ObamaCare - exchanges ,report your states options!

[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.)

[BigBallinStalin]

"I'm only asking about the differences on the margin." What do you think that lengthy post of marginal analysis given a status quo world was all about? Good god. "The framework is maximizing one's contribution to utility, not donating per se," Yeah, sum the individual utility functions as explained in my previous post, and you should get max. utility, but you won't for reasons you keep ignoring.

You keep saying group X should spend more without any means for showing how much they should spend. That doesn't make sense. "Don't spend on extraneous things." Sure, whatever that means; that definition will vary, but whatever. "I would never advocate for everyone to do that [Good!]. I only advocate that people make utility-maximizing choices at the moment they're living in." Again, this is nonsensical. That position either upholds mine about trade or can uphold the donation route. Your position has been demonstrated to be arbitrary and incoherent.


I've already addressed your critical points with my responses to Lootifer. You disagree on concepts and definitions which--to put it bluntly--you keep failing to understand.

For example,
" 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." So, they should spend less on "extraneous things," therefore, they are altering the total amount spent on consumption. That's a contradiction. When income is measured in wealth, you lose wealth when you donate. You gain wealth via ex-ante exchange.

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.

Consider the production process of all the goods and services you used in order to go from your Apartment to a fancy restaurant in Manhattan. Think of the entire line of production for each good. If you conclude that no poor people have been helped, then you're failing to go through the thought experiment. Even if you can find one example which does not benefit poor people in arbitrary place A, so what? We can either conclude: (a) participate in trade which benefits poor people in Africa, or (b) donate.


But the whole philosophic endeavor is largely pointless if you consider the lesser effects donations have had on improving the lives of others. You've been pretty much complaining about the main driver of well-being for many people for the past 200 years and for pretty much everyone since the mid 1900s. "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." Less of that follows as you get more people to subscribe to your moral position (note the marginalism). If you want your ethics, then fine, other people will do the heavy-lifting of actually helping the poor to a much greater degree than your donations.



"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." Sum up all the gains from trade, and you get >90% of the world's wealth. That's not being swamped, sorry.


Regardless of planning the Best Moral Plan for the People, it's known that trade and a certain array of institutions creates greater well-being, so it makes sense to opt for the trade and those institutions. The armchair planning of ethics is largely irrelevant and becomes disastrous when it remains oblivious to what actually helps poor people.

[Metsfanmax]

For example,
" 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." So, they should spend less on "extraneous things," therefore, they are altering the total amount spent on consumption. That's a contradiction.

Perhaps you're still failing to comprehend my argument. They should alter their consumption profile so that a larger fraction is spent on donation to the poor and a lesser fraction is spent on exchange, without necessarily changing the total amount of consumption. This is utility-maximizing for the other reasons in the post, even if it results in less wealth than the alternative scenario. If anything in your response indicates that you think I am arguing for people spending less money, or that you think I advocate people should stop trading altogether, or that trade does not increase wealth, then you are not understanding my position and this is pointless. This is very simple: wealth creation through trade is not always the best action for increasing marginal utility.

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.

Consider the production process of all the goods and services you used in order to go from your Apartment to a fancy restaurant in Manhattan. Think of the entire line of production for each good. If you conclude that no poor people have been helped, then you're failing to go through the thought experiment. Even if you can find one example which does not benefit poor people in arbitrary place A, so what? We can either conclude: (a) participate in trade which benefits poor people in Africa, or (b) donate.

This whole thing is based on your premise that the opportunity cost of donating instead of exchanging is the reason why you should not donate. But that argument is only compelling if the sums being spent on the poor are equal. Even if some part of the supply chain for my dinner in Manhattan ends up in some small part of the income being spent in Africa, as I said, it's not going to be even within an order of magnitude when it comes to utility creation. If I spend $100 on the dinner and even $10 gets to poor people in Africa, there's no way that the loss of that $90 (in their terms) is compensated for by the gap represented by the trade opportunity cost.

But the whole philosophic endeavor is largely pointless if you consider the lesser effects donations have had on improving the lives of others. You've been pretty much complaining about the main driver of well-being for many people for the past 200 years and for pretty much everyone since the mid 1900s.

I am not complaining about it. I am saying that it doesn't presently maximize utility everywhere.

"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." Less of that follows as you get more people to subscribe to your moral position (note the marginalism).

