ObamaCare - exchanges ,report your states options!

[BigBallinStalin]

For example, would you say that the utility of a person with "basic needs + $1" is greater than the utility of a person with “99% basic needs”? With your current position, you must say, “Yes.”

No, I must not. My position is that the marginal utility of $10 is much more to the average person whose net worth is $10 than to the average person whose net worth is $100,000, and so total utility would be increased if everyone who had $100,000 gave $10 to everyone who had $10. If you do not agree with this, then we aren't starting from anywhere near the same place, and this isn't worth discussing.

The underlined doesn't follow. You don't have access to people's utility functions; you simply presume that you do--without explanation. That's like saying, "assume I know about things which I can't know. Therefore, I'm right."

Except, you make that assumption yourself when you claim that the markets can properly assess these things.

I don't require knowledge of people's utility functions for comparative institutional analysis.

There's a 80% chance that your next post will be more vague than your previous post.
There's a 99.99% chance that you won't present any evidence--except for whatever your imagination conjures up.

[Metsfanmax]

For example, would you say that the utility of a person with "basic needs + $1" is greater than the utility of a person with “99% basic needs”? With your current position, you must say, “Yes.”

No, I must not. My position is that the marginal utility of $10 is much more to the average person whose net worth is $10 than to the average person whose net worth is $100,000, and so total utility would be increased if everyone who had $100,000 gave $10 to everyone who had $10. If you do not agree with this, then we aren't starting from anywhere near the same place, and this isn't worth discussing.

The underlined doesn't follow. You don't have access to people's utility functions; you simply presume that you do--without explanation. That's like saying, "assume I know about things which I can't know. Therefore, I'm right."

The explanation is obvious. If you give a guy with a net worth of $10 another $10, you've doubled his net worth. He can go buy something cheap at a diner with that. He probably doesn't get to do that often. The guy with $100,000 can go get fries and a soda whenever he wants to; it's not special to him. Like I said, if you don't believe that $10 is worth more to the former guy than the latter -- on average -- then I'm not going to bother discussing this with you.

[BigBallinStalin]

I understand the 'on average' part. Good luck with the inability to find a valid unit of measurement for making interpersonal comparisons of utility.

Let's clarify your position.

1. What is your desired goal?

2. What are the means to attain that end?

[Metsfanmax]

Let's clarify your position.

1. What is your desired goal?

2. What are the means to attain that end?

My goal is to advance the position that people should feel morally obligated to share their wealth with people who are poorer than they. The means I am using to attain that end are arguing about on an internet message board.

So all of your comments about not being able to compare utility between people are irrelevant. Find at least one poor person who wants your money more than you do, and give it to them.

[Phatscotty]

[AOL] will now pay its 401(k) company match only to employees who are active on Dec. 31 of that year, as opposed to in their paychecks throughout the year. So those who leave the company before the end of the year will forfeit the match. AOL CEO Tim Armstrong blamed $7.1 million in additional Obamacare costs the company is facing this year. Had the company not made the change in its 401(k) payments, employees would have seen their health insurance costs increase, he told CNN Thursday.

http://money.cnn.com/2014/02/06/news/ec ... ?hpt=hp_t3

Arianna Huffington still own AOL??

[BigBallinStalin]

Let's clarify your position.

1. What is your desired goal?

2. What are the means to attain that end?

My goal is to advance the position that people should feel morally obligated to share their wealth with people who are poorer than they. The means I am using to attain that end are arguing about on an internet message board.

So all of your comments about not being able to compare utility between people are irrelevant. Find at least one poor person who wants your money more than you do, and give it to them.

Thanks for clarifying. You've been through a dizzying amount of positions, ranging from redistribution, 100% equality, pro-slavery, and what not. I can't really comment about your last paragraph because my criticism would be valid against some of your positions yet irrelevant to others because your standards/degree of required validity/etc. keep changing <shrugs>. Again it's impossible to debate someone with constantly shifting positions.


Anyway, your criteria would've been satisfied under the relative laissez-faire in pre-1900 USA. Was that your intention?

In other words, plenty of people have and do feel morally obligated to help others--e.g. their friends and family, or even complete strangers (to varying degrees). We can treat that moral position as a given and then compare various institutions which (1) either promote or discourage that moral position and which (2) attain similar outcomes--regardless of the moral position.

[Metsfanmax]

Let's clarify your position.

1. What is your desired goal?

2. What are the means to attain that end?

My goal is to advance the position that people should feel morally obligated to share their wealth with people who are poorer than they. The means I am using to attain that end are arguing about on an internet message board.

So all of your comments about not being able to compare utility between people are irrelevant. Find at least one poor person who wants your money more than you do, and give it to them.

Thanks for clarifying. You've been through a dizzying amount of positions, ranging from redistribution, 100% equality, pro-slavery, and what not. I can't really comment about your last paragraph because my criticism would be valid against some of your positions yet irrelevant to others because your standards/degree of required validity/etc. keep changing <shrugs>. Again it's impossible to debate someone with constantly shifting positions.

It would behoove you to learn how to evaluate an argument without needing to think of it as me holding a "position." An argument is an argument, regardless of who is saying it or what their motivation is.

Anyway, your criteria would've been satisfied under the relative laissez-faire in pre-1900 USA. Was that your intention?

Did people in pre-1900 USA mostly feel obligated to share a substantial portion of their wealth with people much poorer than them?

In other words, plenty of people have and do feel morally obligated to help others--e.g. their friends and family, or even complete strangers (to varying degrees). We can treat that moral position as a given and then compare various institutions which (1) either promote or discourage that moral position and which (2) attain similar outcomes--regardless of the moral position.

If that moral position were a given, then we wouldn't need institutions to achieve it, because people would just give on their own. But they largely don't. The median donation to charity for American households is under $1,000 every year, while the median income is like $45,000. Since something like half of all donations go to religious and educational institutions, the most generous estimate is that the median donation to the poor is about 1% of income.

