Economics: PayDay Loans- Bastards or Black Sheep?

[Hanarchy Montanarchy]

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.

I don't think the goal of the Communists was maximum efficiency. It was an egalitarian distribution of resources, efficiency be damned.

The fact that the quality of life tanked didn't really matter, as long as it was fair. This is a moral position. As it the position that quality of life is more important than fair distribution.

[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.

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 do... 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.

I like it, but it ignores the position that 'society' doesn't have any business managing resources in the first place. Which is also position that I find pretty attractive.

The contemporary attitude that divesting oneself of the burdensome ambiguity of morality is the 'best' way to rational behavior is, I would argue, a moral statement. It is a pretty ubiquitous attitude, so it doesn't look like a moral position.

[DBTrek]

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.

Seems a stretch. Obviously the implications are that a good quality of life is superior to a poor quality of life - and since economic efficiency impacts quality of life by extension efficiency is "good" and inefficiency "bad". But those are optional takeaways from the message, not requirements. Meaning you don't have to prioritize efficiency or quality of life as "good" in order to study the relationship between the two.

You see the moral evaluation connecting efficiency and quality of life to "good" as mandatory, making economic arguments an exercise in ethics.
I don't see the moral correlation as mandatory. It's optional. You can view efficiency and high quality of life as good, or you can view them as simply correlated variables in the larger equation that is economics.

/shrug

[Hanarchy Montanarchy]

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.

Seems a stretch. Obviously the implications are that a good quality of life is superior to a poor quality of life - and since economic efficiency impacts quality of life by extension efficiency is "good" and inefficiency "bad". But those are optional takeaways from the message, not requirements. Meaning you don't have to prioritize efficiency or quality of life as "good" in order to study the relationship between the two.

You see the moral evaluation connecting efficiency and quality of life to "good" as mandatory, making economic arguments an exercise in ethics.
I don't see the moral correlation as mandatory. It's optional. You can view efficiency and high quality of life as good, or you can view them as simply correlated variables in the larger equation that is economics.

/shrug

I get the raps you're spittin' here.

My only quibble is that efficiency and quality of life don't always exactly correlate. For instance, inefficiency in production means more work for the producers. Their quality of life goes up if they can make more money producing, and there are more of them required the less efficient the production.
I am hesitant to claim it is a superior position to measure over all, global quality of life, and prioritize that metric over an individuals quality of life that was damaged. Seems a little collectivist.

[DBTrek]

I get the raps you're spittin' here.

My only quibble is that efficiency and quality of life don't always exactly correlate. For instance, inefficiency in production means more work for the producers. Their quality of life goes up if they can make more money producing, and there are more of them required the less efficient the production.

The U.S.S.R. over-employed, over-invested in production equipment, and ran inefficient economy. There are several examples of this - Factories having "back up" manufacturing equipment rusting next to their buildings, clothing makers dedicating shop space to illicit tool-making because they couldn't rely on the allotted tools arriving from the Kremlin, or the fact that 80% of the bricks made in the USSR were made by non-party approved industries. This is because industrialists couldn't count on the Kremlin delivering the bricks they needed, so they created their own in-house brick making facilities to ensure they'd have the bricks they needed to expand.

Now, did the redundant, inefficient, "producer" get a job and a paycheck? They did. They also lived a scarcity-riddled existence, punching the clock at work next to a giant heap of economic inefficiency rusting in the lot adjacent to them. Toiling their hours away next to ad-hoc brick making facilities that were seldom put to use. All their extra production time, caused by inefficiency, did little for their quality of life.

So less efficient production doesn't really benefit the producers when the gains of that production go towards efforts that benefit no one.

[Hanarchy Montanarchy]

I get the raps you're spittin' here.

My only quibble is that efficiency and quality of life don't always exactly correlate. For instance, inefficiency in production means more work for the producers. Their quality of life goes up if they can make more money producing, and there are more of them required the less efficient the production.

The U.S.S.R. over-employed, over-invested in production equipment, and ran inefficient economy. There are several examples of this - Factories having "back up" manufacturing equipment rusting next to their buildings, clothing makers dedicating shop space to illicit tool-making because they couldn't rely on the allotted tools arriving from the Kremlin, or the fact that 80% of the bricks made in the USSR were made by non-party approved industries. This is because industrialists couldn't count on the Kremlin delivering the bricks they needed, so they created their own in-house brick making facilities to ensure they'd have the bricks they needed to expand.