That's OK. We don't need the whole world to subscribe to my moral position to erase absolute poverty. We don't even need that many.

If you want your ethics, then fine, other people will do the heavy-lifting of actually helping the poor to a much greater degree than your donations

If I had the resources to directly help the poor in this way, then perhaps I would. My argument is that my individual $1000/year cannot do that, so it's more worthwhile to spend on donations. There are lots of places around the world that are largely untouched by Western markets, and I can't change that penetration level all by myself.

"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." Sum up all the gains from trade, and you get >90% of the world's wealth. That's not being swamped, sorry.

And that argument would be relevant if I said we should stop trading, sorry.

[thegreekdog]

You guys should write a book... wait, nevermind, I think this counts.

[AndyDufresne]

You guys should write a book... wait, nevermind, I think this counts.

TGD, this is a serious discussion. Stay on topic and contribute to the serious discussion that is going on in the Off Topic forum, otherwise someone will create a whole new forum for extra-extra serious discussion.

On topic, this is all over my head. Continue.


--Andy

[thegreekdog]

You guys should write a book... wait, nevermind, I think this counts.

TGD, this is a serious discussion. Stay on topic and contribute to the serious discussion that is going on in the Off Topic forum, otherwise someone will create a whole new forum for extra-extra serious discussion.

On topic, this is all over my head. Continue.


--Andy

Thank you for contributing to the point of my post in this thread (I also added a post in the suggestions forum to reinforce the point).

For what it's worth, I suspect universalchiro and Phatscotty did not read any of Mets's or BBS's recent posts in this thread (which Phatscotty has made).

[Metsfanmax]

You guys should write a book... wait, nevermind, I think this counts.

TGD, this is a serious discussion. Stay on topic and contribute to the serious discussion that is going on in the Off Topic forum, otherwise someone will create a whole new forum for extra-extra serious discussion.

On topic, this is all over my head. Continue.


--Andy

Thank you for contributing to the point of my post in this thread (I also added a post in the suggestions forum to reinforce the point).

For what it's worth, I suspect universalchiro and Phatscotty did not read any of Mets's or BBS's recent posts in this thread (which Phatscotty has made).

If Phatscotty feels this is too far afield for a topic on ObamaCare, we can move it to a separate thread.

[thegreekdog]

You guys should write a book... wait, nevermind, I think this counts.

TGD, this is a serious discussion. Stay on topic and contribute to the serious discussion that is going on in the Off Topic forum, otherwise someone will create a whole new forum for extra-extra serious discussion.

On topic, this is all over my head. Continue.


--Andy

Thank you for contributing to the point of my post in this thread (I also added a post in the suggestions forum to reinforce the point).

For what it's worth, I suspect universalchiro and Phatscotty did not read any of Mets's or BBS's recent posts in this thread (which Phatscotty has made).

If Phatscotty feels this is too far afield for a topic on ObamaCare, we can move it to a separate thread.

It's precisely on topic (in my opinion... I was a former global moderator, so that carries a little weight).

To make my point bluntly, Phatscotty is upset that he was called about by individuals for saying he cares only about fiscal policy. That point has made its way into a number of threads. He also is apparently pissed about Andy's contributions to serious threads, which most of us have been able to ignore. Again in my opinion, the proper venue is for him to report the individuals with whom he's having a problem; not to suggest a separate subforum for "serious" discussions, which would not actually solve the stated problem. Additionally, the discussion you and BBS have been having is a perfect example of why a subforum is not needed. A serious discussion is being had in this very thread, created by Phatscotty, between two individuals who arguably would be on the list of people who have "derailed" threads with jokes.

[saxitoxin]

Obama Delays Obamacare Again; OKs Even More People Dying in the Streets Without Healthcare

The Obama administration is giving employers more time to comply with rules requiring them to provide affordable health insurance for their workers.
Companies with 50 to 99 employees will now have until 2016 to provide affordable coverage under Obamacare, a year later than expected. And larger companies are getting a bit of a break too -- they must offer insurance to only 70% of full-time workers in 2015, rather than 95%.

http://money.cnn.com/2014/02/10/news/ec ... index.html

At this rate all the hubbub about Obamacare is for naught. We'll be discussing the pending roll-out of Obamacare on this board in 2075 while orbiting Earth Colony IV on our SpaceCycles.