[BigBallinStalin]

Let's clarify your position.

1. What is your desired goal?

2. What are the means to attain that end?

My goal is to advance the position that people should feel morally obligated to share their wealth with people who are poorer than they. The means I am using to attain that end are arguing about on an internet message board.

So all of your comments about not being able to compare utility between people are irrelevant. Find at least one poor person who wants your money more than you do, and give it to them.

Thanks for clarifying. You've been through a dizzying amount of positions, ranging from redistribution, 100% equality, pro-slavery, and what not. I can't really comment about your last paragraph because my criticism would be valid against some of your positions yet irrelevant to others because your standards/degree of required validity/etc. keep changing <shrugs>. Again it's impossible to debate someone with constantly shifting positions.

It would behoove you to learn how to evaluate an argument without needing to think of it as me holding a "position." An argument is an argument, regardless of who is saying it or what their motivation is.

I'll clear this up, so I don't have to address this again. It really doesn't matter if I equivocate 'position' and 'argument'. For example, "it's impossible to debate someone with constantly shifting arguments " (like this scenario). By 'your position', I mean the one you're presenting. Nothing about your motivations or who you are have affected my arguments because I don't care who you are or what your underlying motivation is (except for the stated motivation/intention in the argument).

Anyway, your criteria would've been satisfied under the relative laissez-faire in pre-1900 USA. Was that your intention?

Did people in pre-1900 USA mostly feel obligated to share a substantial portion of their wealth with people much poorer than them?

Initially, your position was: "people should feel morally obligated to share their wealth with people who are poorer than they."

But now, you've changed the criteria. Note the italicized.

So, what's your position now? The first one or this most recent one? I can't address future positions.

In other words, plenty of people have and do feel morally obligated to help others--e.g. their friends and family, or even complete strangers (to varying degrees). We can treat that moral position as a given and then compare various institutions which (1) either promote or discourage that moral position and which (2) attain similar outcomes--regardless of the moral position.

If that moral position were a given, then we wouldn't need institutions to achieve it, because people would just give on their own. But they largely don't. The median donation to charity for American households is under $1,000 every year, while the median income is like $45,000. Since something like half of all donations go to religious and educational institutions, the most generous estimate is that the median donation to the poor is about 1% of income.

Institutions are 'rules of the game'. The institution of charity has rules. Therefore, you would need institutions to attain your goal.
Think of "morality" as a given, a control variable, a condition against the backdrop of a society. If you change the morality of a society, would you get similar outcomes? (rhetorical question for now). For that question to be meaningful, you'd need to have other relevant variables--e.g. economic institutions Z, political institutions, X, etc. The rest of my response about comparative institutional analysis and attaining similar results regardless of morality still follows.

I can't address the rest because I don't know what your past/current/future position was/is/will be.

[Phatscotty]

Either you are for redistribution of the wealth, or you are against it. Either you are for class warfare, or you are against it. Either you are a Socialist, or you aren't. Either you think Marx was right, or you don't. No Freedom is going to overrule the dedicated Socialist's belief in their version of equality, redistribution of wealth, constantly expanding central power, or the collective mindset; and no guilt trip is going to get a principled Free Marketeer to give up on individuality, economic Freedom, Liberty, or the Constitution.



FLAWLESS VICTORY!

[Night Strike]

If that moral position were a given, then we wouldn't need institutions to achieve it, because people would just give on their own. But they largely don't. The median donation to charity for American households is under $1,000 every year, while the median income is like $45,000. Since something like half of all donations go to religious and educational institutions, the most generous estimate is that the median donation to the poor is about 1% of income.

They don't because the government already takes massive amounts of money from them in the name of helping the poor (even though they haven't helped the poor for 50 years).

Besides, why are YOU living a life of having a computer, and spending tons of time on a gaming website? Shouldn't you be giving all that to people who are worse off than you since that's your standard of someone having only $10 would be better off with your $10?

[Metsfanmax]

I'll clear this up, so I don't have to address this again. It really doesn't matter if I equivocate 'position' and 'argument'. For example, "it's impossible to debate someone with constantly shifting arguments " (like this scenario). By 'your position', I mean the one you're presenting. Nothing about your motivations or who you are have affected my arguments because I don't care who you are or what your underlying motivation is (except for the stated motivation/intention in the argument).

My point is that you shouldn't be attempting to "debate someone." The goal of this discussion should not be for you to have an argument with Metsfanmax. It's to learn about various issues related to redistribution of wealth.

Anyway, your criteria would've been satisfied under the relative laissez-faire in pre-1900 USA. Was that your intention?

Did people in pre-1900 USA mostly feel obligated to share a substantial portion of their wealth with people much poorer than them?

Initially, your position was: "people should feel morally obligated to share their wealth with people who are poorer than they."

But now, you've changed the criteria. Note the italicized.

So, what's your position now? The first one or this most recent one? I can't address future positions.

Formally, my position is that people are morally obligated to share their wealth with people who are substantially poorer than them in an absolute sense. They should continue to give until the decrease in their pleasure with their lifestyle is a substantial fraction of the increase in the pleasure of the person receiving the wealth. For example, I think that a person with a salary of $100,000 could easily give 10% of their income without fundamentally impacting their way of life, while simultaneously doubling the income of 30 people in Africa.

They don't because the government already takes massive amounts of money from them in the name of helping the poor (even though they haven't helped the poor for 50 years).

You mean, the poor in the U.S.? What about the poor in Africa? The US government spends a pittance on that relative to GDP.

Besides, why are YOU living a life of having a computer, and spending tons of time on a gaming website? Shouldn't you be giving all that to people who are worse off than you since that's your standard of someone having only $10 would be better off with your $10?

