Anywho, we general-ly (salute) find ourselves agreeing more with the articles written by econ majors than we do poly sci majors.
(Full disclosure: we were once a poly sci major. Whew. Feels good to get that one off the chest.)
Click the links to see what we mean.
Good (in our opinion):
- Critiquing Society by Ryan Fairchild
- Stupor Tuesday by Tim Taylor
- Mitt Can't Blame The Ref by Ryan Decker
- Why Romney Lost by Zach Davis
- Why You Will End Up Voting For Obama by Craig Janis
- Why I'm Voting For McCain by Austin Baird
- So What If Democrats Like McCain? by Robert Liddle
- An Open Letter To The President Of Banana Republic by Tristan Call
Our liberal friends will be happy to note that many of these articles embrace, at the very least, a liberal foreign policy agenda. And though we've mentioned it before, it merits bringing up again in this post: BYU professors politics by-and-large match the politics of their peers at other universities. That is to say, they tend to be Democrats.
Of the 39 or so professors in our major (history), two were registered as Republicans. An informal poll of the poly sci department showed some 80-90% were dems. Economics is probably more conservative/libertarian. Business school is no doubt conservativeish. But if they're in an arts, humanities, social science department(engineering probably leans conservative as well), they're more likely to be left-leaning. We're sure they do their best to be fair. But it's hard not to let your bias infiltrate your teaching. As anyone knows, it's the biases we're not aware of that are often most damaging.
All of this is by the by. Back to BYU PR. The article that annoyed us the most was the protectionist, "open letter to the president of Banana Republic." The condescension of this little article probably matches the condescending tone we use when critiquing other writers' word usage and grammar. Seriously. Take for example, this line:
I am unconvinced by your rationale for not publishing a list of the factories that Gap contracts with. The reasoning, from your online FAQ, was that: “We invest a lot of time, effort and money in identifying factories that meet our product-quality and vendor-compliance standards…We believe it would be unwise to provide a complete list of approved factories for our competitors to use.” Without question, I believe that protection and accountability for labor standards is worth the cost and the competition. I do not accept that obscuring specific and detailed information on particular contracts and factories is necessary for Gap’s financial survival.How, exactly, does Tristan expect Gap to gain a competitive advantage over their rivals if they disclose all of this information? Tristan's lecturing tone belies a total ignorance of economics and business. When confronted by a so-called sweat shop, the only question he should ask is, "can they quit if they want?" That's it. Because if they can, and they don't, it's because their sweat shop job is better than the alternative. And who is he to tell them otherwise? It's that kind of sanctimonious, condescending, know-it-all-ism, that really chaps our asterisk.
His last graph centers on the "excesses" of executive pay. Again, Tristan, it's basic economics. Low level workers get paid like low level workers because they are easily replaced. Top level execs get paid gazillions of dollars because they are not easily replaced. And they do the things that keep Gap in business and employ all the people at those 2000 factories you mentioned. If they weren't doing their jobs or weren't worth the money, they would get fired.
Congratulations, Tristan. You bought the talking points of the protectionists--especially labor unions. They don't care about the environment in Brazil or Chinese working conditions. They just care about their jobs. The truth is, who are we to tell Brazil what to do with their rain forest? Or to tell the Chinese workers that they shouldn't work 15 hour days for 25 cents? Obviously they chose that job because it was better than the alternative.
We'd like to go on and pound on all the fair traders, but it's late, and mom says it's time for us to get off the soap box.
Justin, Spikers, can we agree on free trade?
If you have tips, questions, comments, suggestions, or requests for subscription only articles, email us at lybberty@gmail.com.
16 comments:
In general I favor free trade. I favor government intervention in 2 cases: 1) Where Markets Fail; and 2) where other values (moral, equity, security, etc.) outweigh utilitarian concerns.
Agreed on the first, with caveats--often the market can provide a better solution to its own failure than government can (Consumer Reports overcoming imperfect information, for example).
What do you mean by the 2nd?
Mr. Lybbert, I agree with your comments in general, but there are a few points to clarify.
First, the reasons for paying executives high salaries is not strictly the result of their high value. Companies generally use the mechanism of tying performance to pay through stock options. This mechanism (and not their labor value) often results in executives making huge amounts of money. But again, this goes back to your point, "Are these companies being forced to pay their executives these salaries"? Obviously not.
Second, nothing gets my blood pressure higher than protectionists (both republican and democrat) arguing for labor standards. It is complete nonsense. The paternalistic idea that Americans politicians know better than Bangladeshi parents what is best for their children is ridiculous. It doesn't make sense to assume the irrationality of people in maximizing their own utility or benefit. This supports your assertion that their should be more economic thought in these articles.
I agree on these free trade principles, however, there are issues here that cannot be lumped together. You mentioned the destruction of Brazilian rain forests. Others may mention the enormous amount of pollution that China and India are creating. To a large extent these environmental concerns do not occur in a national bubble and they have a huge affect on the rest of the world. In econ-speak, the externalities are not completely internalized by the countries that produce them. I would not advocate using the "stick" approach that most protectionists advocate to punish these countries for their environmental destruction. If Western world values these resources more than their native locations we should be willing to pay them their net present value in return for their willingness to protect them. Because of their income constraints these countries may place a contingent value on resources (clean air, rain forest, endangered species) that may be undervalued by Western standards. In these cases I believe that transfers and policies should be pursued. In short, the free market doesn't get it right.