[Metsfanmax]

Obama Delays Obamacare Again; OKs Even More People Dying in the Streets Without Healthcare

The Obama administration is giving employers more time to comply with rules requiring them to provide affordable health insurance for their workers.
Companies with 50 to 99 employees will now have until 2016 to provide affordable coverage under Obamacare, a year later than expected. And larger companies are getting a bit of a break too -- they must offer insurance to only 70% of full-time workers in 2015, rather than 95%.

http://money.cnn.com/2014/02/10/news/ec ... index.html

At this rate all the hubbub about Obamacare is for naught. We'll be discussing the pending roll-out of Obamacare on this board in 2075 while orbiting Earth Colony IV on our SpaceCycles.

How does a company go about figuring out which employees to offer the insurance to, to meet the 70% requirement?

[saxitoxin]

Obama Delays Obamacare Again; OKs Even More People Dying in the Streets Without Healthcare

The Obama administration is giving employers more time to comply with rules requiring them to provide affordable health insurance for their workers.
Companies with 50 to 99 employees will now have until 2016 to provide affordable coverage under Obamacare, a year later than expected. And larger companies are getting a bit of a break too -- they must offer insurance to only 70% of full-time workers in 2015, rather than 95%.

http://money.cnn.com/2014/02/10/news/ec ... index.html

At this rate all the hubbub about Obamacare is for naught. We'll be discussing the pending roll-out of Obamacare on this board in 2075 while orbiting Earth Colony IV on our SpaceCycles.

How does a company go about figuring out which employees to offer the insurance to, to meet the 70% requirement?

Step 1: Make a list of all unmarried men with no chronic health conditions.
Step 2: Send list to insurance company.

[Phatscotty]

[Night Strike]

It's great being ruled by a dictator!!!

[Phatscotty]

You guys should write a book... wait, nevermind, I think this counts.

TGD, this is a serious discussion. Stay on topic and contribute to the serious discussion that is going on in the Off Topic forum, otherwise someone will create a whole new forum for extra-extra serious discussion.

On topic, this is all over my head. Continue.


--Andy

Thank you for contributing to the point of my post in this thread (I also added a post in the suggestions forum to reinforce the point).

For what it's worth, I suspect universalchiro and Phatscotty did not read any of Mets's or BBS's recent posts in this thread (which Phatscotty has made).

If Phatscotty feels this is too far afield for a topic on ObamaCare, we can move it to a separate thread.

It's precisely on topic (in my opinion... I was a former global moderator, so that carries a little weight).

To make my point bluntly, Phatscotty is upset that he was called about by individuals for saying he cares only about fiscal policy. That point has made its way into a number of threads. He also is apparently pissed about Andy's contributions to serious threads, which most of us have been able to ignore. Again in my opinion, the proper venue is for him to report the individuals with whom he's having a problem; not to suggest a separate subforum for "serious" discussions, which would not actually solve the stated problem. Additionally, the discussion you and BBS have been having is a perfect example of why a subforum is not needed. A serious discussion is being had in this very thread, created by Phatscotty, between two individuals who arguably would be on the list of people who have "derailed" threads with jokes.

I haven't seen it this badly since Woodruff. I'm not going to report anyone, unless they think they can get away with it because they know I won't report people. And trust me, I will know when that happens.....NEITZE!!!!

And I have another suggestion. How about we keep the suggestions discussion in the suggestions thread? There really doesn't need to be a nuclear invasion of 'whose forum is it anyways'.

Chill the F out

[BigBallinStalin]

We're hitting diminishing returns here, so I'll just sum up my position.

(1) Without a clear standard for comparing utilities, people won't know the optimal trade-off between donations and exchanges. It could be the case that 100% trade maximizes net utility or that 99% trade and 1% donations maximize net utility, or ??% donate and ??%trade. Picard can't tell which trade-off is best for himself--much less for the world (in terms of utility).

(2) Regrettably, some people will ultimately behave as if they do know that optimal point for everyone without explicitly stating how. This is done by making arbitrary assumptions of people's utility functions. I don't find this to be very convincing.

(3) Normative positions such as "instead of spending money on frivolous items, we should donate to the worst off in the world," can increase our feeling of Warm and Fuzzies, but there is a lurking danger here. The armchair planning of ethics can become disastrous when it remains oblivious to what actually helps poor people. Think of all the good intentions which have created more harm than good. Much of the donation industry subsidizes poor institutions abroad, thus perpetuating the poverty.