Yes, I am being selfish and not acting to the full standard that my moral system dictates. But it does give me something to strive for, and I'm slowly trying to improve the amount I donate. This is not unreasonable; people pick moral systems all the time that they don't fully live up to, as a way to guide them (i.e., people often think that Christ was a good role model, but how many of us are Christ-like in all of our actions? Does that mean that we should give up on him?).

[BigBallinStalin]

I'll clear this up, so I don't have to address this again. It really doesn't matter if I equivocate 'position' and 'argument'. For example, "it's impossible to debate someone with constantly shifting arguments " (like this scenario). By 'your position', I mean the one you're presenting. Nothing about your motivations or who you are have affected my arguments because I don't care who you are or what your underlying motivation is (except for the stated motivation/intention in the argument).

My point is that you shouldn't be attempting to "debate someone." The goal of this discussion should not be for you to have an argument with Metsfanmax. It's to learn about various issues related to redistribution of wealth.

Whoa, lemme recover from the constant position-shifting. I'm familiar with redistribution arguments. I know how to improve them, but why debate with myself? I'm still going to pressure you to make more coherent and valid arguments. If you feel some emotional attachment to your argument, then that's on you.

Anyway, your criteria would've been satisfied under the relative laissez-faire in pre-1900 USA. Was that your intention?

Did people in pre-1900 USA mostly feel obligated to share a substantial portion of their wealth with people much poorer than them?

Initially, your position was: "people should feel morally obligated to share their wealth with people who are poorer than they."

But now, you've changed the criteria. Note the italicized.

So, what's your position now? The first one or this most recent one? I can't address future positions.

Formally, my position is that people are morally obligated to share their wealth with people who are substantially poorer than them in an absolute sense. They should continue to give until the decrease in their pleasure with their lifestyle is a substantial fraction of the increase in the pleasure of the person receiving the wealth. For example, I think that a person with a salary of $100,000 could easily give 10% of their income without fundamentally impacting their way of life, while simultaneously doubling the income of 30 people in Africa.

You mean people in Africa who make less than $2 a day? Or the homeless guy in the US down the street? One is 'absolutely' poor within the US; the other is 'absolutely' poor within the world (but he's richer than the guy with <$1 per day).

Well, we know the measurement standard for that is inappropriate for science and inaccurate for laypersons. You disagree for reasons which weren't convincing. So, we'll skip that and focus here:

It could easily follow that one must place the most poor above their children, their friends, and even themselves. So, you should increase your income, lower your time with your friends, lower your investment in your own social capital, and lower time spent mating in order to donate to others. Why? One should continue to give until the decrease in their pleasure with their lifestyle is a substantial fraction of the increase in the pleasure of the person receiving the wealth. When do you know to stop? I don't, so (1) it's a silly standard, and (2) to get around it, why not assume each person knows their best optimum within a voluntary system of donations?

I agree with italicized if that's the only expenditure. Of course, when you add 50% in marginal tax rates, then it won't work because there'd be no need to donate. For example, a substantial portion of the 50% in taxes goes to poor people, so it will satisfy that unknown interpersonal utility requirement.


More importantly, charity can only go so far in helping people, so there's other means to help people (employing them, bringing them to the US, analyzing their country to understand what's wrong, analyzing current policies which are well-intended yet detrimental to them, etc.). I'm sure you'd agree with that, right? Why only focus on redistribution? Why not focus on how wealth is created?

[Metsfanmax]

Formally, my position is that people are morally obligated to share their wealth with people who are substantially poorer than them in an absolute sense. They should continue to give until the decrease in their pleasure with their lifestyle is a substantial fraction of the increase in the pleasure of the person receiving the wealth. For example, I think that a person with a salary of $100,000 could easily give 10% of their income without fundamentally impacting their way of life, while simultaneously doubling the income of 30 people in Africa.

You mean people in Africa who make less than $2 a day? Or the homeless guy in the US down the street? One is 'absolutely' poor within the US; the other is 'absolutely' poor within the world (but he's richer than the guy with <$1 per day).

Utility is maximized if you give to the people in Africa rather than the people in the U.S.

Well, we know the measurement standard for that is inappropriate for science and inaccurate for laypersons. You disagree for reasons which weren't convincing.

I have not attempted to promote a measurement standard for that. Each person must decide for themselves at what point giving more money starts to seriously infringe on their fundamental way of life. What I am trying to do is convince them that 1) they should give within that framework and that 2) giving up going to the movies and buying unnecessary toys does not infringe upon their way of life. In fact, there are many ways to alter one's consumption profile to decrease total costs and give more to charity, and giving 5% or 10% is not that hard if you want to do it.

It could easily follow that one must place the most poor above their children, their friends, and even themselves. So, you should increase your income, lower your time with your friends, lower your investment in your own social capital, and lower time spent mating in order to donate to others. Why?

Because that's what acting morally is about, if you are interested in maximizing utility. If I buy my child the newest gadget rather than having them read books (say), I am implicitly saying that it is better for the world for my child to have the toy, rather than for a person in Africa to have food for half a year. Why? Because they happen to be my child? Does that make them somehow more worthy of these funds than the person in Africa?

One should continue to give until the decrease in their pleasure with their lifestyle is a substantial fraction of the increase in the pleasure of the person receiving the wealth. When do you know to stop? I don't, so (1) it's a silly standard, and (2) to get around it, why not assume each person knows their best optimum within a voluntary system of donations?

Each person decides for themselves when to stop. They balance their obligations under the moral system with the other obligations in their life (paying the bills, buying groceries, etc.) and decide how moral they want to be (essentially). If you believe in acting morally, then with time you will try to shift more of your wealth towards the former. Surely there are demands of utilitarianism that very few are prepared to accept, since humans are irrational, self-interested creatures by their nature (and it is this which makes utilitarianism meaningful in the first place -- people want to experience pleasure and avoid pain). That doesn't negate the fact that any action to increase utility is morally commendable.

