio-political beliefs, your preference is to drag in a subjective standard like "morality". As morality is ambiguous, you can argue in favor of your superior morality all day long, and claim your socio-political preferences are correct by moral standards. But that's all a bunch of smoke and mirrors.

Economics, on the other hand, is a little more solid. It can be tested. Examples can be referenced. Its components can be measured. Which is why I prefer to talk about economics rather than argue your particular political dogma. Everyone believes their own socio-political views to be superior. But superior economics are most efficient, and that's measurable.

[Hanarchy Montanarchy]

The best allocation of limited resources sounds like a moral question.

It's not. It's mathematical. The best economic answer is the most efficient allocation of resources. Inefficiency makes waste, and waste lowers quality of life. That's why the USSR had a staggering amount of natural resources, but their inefficient, centrally-planned economy, led to a dismal standard of living for most Russians.

This is an ethical claim about how society should be run.

If you don't see that, I am certainly not going to argue you into seeing it.

[Hanarchy Montanarchy]

This sounds, to me, like an excuse to muddy the waters with dogma when numbers don't work out the way you'd hoped. The economics I've presented in these threads are like mathematical story problems where we can examine cause/effect of tinkering with the inputs and looking at the outputs of a hypothetical (or historical) situation. I doubt you believe that the "moral implications" of a mathematical story problem can't be "side stepped". Yet you're fundamentally claiming that here.

Closer to the truth, I suspect, is that economic realities contradict some deeply held political or social beliefs that you prefer not be challenged. Being an intelligent guy, when you begin to process that the economics of a situation aren't going to line up with your socio-political beliefs, your preference is to drag in a subjective standard like "morality". As morality is ambiguous, you can argue in favor of your superior morality all day long, and claim your socio-political preferences are correct by moral standards. But that's all a bunch of smoke and mirrors.

Economics, on the other hand, is a little more solid. It can be tested. Examples can be referenced. Its components can be measured. Which is why I prefer to talk about economics rather than argue your particular political dogma. Everyone believes their own socio-political views to be superior. But superior economics are most efficient, and that's measurable.

The predictive capabilities of Economics aren't nearly as sturdy as they seem. Economists are great at showing how wonderful their models are post hoc, but they never manage to accurately predict a damn thing.

Morality is more ambiguous, and people would like to fancy themselves rational people, with reasoned positions. I am always skeptical... of myself as much as anyone.

And, for what it is worth, I have no interest in arguing that my morality is superior. I only want to argue that these questions are moral questions.

[DrYouth]

The best allocation of limited resources sounds like a moral question.

It's not. It's mathematical. The best economic answer is the most efficient allocation of resources. Inefficiency makes waste, and waste lowers quality of life. That's why the USSR had a staggering amount of natural resources, but their inefficient, centrally-planned economy, led to a dismal standard of living for most Russians.

This is an ethical claim about how society should be run.

If you don't see that, I am certainly not going to argue you into seeing it.

Let's see if I can chart some common ground here...

Economic forces can be harnessed to solve social problems involving the allocation of resources in ways that central planning have never been able to. Not making use of these forces causes a society to have great difficulty managing it's resources and getting the greatest creative potential from it's members. Therefore societies that restrain or inhibit economic forces for "moral" or "ideologic" purposes have been outcompeted by those that don't... leading to their collapse.

Harnessing economic forces while managing the gaps in any such system wisely is what the leading nations of our day have all settled on.

It's the "managing the gaps in the system" part of the equation that really separates the pack at the end of the day....

And there are most definitely moral questions involved.... but not always as many as you would think... they can also be seen as practical questions... where most could agree despite different value systems.

[DBTrek]

The best allocation of limited resources sounds like a moral question.

It's not. It's mathematical. The best economic answer is the most efficient allocation of resources. Inefficiency makes waste, and waste lowers quality of life. That's why the USSR had a staggering amount of natural resources, but their inefficient, centrally-planned economy, led to a dismal standard of living for most Russians.

This is an ethical claim about how society should be run.

If you don't see that, I am certainly not going to argue you into seeing it.

There exists a strong probability that you can't "argue me into seeing it" because your assessment is simply wrong.
Or maybe you're right, and it's simply too difficult to explain how economics is all about ethics too a bunch of dummies like the MHF forum members.
Could be.

[SuburbanFarmer]

It's not. It's mathematical. The best economic answer is the most efficient allocation of resources. Inefficiency makes waste, and waste lowers quality of life. That's why the USSR had a staggering amount of natural resources, but their inefficient, centrally-planned economy, led to a dismal standard of living for most Russians.

This is an ethical claim about how society should be run.

If you don't see that, I am certainly not going to argue you into seeing it.

There exists a strong probability that you can't "argue me into seeing it" because your assessment is simply wrong.
Or maybe you're right, and it's simply too difficult to explain how economics is all about ethics too a bunch of dummies like the MHF forum members.
Could be.

Pigeon much?

Hanarch isn't wrong - at least not entirely. The most mathematically efficient means of distributing resources would be a form of Socialism or Communism - administered by a central computer, calculating needs vs. supply.

The only reason that those systems failed was because of Sociology - human nature, emotion, morality. If it were administered upon an animal population, say, a herd of cows, it would work perfectly. The workers would work, resources would be distributed evenly, and so on.

Econ has NEVER been purely a science. Bell curves and deviations are fine for macro, but they can't explain the stock market. That is driven 50% by pure emotions, even in the age of HFTs and hedge funds.

[Hanarchy Montanarchy]

It's not. It's mathematical. The best economic answer is the most efficient allocation of resources. Inefficiency makes waste, and waste lowers quality of life. That's why the USSR had a staggering amount of natural resources, but their inefficient, centrally-planned economy, led to a dismal standard of living for most Russians.

This is an ethical claim about how society should be run.

If you don't see that, I am certainly not going to argue you into seeing it.

There exists a strong probability that you can't "argue me into seeing it" because your assessment is simply wrong.
Or maybe you're right, and it's simply too difficult to explain how economics is all about ethics too a bunch of dummies like the MHF forum members.
Could be.

Prioritizing efficiency because that will improve quality of life is an ethical argument for efficiency.

When there is a statement that everyone agrees with, it is easy to overlook the moral assumptions and treat it as a purely rational statement of fact. I think that is a hurtle that is too high for even my pro-level rhetoric.

[DBTrek]

Hanarch isn't wrong - at least not entirely. The most mathematically efficient means of distributing resources would be a form of Socialism or Communism - administered by a central computer, calculating needs vs. supply.

That is extremely incorrect. Centrally planned economies (even ones done by a hypothetical super computer) are all playing a prediction game. These systems rely on what humans (or computers) *think* consumers will need in the future, and distributing resources accordingly. As neither people nor computers have powers of precognition, it is inevitable that some (likely most) of these predictions will be wrong. By making a wrong prediction, consumers will be provided too much or too little of a given resource, and these surpluses and shortages will represent waste. Or, as economists would call them, inefficiencies.

You know what's more efficient? Not predicting at all. Reacting to what people want, as determined by their willingness to buy, in real time. That's efficient.