Now, did the redundant, inefficient, "producer" get a job and a paycheck? They did. They also lived a scarcity-riddled existence, punching the clock at work next to a giant heap of economic inefficiency rusting in the lot adjacent to them. Toiling their hours away next to ad-hoc brick making facilities that were seldom put to use. All their extra production time, caused by inefficiency, did little for their quality of life.

So less efficient production doesn't really benefit the producers when the gains of that production go towards efforts that benefit no one.

Which is why I would never argue that maximizing inefficiency, or command economies, are good ideas.

But, increases in efficiency don't always lead to quality of life improvements.

[DrYouth]

But, increases in efficiency don't always lead to quality of life improvements.

That's true, they don't...
But decreases in efficiency certainly don't either...

Quality of life is not addressed by economics past a certain point... basic survival needs.
The question of quality of life is all about meaning, purpose and social cohesion.
Something that economics does not address at all.

But this is an economics thread.

Shall we adjourn to the chapel or the psych ward?

[Hanarchy Montanarchy]

But, increases in efficiency don't always lead to quality of life improvements.

That's true, they don't...
But decreases in efficiency certainly don't either...

Quality of life is not addressed by economics past a certain point... basic survival needs.
The question of quality of life is all about meaning, purpose and social cohesion.
Something that economics does not address at all.

But this is an economics thread.

Shall we adjourn to the chapel or the psych ward?

We can certainly have quality of life discussions that aren't economic, but my only point is that efficiency and quality of life are not automatically correlated, in either increase or decrease directions. The statement that they are is, I am arguing, ideological.

Even without talking about meaning or purpose, an increase in production efficiency can result in a major hit to an individuals quality of life in a purely economic sense.

[DBTrek]

Even without talking about meaning or purpose, an increase in production efficiency can result in a major hit to an individuals quality of life in a purely economic sense.

A lot of mixed terminology here leading to confusion I think. Economic efficiency covers more than "production efficiency". An "individual's quality of life" may be impacted by factors well outside of the economy, so using any random individual's life to measure the economy is silly.

Economic efficiency does directly lead to increased quality of life for citizens of that economy. Look at milk. Milk can be used for yogurt, ice cream, or butter. How can we allocate the supply of milk to these three different demands, and how does efficiency matter?

Central planning: We can have a body tasked with divvying up the milk supply. They can guess what portion of milk each industry gets. They will inevitably guess wrong (because no one can accurately predict national consumption) which will lead to some shortages or some supluses of butter, yogurt, and ice cream. Quality of life is degraded as consumers are unable to get yogurt (shortage), but have more butter than they care to buy (surplus).

Market pricing: Producers bid on the milk supply, buying only what they need to supply their customers demands. Customers, who have made their demands known through purchasing decisions, are neither over nor under supplied with dairy products made from milk. The quality of life is improved as consumers find a balance of dairy products that reflects their actual needs on market shelves.

When does economic efficiency *not* lead to a better quality of life for the citizens of that economy?

[Hanarchy Montanarchy]

Even without talking about meaning or purpose, an increase in production efficiency can result in a major hit to an individuals quality of life in a purely economic sense.

A lot of mixed terminology here leading to confusion I think. Economic efficiency covers more than "production efficiency". An "individual's quality of life" may be impacted by factors well outside of the economy, so using any random individual's life to measure the economy is silly.

Economic efficiency does directly lead to increased quality of life for citizens of that economy. Look at milk. Milk can be used for yogurt, ice cream, or butter. How can we allocate the supply of milk to these three different demands, and how does efficiency matter?

Central planning: We can have a body tasked with divvying up the milk supply. They can guess what portion of milk each industry gets. They will inevitably guess wrong (because no one can accurately predict national consumption) which will lead to some shortages or some supluses of butter, yogurt, and ice cream. Quality of life is degraded as consumers are unable to get yogurt (shortage), but have more butter than they care to buy (surplus).

Market pricing: Producers bid on the milk supply, buying only what they need to supply their customers demands. Customers, who have made their demands known through purchasing decisions, are neither over nor under supplied with dairy products made from milk. The quality of life is improved as consumers find a balance of dairy products that reflects their actual needs on market shelves.

When does economic efficiency *not* lead to a better quality of life for the citizens of that economy?

The quality of life for the majority of consumers improves if they all want cheep ice cream, and the market gets it to them. But the quality of life goes down for a yogurt producer who's business collapses.

There are always quality of life conflicts, and efficiency doesn't solve them all, but you are making a case that 'the way society should run' is to maximize efficiency through open markets for the benefit of the average consumer. It isn't wrong, but it is an ethical position.

Obviously, basing your opinion on how the economy is doing on one individuals quality of life is silly, but so is completely ignoring that individuals quality of life for the greater good of a more efficient society.