Also, charity can only go so far in helping people, so there's other means to help people (employing them, bringing them to the US, analyzing their country to understand what's wrong, analyzing current policies which are well-intended yet detrimental to them, etc.). I'm sure you'd agree with that, right? Why only focus on redistribution? Why not focus on how wealth is created?

I don't only focus on redistribution. My argument is that when redistribution is not in conflict with other methods of wealth creation (like extending markets to developing nations), then you should do it.

[BigBallinStalin]

In other words, people should be morally obligated to donate some amount of their goods to very poor people since this increases the net utility of the world.

Let's address the situation where donating can conflict with the means of creating wealth for the very poor.

To be clear, a donation is a transfer of wealth. In terms of wealth alone, this is zero-sum. In terms of utility, this is positive-sum (given that the donation is voluntary, of course). An exchange is a creation of wealth because in an exchange ex-ante each party values the other party's good more so than their own good. After the exchange, each party has increased their value (i.e. wealth). In terms of either wealth or utility, they are both positive-sum. We're assuming that utility is an increasing function in wealth and donations.

Now, suppose you pay $10 for a T-shirt that's been imported from an Indonesian 'sweat-shop'. Your $10 becomes distributed among the chain of suppliers--from the retailer, shipper, sweat-shopper, and the suppliers of labor within each market. Consequently, your exchange increases the net wealth of the world, and net utility has increased since additional wealth causes utility to increase. Net wealth: >$10--in terms of total value. Net utility: +something + wealth (i.e. the value created from exchange).

If you were instead to donate $10 to one of the many workers in the sweat-shop, then you forego the opportunity to increase the wealth and utility of all the other very poor workers in that sweat-shop as well as everyone (of varying wealth) in the production process. In other words, donating has a cost (the opportunity cost), and an exchange has an opportunity cost (from whatever else you could've done with $10). In this example, net wealth: $0. Net utility: +something + 0(wealth).


In short, since we live in a world of scarcity every action of ours incurs a cost. In the trade-off between donating and trading in terms of maximizing utility, trading increases utility on average more so than donation. So, why not opt for 100% trade and 0% donation*?

*tangent: and for that matter, why not advocate for the abolishment of international trade restrictions?

[Lootifer]

Good discussion welcome back BBS.

Re: ex-ante

Isn't this the wrong way to look at the marginal utility of transactions*? Shouldn't you be looking at ex-post? And in our world i'd hazard to guess there is a reasonable difference between the two (primarily because of our sales/marketing/ticket-clipping culture).

* Though I agree it's the best way to look at the marginal wealth of transations

Re: 2nd and 3rd to last paragraphs.

Isn't net wealth creation due to the tshirt being manufactured, with the marginal cost to produce a tshirt being significantly less than the $10 price tag? For example logistics and marketing don't create any wealth. Sure you need to divide the CoP by the difference in indonesian efficiency compared to local brown paper bag efficiency but I still don't see how you can just claim >$10 in terms of net wealth.

[Metsfanmax]

In other words, people should be morally obligated to donate some amount of their goods to very poor people since this increases the net utility of the world.

Let's address the situation where donating can conflict with the means of creating wealth for the very poor.

To be clear, a donation is a transfer of wealth. In terms of wealth alone, this is zero-sum. In terms of utility, this is positive-sum (given that the donation is voluntary, of course). An exchange is a creation of wealth because in an exchange ex-ante each party values the other party's good more so than their own good. After the exchange, each party has increased their value (i.e. wealth). In terms of either wealth or utility, they are both positive-sum. We're assuming that utility is an increasing function in wealth and donations.

Now, suppose you pay $10 for a T-shirt that's been imported from an Indonesian 'sweat-shop'. Your $10 becomes distributed among the chain of suppliers--from the retailer, shipper, sweat-shopper, and the suppliers of labor within each market. Consequently, your exchange increases the net wealth of the world, and net utility has increased since additional wealth causes utility to increase. Net wealth: >$10--in terms of total value. Net utility: +something + wealth (i.e. the value created from exchange).

If you were instead to donate $10 to one of the many workers in the sweat-shop, then you forego the opportunity to increase the wealth and utility of all the other very poor workers in that sweat-shop as well as everyone (of varying wealth) in the production process. In other words, donating has a cost (the opportunity cost), and an exchange has an opportunity cost (from whatever else you could've done with $10). In this example, net wealth: $0. Net utility: +something + 0(wealth).


In short, since we live in a world of scarcity every action of ours incurs a cost. In the trade-off between donating and trading in terms of maximizing utility, trading increases utility on average more so than donation. So, why not opt for 100% trade and 0% donation*?

*tangent: and for that matter, why not advocate for the abolishment of international trade restrictions?

Your conclusion simply does not follow from your premises, for several reasons. First, you incorrectly assume that utility creation is not counted positively as part of an exchange, but this is wrong to the extent that it might make me personally happy to donate money to others. Therefore, the donation does create wealth, if we broadly count my happiness as part of the world's net wealth. (And there are practical reasons to do so -- my happiness might translate into increased productivity, say.) Second, while in the exchange I do have the T-shirt, this is offset by the costs of producing the shirt; the $10 is therefore paying the cost of labor, but if I had just donated the $10, that time could have been spent producing a T-shirt for someone else, so they get both the $10 from my donation and the $10 from somebody else buying a shirt. This assumes that the T-shirt market is not affected by my individual decision not to buy one*, which seems obvious given the number of people buying T-shirts in the U.S. Third, your argument about how only one person gets the money is a non-sequitur; if these people are of similar wealth then net utility is increased the same if I give it all to one person, or split it equally among the workers. But in either case I could just split up the money among those workers the same way, and receive the same net effect (minus the T-shirt). Fourth, in any likely scenario, a good fraction of that $10 will not make it to the poorest workers, but will stay with the managers, who don't need it as much. Fifth, there's not even an opportunity cost. We're not talking about whether someone is going to buy a bunch of T-shirts that they don't need, as an inefficient method of cash transfer to the poor, are we?

