Economic (Mis)Education in Europe

[mheslep]

I suggest you check out the World Bank who compile these figures and read their definition and methodology. http://extsearch.worldbank.org/servlet/SiteSearchServlet?q=gdp ppp&dPgLang=ENG Many of those other factors you allude to are now included in the calculations. It may not give a perfect comparison in standards of living but it's the best indicator available and I would suggest more useful than comparing refuse collection costs.

Yes I am familiar with the method. The PPP calculation can get complicated but at the end its still basically GDP/PPP. The 'other factors' I referred to above especially include government subsidies. Sorry to give http://en.wikipedia.org/wiki/Purcha...es_with_PPP_comparisons_in_welfare_economics" ala Yonoz here but I am short on time:

Differing levels of government involvement in social spheres further complicate development of good CPI baskets (and, consequently, PPP measurements). For example, in 1986, nominal GDP of the United States was almost 4 times larger than the nominal GDP of the Soviet Union (on a per capita basis). Direct comparison failed to capture, however, that the Soviet Union provided free ... higher education and free healthcare to all its citizens, whereas Americans had to pay for education and healthcare themselves. To properly account for differences in quality of life in this situation, the CPI basket would have to include these expenditures explicitly. More importantly, government subsidies can potentially have large effect on consumption levels (free higher education will result in more college graduates), making it difficult to choose weights for individual components of CPI.

 

[LydiaAC]

LydiaAC, I have read that in some places in Mexico Indians do not know how to speak Spanish, only the old Indian languages. Is this true? In the Indian towns do they speak Spanish or an Indian language?

I do not know exactly the number but the percentage of Indians who do not speak Spanish is significant. Most of them live in Indian towns. The gender distribution is not uniform: there are more women who does not speak Spanish than men. Indians who live in non-Indian cities learn at least a little of Spanish and in Baja California, a little of English.

I would like to comment about something related with capitalism. In a forum, a mother complained about Latin America Discovery Kids Channel because, although presents shows which promote good nutrition, they make publicity of non-nutritional food. A participant, who was fond of capitalism, reacted aggressively, and called her f*** communist and asked with sarcasm what she thought that the channel make money, if she thought that the channel could be sustained by the tomato farmers and so on.
I thought that, still in the spirit of capitalism, what that mother asked was not unreasonable. She was asking for a product "a TV channel who promotes good nutrition in shows and announcements". A TV business could opt for offering that product and maybe they must charge more money for it, because the publicity would be scarce. If the TV viewers and the TV business could find an arrangement which satisfy everybody, both parts would be better off. What does this have to do with communism?
To say that free markets are a way in which the humans can associate freely and without coercion is not the same that say that free markets are the only way in which humans must be allowed to associate. The above example is still in the logic of free markets but there is a lot of examples in which humans associate freely outside of free markets like in the case of open source software or Wikipedia.

 

[denverdoc]

Agreed, the free market premise that value has anything to do with price exercises tortured logic where we assume comfort of a few is a price many are willing to pay, and ignores the unholy incomes of many athletes, movie stars, CEO's compared to say a bus driver or school teacher. To me the value of a teacher is self evident, the CEO pawning unneeded crap thru ever more powerful media is not.

 

[Economist]

To me the value of a teacher is self evident, the CEO pawning unneeded crap thru ever more powerful media is not.

Well, it's not up to you to decide. The "value" of these professions have been worked out through numerous decision makers and markets processes. For you to sit back and say that you "disagree" with this outcome is to second guess the decisions made by a large amount of independent decision makers. And frankly it's arrogant and a bit elitist to think that you have the knowledge and judgement to be able to second guess this process.

 

[Smurf]

Well, it's not up to you to decide. The "value" of these professions have been worked out through numerous decision makers and markets processes. For you to sit back and say that you "disagree" with this outcome is to second guess the decisions made by a large amount of independent decision makers. And frankly it's arrogant and a bit elitist to think that you have the knowledge and judgement to be able to second guess this process.

Well I think it's arrogant and elitist of you to think you can second guess the complex historical processes involving millions of decision makers that resulted in the current economic ideas of Europe. HOW DO YOU KNOW it's not just part of a master plan leading us into an eternal utopia!? HUH HUH!?

 

[CaptainQuasar]

Well, it's not up to you to decide. The "value" of these professions have been worked out through numerous decision makers and markets processes. For you to sit back and say that you "disagree" with this outcome is to second guess the decisions made by a large amount of independent decision makers. And frankly it's arrogant and a bit elitist to think that you have the knowledge and judgement to be able to second guess this process.

Dude - you realize that you're almost literally saying "the Market is God" don't you? His wisdom is beyond human ken, hubris alone questions it.

"Pish! Value need have nothing to do with reality!" is the Enron mindset. By conflating market price with the general concept of value you are attributing far more insight to the Invisible Hand than is warranted or even rational. Urging that everyone surrender their personal judgment of value - and criticizing failure to do so as arrogance - demonstrates a fundamentally superstitious appraisal of reality.

Yeah, markets are handy tools economically, mathematically, and systemically, but they aren't some general magic wand and they don't have the oracular powers that you're attributing to them. You're granting authority to inanimate objects (or inanimate patterns, at least) and advancing a Shamanic Fetishist interpretation of economics.