Matt:
I am unconvinced that maximizing utility should always be societies ultimate goal. For example, our "war on terror" cannot be understood in utilitarian terms. Our response to 9/11 is probably not justified in utilitarian terms. The costs of the "war on terror" are likely to far outweigh any benefits therefrom. However, justice and security concerns outweigh utilitarian concerns.
Another example is prominent in many social welfare programs. Many social welfare programs do not maximize utility. Instead, those societies have chosen equity and social solidarity as the ultimate goals.
Perhaps the best example comes from Constitutional Rights. Voting rights the right to free speech (even dangerous, profane, or hate speech) should be protected, and have been protected, even when that protection could not be justified in utilitarian terms.
And all this time I thought you were still majoring in pop culture :)
Dallas
Mr. Lybbert,
How about a "vote for Bush and Dick" poll. Given the current choices I would be look seriously at 4 more years. I am curious to see if anyone else would have the same dilemma.
Spikers,
There is a difference between cost/benefit and utility. You cannot transition seamlessly between the costs/benefits of the war on terror and the utility maximizing approach to the war on terror. I agree that not all things can be measured in utility, but the government measures human life in dollar values all the time. For example, according the EPA the market value of a human life right now is between 6 and 10 million dollars.
Branden:
The following comes from John P. Burkett's book Microeconomic: Optimization, Experiments, and Behavior
"An activity is worth undertaking if and only if its cost is less than its benefit. For this principle to be meaningful, cost and benefit must be measured in comparable units... [Typically money]...When Choosing among alternative activities that use the same resources, a decision make using the cost-benefit criterion chooses the activity with the greatest benefit. Decision makers who consistently apply the cost-benefit criterion are termed utility maximizers."
What you are arguing is simply for an expanded framework for estimating costs and benefits. You are not the first one to suggest expanding economic valuations in economic models. Economists and other academics have recommended that issues such as freedom, rights, diversity, gender, and other values be included in broader cost-benefit analysis.
The problem is that things like voting rights, justice, access to the courts, due process of law, etc, are not easily estimated. Even the value of life estimates are somewhat controversial, to say the least.
Regarding the "war on terror,": there are few people who advocated that we do nothing in response to 9/11. I beleive, that even if we knew we would spend far more than we would gain from taking action, people would have still urged that we take action in Afghanistan. Perhaps this is because people place high value on justice.
There are estimates that 9/11 cost anywhere from a few hundred billion to $2 trillion.
We have already spent some $700 billion dollars fighting the "war on terror" and will likely spend trillions more. Then there is the cost in lost American lives, lost freedoms (patriot act, wiretapping), not to mention the money we are spending to rebuild the nations we knocked down. In sum, we are likely to spend a lot prosecuting this war. [see http://www.fas.org/sgp/crs/natsec/
RL33110.pdf].
Now the benefits from this war are basically the decreased probability of getting hit with another terrorist attack (security), and then other values which are difficult to put in dollar terms (i.e. justice).
My feeling is that our government has failed to wage an effective war. We have spilled blood and spent treasure, but what have we gained? The costs of the war will likely greatly outweigh the benefits of the war. Thus, it is not easy to justify the war in utilitarian terms.
Some may claim that the public derives utility from the war, through increased feelings of safety, or that justice is being served, or that we are bringing democracy to the world, etc. But public opinion polls seem to refute that claim. Most people want out of Iraq. I think that is because people see that costs are outweighing the benefits.
Spikers:
My only objection to your original post was that when analyzing the war costs and benefits there must be a consistent unit of measurement. Utils and dollars both present their own host of measurement problems as we both understand. It is apparent that you understand this and that I was splitting hairs. I agree that there are issues where this is troublesome and in some cases impossible. I'm sure you would agree that it is difficult to place a dollar value on equity despite our religious/moral/social motivations to obtain more of it.
Interestingly enough, making a decision on the Iraq war requires us to stand outside of an economic framework and make emotional and moral valuations. Although I don't hold your view that the war should end, I do feel that the Bush Administration should have been more up front with the costs and not kept them off-budget. If the war is worth it we should have collectively "ponied up" and either raised to taxes to pay for it or cut spending in other areas.
Agreed
I think some Econ heroes who have "ponied up" for their country by being arm-chair quarterbacks and posting on this blog are missing the complete point of the war on terror or a war in general.
That was matt b. Matt, distinguish thyself. I have sole ownership of the blogger id "matt".
Also, please elaborate your point. I think the discussion of costs and benefits is interesting and informative. What point has been missed?
Matt L
Could an Obama supporter please explain to me why during his opening statement in the debate he ripped on NAFTA and its effect on Ohioans and Texans and then 15 minutes later he said in response to immigration that we need to work on strengthening the Mexican economy. What the heck does he think that the point of NAFTA was? I'm befuddled.
He was simply pandering to the voters. You cannot take statements made at debates or on the campaign trail at face value. Pragmatic politicians often speak out of both sides of their mouths.
So we should elect people not based on what they say but what we hope that they believe deep down inside? Or our hope for their pragmatism. Is this the "hope" that Mr. Obama has been marketing? I concede that the Democrats do not have a monopoly on this silliness. Am I an idealist to think that there must be a better way? Perhaps, but I don't believe pragmatists must make stupid comments out of political necessity.
So Matt B., what is "the complete point of the war on terror or a war in general?"
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