*Many of my arguments assume that we are talking about this on the typical individual level. If you are an individual with enough leverage over the market to actually change the T-shirt market, then we need to think about different ways for you to donate.

[BigBallinStalin]

Good discussion welcome back BBS.

Re: ex-ante

Isn't this the wrong way to look at the marginal utility of transactions*? Shouldn't you be looking at ex-post? And in our world i'd hazard to guess there is a reasonable difference between the two (primarily because of our sales/marketing/ticket-clipping culture).

* Though I agree it's the best way to look at the marginal wealth of transations

Exchanges
The distinction between ex-ante and ex-post exchange is necessary for separating the valid claim from the unknown claim. The positive-sum gain of an ex-ante exchange is an a priori synthetic proposition. It's always true, no matter what. On the other hand, an exchange ex-post might or might not be mutually beneficial. Poor DoomYoshi later realizes that he didn't want to buy such a large box of dildos. If I use ex-ante exchanges and donations, then my conclusions follow. If I don't, then who knows.

I'm going to ignore the scenarios where ex-post exchanges are not mutually beneficial. In turn, I'm also ignoring the ex-post donations which become negative-sum. For example, farmer Y got a $10 donation; everyone found out; so he got robbed. There's too many hypothetical conditions of unknown magnitudes, but we can still nitpick:

Although the simplifying assumptions might not be satisfying, I'm not going to go around measuring all ex-post values. Besides, in a competitive market, losses would result from too many bad, ex-post exchanges for one's product, but the profit motive would tend to alleviate this problem until MC = MB, so I'm not that worried.

Utility
This might be the wrong way to look at interpersonal comparisons of marginal utility, but I'm just assuming utility is an increasing function of wealth and 'whatever else'. For example, when people realize that buying cheap, Indonesian products actually helps very poor people, then the exchange itself can increase one's utility--as well as the wealth created from the exchange. Whoo! If so, then donating could result in less net utility since the opportunity cost of a donation would be greater in terms of utility. OC = T-Shirt, contributing to the payment of poor people's labor, loving that exchange.

Nevertheless, utility is still a rabbithole because there's too many unknown variables, anyone can posit pretty much anything, and it's impossible to sufficiently measure across individuals. Even though we can make broad comparisons like "I think the average CC user's utility is higher than the average Chadian's utility," that doesn't matter. It doesn't help us find the optimal point of donating v. trading in regard to maximizing world utility. It's just philosophical hand-waving.

Between you and me, Kaldor-Hicks efficiency analysis is superior because at least it's feasible and tractable. Even though KH analysis can have bad moral implications, Pareto efficiency can be even worse. Nevertheless, at least those frameworks take ya somewhere.

[BigBallinStalin]

Re: 2nd and 3rd to last paragraphs.

Isn't net wealth creation due to the tshirt being manufactured, with the marginal cost to produce a tshirt being significantly less than the $10 price tag? For example logistics and marketing don't create any wealth. Sure you need to divide the CoP by the difference in indonesian efficiency compared to local brown paper bag efficiency but I still don't see how you can just claim >$10 in terms of net wealth.

I'm equating "value created by exchanges" with "wealth." Wealth is only a means for consumption and savings/investment.

Wealth can't be created only by production because if no one buys the product, then obviously wealth is being lost. The opportunity cost of that investment has exceeded the net present value of expected streams of income from producing stuff nobody wants. Even if the marginal input costs were less than Price, it wouldn't matter since the final good isn't being bought.

The creation of value arises from the capturing of greater consumer and producer surplus (a.k.a. surplus value). Exchanges enable this, and production can contribute but only if the goods are ultimately exchanged. To be more precise, for example, consider the exchanges of capital goods over the past ten years. That would create wealth, but if there's some recession (a la malinvestment), then that wealth is destroyed.

The measurement of aggregate output (manufactured goods, or GDP) doesn't count the destruction of wealth from recessions and natural disasters. In fact, rebuilding after a disaster increases GDP. Yay!, more 'wealth'! So, the production of a T-shirt isn't automatically wealth-increasing--regardless of MC and Price. To be even more annoying precise, consumption is the destruction of wealth. If you eat an apple, you're down an apple--but presumably up in utility. (I gave Mets enough to deal with though).


Competitive equilibrium prices reveal society's value of that product. At equilibrium, P = MC = MB. If the Price = MC, then people are happy that those inputs are being used in such a degree for the creation of those goods. Wealth is being maximized. If MC > P, then those inputs have more valuable alternative uses. Wealth is being wasted. If MC < P, then those inputs aren't producing enough of that good. Wealth is being lost because the people want more! Marginal cost curves reflect opportunity costs. Market prices, e.g. $10 t-shirt, do not include the Full Price (e.g. transaction costs, time and resources spent to drive to the store and get the shirt, etc.), which is completely reflected in the competitive equilibrium price.

[BigBallinStalin]

In other words, people should be morally obligated to donate some amount of their goods to very poor people since this increases the net utility of the world.

Let's address the situation where donating can conflict with the means of creating wealth for the very poor.

To be clear, a donation is a transfer of wealth. In terms of wealth alone, this is zero-sum. In terms of utility, this is positive-sum (given that the donation is voluntary, of course). An exchange is a creation of wealth because in an exchange ex-ante each party values the other party's good more so than their own good. After the exchange, each party has increased their value (i.e. wealth). In terms of either wealth or utility, they are both positive-sum. We're assuming that utility is an increasing function in wealth and donations.

Now, suppose you pay $10 for a T-shirt that's been imported from an Indonesian 'sweat-shop'. Your $10 becomes distributed among the chain of suppliers--from the retailer, shipper, sweat-shopper, and the suppliers of labor within each market. Consequently, your exchange increases the net wealth of the world, and net utility has increased since additional wealth causes utility to increase. Net wealth: >$10--in terms of total value. Net utility: +something + wealth (i.e. the value created from exchange).