 

[denverdoc]

Well, it's not up to you to decide. The "value" of these professions have been worked out through numerous decision makers and markets processes. For you to sit back and say that you "disagree" with this outcome is to second guess the decisions made by a large amount of independent decision makers. And frankly it's arrogant and a bit elitist to think that you have the knowledge and judgement to be able to second guess this process.

Well, OK. But when so much relies on powerful marketing tools, misinformation, and human foibles, I have to second guess. If the world were to suffer from some plague tomorrow, good luck with your market choices. I'll stick with mine.

 

[Economist]

Well I think it's arrogant and elitist of you to think you can second guess the complex historical processes involving millions of decision makers that resulted in the current economic ideas of Europe. HOW DO YOU KNOW it's not just part of a master plan leading us into an eternal utopia!? HUH HUH!?

I personally think there is a big difference between decisions made in a market context, where individuals voluntarily interact with one another, and decisions made in a political context were majority rules, and people can personally vote for policies that harm other people. Markets are not a zero-sum game, while politics and democracy on the other hand are.

The point is that prices (which includes wages) are very complex phenomenon that occur through large numbers of decision makers. One of the main reason that socialism doesn't work is that it's much to difficult for small numbers of individuals to correctly set prices. Hayek talks very intelligently about this, and if you don't know how important a role prices play I would suggest any introductory textbook on microeconomics.

Dude - you realize that you're almost literally saying "the Market is God" don't you? His wisdom is beyond human ken, hubris alone questions it.

"Pish! Value need have nothing to do with reality!" is the Enron mindset. By conflating market price with the general concept of value you are attributing far more insight to the Invisible Hand than is warranted or even rational. Urging that everyone surrender their personal judgment of value - and criticizing failure to do so as arrogance - demonstrates a fundamentally superstitious appraisal of reality.

Yeah, markets are handy tools economically, mathematically, and systemically, but they aren't some general magic wand and they don't have the oracular powers that you're attributing to them. You're granting authority to inanimate objects (or inanimate patterns, at least) and advancing a Shamanic Fetishist interpretation of economics.

I don't even think markets are God. If they were, they'd be perfect. The fact is, markets are far from perfect (although they do work pretty darn well). The real question is how well markets work compared to other realistic alternatives. Usually the most realistic alternative is politics, which is even less perfect than markets.

Well, OK. But when so much relies on powerful marketing tools, misinformation, and human foibles, I have to second guess. If the world were to suffer from some plague tomorrow, good luck with your market choices. I'll stick with mine.

Marketing plays a role, but everyone markets, so it probably generally works out were the best products are the ones that stick around. Do you realize how many companies (even ones that market) go out of business every year? Do you also realize that research has showed that advertising actually decreases prices (by increasing competition)?

What are you talking about with the plague? If a plague happened, most survivors would have a very tough life, specifically because many markets would probably break down.

 

[DrClapeyron]

Economist, you say prices are complex phenomena but you tend to throw around statements such as PPP, GDP, and GNP. These are simple tools given in intro econ courses to students to show them how an economist should think. You cannot measure two economies like the US and the UK simply by using these tools. Politics makes a world of difference and majority rarely is a deciding factor in business and politics where it is more about owning volume over votes or opinions.

 

[Economist]

Economist, you say prices are complex phenomena but you tend to throw around statements such as PPP, GDP, and GNP. These are simple tools given in intro econ courses to students to show them how an economist should think. You cannot measure two economies like the US and the UK simply by using these tools. Politics makes a world of difference and majority rarely is a deciding factor in business and politics where it is more about owning volume over votes or opinions.

Actually, things like controlling for inflation and PPP indexes are used in order to help one control for prices and draw insightful conclusions from the data. I am not saying they're perfect, but rather that they're pretty good and by far the best measures we have. What would be your measures to compare citizens across time, or to compare standard of living across the globe?

 

[CaptainQuasar]

Dude - you realize that you're almost literally saying "the Market is God" don't you?

I don't even think markets are God. If they were, they'd be perfect. The fact is, markets are far from perfect (although they do work pretty darn well). The real question is how well markets work compared to other realistic alternatives. Usually the most realistic alternative is politics, which is even less perfect than markets.

You didn't say anything about politics, you said that human judgment is an alternative that is inadequate to make decisions different from the results of arbitrage and price equilibriums in markets. You said that an attempt to do so would be "arrogant and elitist". That's regarding market outcomes as something akin to God's Law, which shalt not be questioned.

Knowing that you think this is quite significant to understanding the various views you've presented here and in other threads deriding anything outside of corporate competition as a solution to social problems.

I hate to break it to you, man, but your views literally do have the Enron mindset at their core. Have you seen http://en.wikipedia.org/wiki/Enron:_The_Smartest_Guys_in_the_Room" ? It's entirely apropos to this conversation.

But for the record, I would agree with you that "socialist" type efforts would do well to make more extensive use of market mechanisms as a tool. The California pollution control credit system is an example of a regulatory restricting-commerce-for-the-greater-good measure that leverages a market mechanism. I'm just not putting markets on quite the pedestal that you are.

(This is also what I meant by saying that the Soviet implementation of communism suffered from being drawn on an 1870's understanding of capitalism. If communism were implemented today it would use market mechanisms and active competition, I'm certain, while still keeping enterprise capital in the hands of the state.)