(4) Instead, we should adhere to the normative belief in a liberal order: (a) promote everyone with the freedom from the coercive control of others, while (b) abstaining from the desire to exert coercive control over others. When we examine history, we find that donations have played a relatively minor role in improving the well-being of others. The heavy-lifter is trade coupled with the belief in a liberal order organized by markets with minimal governance (see: England and the Industrial Revolution). This vision of a liberal order has been adopted in marginal degrees, but steps toward this vision have been the main cause in pulling people from the depths of poverty (e.g. the East Asian Tigers, India post-socialist policies, etc.).

Therefore, we can drop the normative position on donating some optimal amount and instead insist on trading with people with whom we feel are most deserving (whoever they may be). Even though buying a Indonesian T-shirt helps multiple people of various incomes across the production process, your purchase along with many others' purchases help coordinate everyone within our global community around the goal of mutually benefiting each other. If you want to donate, then that's still fine, but I won't insist that you must donate. When trading, even the most self-interested dickhead in the world would still be helping others.

(5) The normative vision of a liberal order can provide enough robustness to handle the most selfish while still lifting people out of poverty. A utilitarian vision of obligatory donation cannot.

[Metsfanmax]

OK, we can make this the end of the discussion.

(1) Without a clear standard for comparing utilities, people won't know the optimal trade-off between donations and exchanges. It could either be the case that 100% trade maximizes net utility or that 99% trade and 1% donations maximize net utility. Picard can't tell which trade-off is best for himself--much less the world (in terms of utility).

My standard is clear: increasing the ability of people to obtain life necessities such as clean water and enough food is, in nearly every instance, more important (read: utility-maximizing) than increasing the number of DVDs one owns. Therefore if you have the choice between buying a $15 DVD and buying someone in Africa a week's worth of food, the latter is the more moral action. There's a difference between clarity of the standard and your insistence that it doesn't apply to every single person on the planet.

(2) Regrettably, some people will ultimately behave as if they do know that optimal point for everyone without explicitly stating how. This is done by making arbitrary assumptions of people's utility functions. I don't find this to be very convincing.

Yes, it would be regrettable if someone claimed to know the optimal donation amount for each person. That person clearly wouldn't understand my argument.

(3) Normative positions such as "instead of spending money on frivolous items, we should donate to the worst off in the world," can increase our feeling of Warm and Fuzzies, but there is a lurking danger here. The armchair planning of ethics can become disastrous when it remains oblivious to what actually helps poor people. Think of all the good intentions which have created more harm than good. Much of the donation industry subsidizes poor institutions abroad, thus perpetuating the poverty.

I obviously support paying careful attention to what types of donations one makes, so as to further magnify the impact of one's donation. That is, generally the most effective interventions we know about work directly to improve the health or purchasing ability of the poor, rather than subsidizing institutions that are then supposed to trickle down.

(4) Instead, we should adhere to the normative belief in a liberal order: (1) promote everyone with the freedom from the coercive control of others, while (2) abstaining from the desire to exert coercive control over others. When we examine history, we find that donations have played a relatively minor role in improving the well-being of others. The heavy-lifter is trade coupled with the belief in a liberal order organized by markets with minimal governance (see: England and the Industrial Revolution). This vision of a liberal order has been adopted in marginal degrees, but steps toward this vision have been the main cause in pulling people from the depths of poverty (e.g. the East Asian Tigers, India post-socialist policies, etc.).

I fully believe in a liberal order, and find it to be not mutually exclusive with restructuring how one spends one's disposable income.

Therefore, we can drop the normative position on donating some optimal amount and instead insist on trading with people with whom we feel are most deserving (whoever they may be). Even though buying a Indonesian T-shirt helps multiple people of various incomes across the production process, your purchase along with many others' purchases help coordinate everyone within our global community around the goal of mutually benefiting each other. You can be the most self-interested dickhead in the world, but you'd still be helping others if you trade. The normative vision of a liberal order can provide enough robustness to handle the most selfish while still lifting people out of poverty.

Finally, your standard absurdly claims that if I donate money to a poor person in Africa, then I am somehow giving up on the idea of trade, which is silly because the poor person is going to spend the money that I give to them. And they'll spend all of it in the market that most needs to be reinforced rather than having some of it stay in a developed nation.