If you were instead to donate $10 to one of the many workers in the sweat-shop, then you forego the opportunity to increase the wealth and utility of all the other very poor workers in that sweat-shop as well as everyone (of varying wealth) in the production process. In other words, donating has a cost (the opportunity cost), and an exchange has an opportunity cost (from whatever else you could've done with $10). In this example, net wealth: $0. Net utility: +something + 0(wealth).


In short, since we live in a world of scarcity every action of ours incurs a cost. In the trade-off between donating and trading in terms of maximizing utility, trading increases utility on average more so than donation. So, why not opt for 100% trade and 0% donation*?

*tangent: and for that matter, why not advocate for the abolishment of international trade restrictions?

Your conclusion simply does not follow from your premises, for several reasons. First, you incorrectly assume that utility creation is not counted positively as part of an exchange, but this is wrong to the extent that it might make me personally happy to donate money to others. Therefore, the donation does create wealth, if we broadly count my happiness as part of the world's net wealth. (And there are practical reasons to do so -- my happiness might translate into increased productivity, say.) Second, while in the exchange I do have the T-shirt, this is offset by the costs of producing the shirt; the $10 is therefore paying the cost of labor, but if I had just donated the $10, that time could have been spent producing a T-shirt for someone else, so they get both the $10 from my donation and the $10 from somebody else buying a shirt. This assumes that the T-shirt market is not affected by my individual decision not to buy one*, which seems obvious given the number of people buying T-shirts in the U.S. Third, your argument about how only one person gets the money is a non-sequitur; if these people are of similar wealth then net utility is increased the same if I give it all to one person, or split it equally among the workers. But in either case I could just split up the money among those workers the same way, and receive the same net effect (minus the T-shirt). Fourth, in any likely scenario, a good fraction of that $10 will not make it to the poorest workers, but will stay with the managers, who don't need it as much. Fifth, there's not even an opportunity cost. We're not talking about whether someone is going to buy a bunch of T-shirts that they don't need, as an inefficient method of cash transfer to the poor, are we?

*Many of my arguments assume that we are talking about this on the typical individual level. If you are an individual with enough leverage over the market to actually change the T-shirt market, then we need to think about different ways for you to donate.

A careful reading of the following can be used to update your criticism:

viewtopic.php?f=8&t=93718&view=unread#p4416187
viewtopic.php?f=8&t=93718&view=unread#p4416189

[Metsfanmax]

In other words, people should be morally obligated to donate some amount of their goods to very poor people since this increases the net utility of the world.

Let's address the situation where donating can conflict with the means of creating wealth for the very poor.

To be clear, a donation is a transfer of wealth. In terms of wealth alone, this is zero-sum. In terms of utility, this is positive-sum (given that the donation is voluntary, of course). An exchange is a creation of wealth because in an exchange ex-ante each party values the other party's good more so than their own good. After the exchange, each party has increased their value (i.e. wealth). In terms of either wealth or utility, they are both positive-sum. We're assuming that utility is an increasing function in wealth and donations.

Now, suppose you pay $10 for a T-shirt that's been imported from an Indonesian 'sweat-shop'. Your $10 becomes distributed among the chain of suppliers--from the retailer, shipper, sweat-shopper, and the suppliers of labor within each market. Consequently, your exchange increases the net wealth of the world, and net utility has increased since additional wealth causes utility to increase. Net wealth: >$10--in terms of total value. Net utility: +something + wealth (i.e. the value created from exchange).

If you were instead to donate $10 to one of the many workers in the sweat-shop, then you forego the opportunity to increase the wealth and utility of all the other very poor workers in that sweat-shop as well as everyone (of varying wealth) in the production process. In other words, donating has a cost (the opportunity cost), and an exchange has an opportunity cost (from whatever else you could've done with $10). In this example, net wealth: $0. Net utility: +something + 0(wealth).


In short, since we live in a world of scarcity every action of ours incurs a cost. In the trade-off between donating and trading in terms of maximizing utility, trading increases utility on average more so than donation. So, why not opt for 100% trade and 0% donation*?

*tangent: and for that matter, why not advocate for the abolishment of international trade restrictions?

Your conclusion simply does not follow from your premises, for several reasons. First, you incorrectly assume that utility creation is not counted positively as part of an exchange, but this is wrong to the extent that it might make me personally happy to donate money to others. Therefore, the donation does create wealth, if we broadly count my happiness as part of the world's net wealth. (And there are practical reasons to do so -- my happiness might translate into increased productivity, say.) Second, while in the exchange I do have the T-shirt, this is offset by the costs of producing the shirt; the $10 is therefore paying the cost of labor, but if I had just donated the $10, that time could have been spent producing a T-shirt for someone else, so they get both the $10 from my donation and the $10 from somebody else buying a shirt. This assumes that the T-shirt market is not affected by my individual decision not to buy one*, which seems obvious given the number of people buying T-shirts in the U.S. Third, your argument about how only one person gets the money is a non-sequitur; if these people are of similar wealth then net utility is increased the same if I give it all to one person, or split it equally among the workers. But in either case I could just split up the money among those workers the same way, and receive the same net effect (minus the T-shirt). Fourth, in any likely scenario, a good fraction of that $10 will not make it to the poorest workers, but will stay with the managers, who don't need it as much. Fifth, there's not even an opportunity cost. We're not talking about whether someone is going to buy a bunch of T-shirts that they don't need, as an inefficient method of cash transfer to the poor, are we?

*Many of my arguments assume that we are talking about this on the typical individual level. If you are an individual with enough leverage over the market to actually change the T-shirt market, then we need to think about different ways for you to donate.

A careful reading of the following can be used to update your criticism:

viewtopic.php?f=8&t=93718&view=unread#p4416187
viewtopic.php?f=8&t=93718&view=unread#p4416189

Before we go further, I need to understand the argument. Are you saying that if I want to give $500 to the poor, I should buy 50 T-shirts instead of just giving them the money directly?

[BigBallinStalin]

That route might maximize net utility greater than the $500 donation, but with utility = f(wealth,whatever else), then we can conclude either way.

Consider this: what explains the rapid increase of wealth from the mid 1700s to today? And why are some countries richer than other countries?

Are the rich countries richer because of donations? Or is there something else which more heavily drives the origins and continued growth of their wealth?

[Metsfanmax]

That route might maximize net utility greater than the $500 donation, but with utility = f(wealth,whatever else), then we can conclude either way.

I'm asking because you're insisting that there's an opportunity cost, but I am talking about donations that go above and beyond a person's necessary expenditures. I'm saying that if you have $500 of disposable income, you produce the most utility by donating it directly to poor people. So it's important to distinguish between disposable income, and restructuring necessary expenditures to benefit poor people.

[BigBallinStalin]

That route might maximize net utility greater than the $500 donation, but with utility = f(wealth,whatever else), then we can conclude either way.

I'm asking because you're insisting that there's an opportunity cost, but I am talking about donations that go above and beyond a person's necessary expenditures. I'm saying that if you have $500 of disposable income, you produce the most utility by donating it directly to poor people. So it's important to distinguish between disposable income, and restructuring necessary expenditures to benefit poor people.

With any action, there is an opportunity cost. An opportunity cost is the foregoing of the next best alternative. It serves as a standard for determining one's utility-maximizing action. For example, when I choose to respond to your post, I incur an opportunity cost, like doing something more important. Nevertheless, the value of my current action is greater than the OC, so in this case I'm maximizing my utility. If OC > Value(current action), then I'm failing to maximize utility; I'm being inefficient, thus being wasteful.


Assume everyone in the US seeks to maximize utility, and they face a series of choices between exchanging and donating. It follows that there's an OC for each choice. To simplify, let's assume Captain Picard is almost at the optimal point between trading and donating. He must choose between 1 trade or 1 donation. If he chooses correctly, he attains that optimum. If he chooses poorly, he moves an additional choice away from the optimum. If Picard chooses to trade, he foregos the net utility of donating. If he chooses to donate, he foregos the net utility of trading.

In other words, Picard's utility = f(wealth,whatever else).

(A) Donate to 1 person, thus OC: trade.
MU = f(-Marginal wealth, (?)Marginal whatever else).
OC: MU = f(+MW, (?)MSE).

(B) Trade and get 1 good in exchange for $(change)MW, thus OC: donate.
MU = f(+MW, (?)MSE).
OC: MU = f(-MW, (?)MSE).


Note how each decision incurs an opportunity cost, so Picard can fail to maximize utility if he chooses incorrectly.

What's the problem? We don't know the marginal change in utility of "something else" (whatever that list of variables may be, which differs for everyone), so we can't really say which option would maximize Picard's utility and guide him to the optimum.


Now, we'll complicate the problem by adding 3rd party effects.

(A) Donate to 1 person, thus OC: trade.

MU = f(-MW, (?)MSE) _plus_ Donee's MU = f*(+MW, (?)MWE).

OC: foregone MU = f(+MW, (?)MSE) _plus_ Everyone's* MU = f*(+MW, (?)MWE).


(B) Trade and get 1 good, thus OC: donate.

MU = f(+MW, (?)MSE) _plus_ Everyone's* MU = f*(+MW, (?)MWE)

OC: foregone MU = f(-MW, (?)MSE) _plus_ Donee's MU = f*(+MW, (?)MWE).

*Everyone who's involved in the production process which led to that one good.

What's the problem? We don't know which option maximizes net utility for the whole world because of the same problem with "something else."


Therefore, your $500 donation route might maximize net utility greater than the $500 spent on trade, but with utility = f(wealth,whatever else), then we can conclude either way.

If the trade maximizes net utility, then donations fail to maximize net utility. And vice-versa.

[BigBallinStalin]

That route might maximize net utility greater than the $500 donation, but with utility = f(wealth,whatever else), then we can conclude either way.

I'm asking because you're insisting that there's an opportunity cost, but I am talking about donations that go above and beyond a person's necessary expenditures. I'm saying that if you have $500 of disposable income, you produce the most utility by donating it directly to poor people. So it's important to distinguish between disposable income, and restructuring necessary expenditures to benefit poor people.

With any action, there is an opportunity cost. An opportunity cost is the foregoing of the next best alternative. It serves as a standard for determining one's utility-maximizing action. For example, when I choose to respond to your post, I incur an opportunity cost, like doing something more important. Nevertheless, the value of my current action is greater than the OC, so in this case I'm maximizing my utility. If OC > Value(current action), then I'm failing to maximize utility; I'm being inefficient, thus being wasteful.


Assume everyone seeks to maximize utility, and they face a series of choices between exchanging and donating. It follows that there's an OC for each choice. To simplify, let's assume Captain Picard is almost at the optimal point between trading and donating. He must choose between 1 trade or 1 donation. If he chooses correctly, he attains that optimum. If he chooses poorly, he moves an additional choice away from the optimum. If Picard chooses to trade, he foregos the net utility of donating. If he chooses to donate, he foregos the net utility of trading.

In other words, Picard's utility = f(wealth,whatever else).

(A) Donate to 1 person, thus OC: trade.
MU = f(-Marginal wealth, (?)Marginal whatever else).
OC: MU = f(+MW, (?)MSE).

(B) Trade and get 1 good in exchange for $(change)MW, thus OC: donate.
MU = f(+MW, (?)MSE).
OC: MU = f(-MW, (?)MSE).


Note how each decision incurs an opportunity cost, so Picard can fail to maximize utility if he chooses incorrectly.

What's the problem? We don't know the marginal change in utility of "something else" (whatever that list of variables may be, which differs for everyone), so we can't really say which option would maximize Picard's utility and guide him to the optimum.


Now, we'll complicate the problem by adding 3rd party effects.

(A) Donate to 1 person, thus OC: trade.

MU = f(-MW, (?)MSE) _plus_ Donee's MU = f*(+MW, (?)MWE).

OC: foregone MU = f(+MW, (?)MSE) _plus_ Everyone's* MU = f*(+MW, (?)MWE).


(B) Trade and get 1 good, thus OC: donate.

MU = f(+MW, (?)MSE) _plus_ Everyone's* MU = f*(+MW, (?)MWE)

OC: foregone MU = f(-MW, (?)MSE) _plus_ Donee's MU = f*(+MW, (?)MWE).

*Everyone who's involved in the production process which led to that one good.

What's the problem?

(1) We don't know which option maximizes net utility for the whole world because of the same problem with "something else."

(2) Donating to poor person X might result in a net decrease in utility because you're foregoing the opportunity to trade with others--including poor people--who could've experienced greater utilities than person X. Although the $500 is distributed across a long chain of suppliers and demanders, it contributes to the maintaince of that production process. This increases the likelihood of continued streams of income. You can scoff at this all you like, but you'll be scoffing on all their utilities.


Therefore, your $500 donation choice might maximize net utility greater than the $500 spent on trade, but with utility = f(wealth,whatever else), then we can conclude either way.

If the trade maximizes net utility, then donations fail to maximize net utility. And vice-versa.


It seems we're at a conundrum, but there is an answer. It's obtained by thinking about the following:

What explains the rapid increase of wealth from the mid 1700s to today? And why are some countries richer than other countries?

Are the rich countries richer because of donations? Or is there something else which more heavily drives the origins and continued growth of their wealth?

(Hint: it's hardly donations).

[Metsfanmax]

That route might maximize net utility greater than the $500 donation, but with utility = f(wealth,whatever else), then we can conclude either way.

I'm asking because you're insisting that there's an opportunity cost, but I am talking about donations that go above and beyond a person's necessary expenditures. I'm saying that if you have $500 of disposable income, you produce the most utility by donating it directly to poor people. So it's important to distinguish between disposable income, and restructuring necessary expenditures to benefit poor people.

With any action, there is an opportunity cost. An opportunity cost is the foregoing of the next best alternative. It serves as a standard for determining one's utility-maximizing action. For example, when I choose to respond to your post, I incur an opportunity cost, like doing something more important. Nevertheless, the value of my current action is greater than the OC, so in this case I'm maximizing my utility. If OC > Value(current action), then I'm failing to maximize utility; I'm being inefficient, thus being wasteful.


Assume everyone seeks to maximize utility, and they face a series of choices between exchanging and donating. It follows that there's an OC for each choice. To simplify, let's assume Captain Picard is almost at the optimal point between trading and donating. He must choose between 1 trade or 1 donation. If he chooses correctly, he attains that optimum. If he chooses poorly, he moves an additional choice away from the optimum. If Picard chooses to trade, he foregos the net utility of donating. If he chooses to donate, he foregos the net utility of trading.

...

What's the problem? We don't know which option maximizes net utility for the whole world because of the same problem with "something else."


Therefore, your $500 donation route might maximize net utility greater than the $500 spent on trade, but with utility = f(wealth,whatever else), then we can conclude either way.

If the trade maximizes net utility, then donations fail to maximize net utility. And vice-versa.


It seems we're at a conundrum, but there is an answer. It's obtained by thinking about the following:

What explains the rapid increase of wealth from the mid 1700s to today? And why are some countries richer than other countries?

Are the rich countries richer because of donations? Or is there something else which more heavily drives the origins and continued growth of their wealth?

(Hint: it's hardly donations).

The main problem here is that you're trying to generalize the situation to whether it would be utility-maximizing if everyone did this, and if everyone existed in a global market without trading barriers. But that's not helpful, because I'm only asking about how you can make a difference on the margins, given the constraints of your situation. And that's what matters for individual ethical choices. The framework is maximizing one's contribution to utility, not donating per se, and if there ever came to be a situation in which I could individually maximize utility by buying a T-shirt rather than donating the money, then I would. But the point here is that most markets are far too large for my ~$1,000/year in donations to represent a real opportunity cost. Those markets will exist either way, and those people will have jobs either way. So on the margins, I have no incentive to contribute to the stability of those markets. Yes, if everyone stopped participating in them bad things would happen, but I would never advocate for everyone to do that. I only advocate that people make utility-maximizing choices at the moment they're living in.

(In terms of a direct response, there's a whole issue that you're neglecting to include in your analysis, which is what the exchange is being used to obtain. Remember that I'm not saying people should be altering the total amount of dollars they spend on things. I am saying that they should use more of their disposable income for donations rather than buying extraneous things. Here's an example. Let's say I go to a fancy restaurant in Manhattan and spend $100. While the exchange arguably could be said to be increasing net wealth, it certainly cannot be said to be increasing wealth for people in Africa. Therefore the wealth being created likely does not generate anywhere within an order of magnitude of the same increase in utility as if I donated that $100 to poor people in Africa. So right away, your argument is non-responsive if I'm spending a significant fraction of my disposable income on products and services that don't at all help poor people. Similarly, you have failed to respond to my point that even if I spend it on products that are manufactured in the these countries, a significant fraction of the income does not stay within those countries (if I buy an iPad, much of my money goes to California). Therefore you don't capture all of the benefits of increased trade that you are arguing for, so it's not clear that my money is spent most effectively.

All of this matters because even if you argue that the generalized example proves there's a marginal opportunity cost at the individual level from donating over trading, that is swamped by the aforementioned effects.)