Australian Lefty on Politics, Governance, Science and Info Management

Rightsizing 2: Arson and obesity good for the economy

Posted by Dave Bath on 2008-12-02

Mike Sutcliffe’s comment to my first "rightsizing" post (2008-11-30) is worth a response in a separate post or two.  It seems he believes that a free market economy naturally "rightsizes".  Let me clarify.

  1. The typical modern market is not driven by collective wisdom and rational decisions, or the wild market swings all too evident would not happen except with introduction of disruptive products and services.
  2. Rightsizing an economy can involve a shift from classical economic activity (earning/spending) to activities such as spending quality time with family and friends.
  3. The laws of diminishing returns of utility from expenditure on luxuries does not do much to stop affluenza sufferers buying.

For the moment, however, I’ll concentrate on things we consider bad in themselves, but are absolutely brilliant for pushing up GDP, stimulating demand for goods and services.

I’ll "prove" that arson, terrorism and obesity are great for the economy.

Arson is good.  Burn down a building, preferably containing lots of high-value goods, and you immediately create demand for rebuilding (great for the construction industry) and replacement of the stock.  Total amount of goods and services produced (GDP growth)… up considerably… much more than if the arson hadn’t happened.  Burning down a school full of children is close to optimal, the children aren’t producing anything, yet they’ll need lots of expensive health services (and you cannot off-shore nurses and doctors!).

Terrorism is better.  Not only do you get the economic stimulus of building what was destroyed, but there is a fair chance you’ll increase demands for military and paramilitary toys, and maybe even start major military action: using assets (that need replacement) to destroy other assets (that need replacement).  Goods production (and none of these assets come cheap) goes through the roof!

Obesity is good for the GDP.  Not only do you enhance retail in supermarkets, increase demand (and prices) for food producers and processors, but you increase demand for energy to transport the morbidly obese person about (E = 1/2mv2).  What is more, you either demand goods and services to reduce weight (gyms and dieticians) or demand even higher value goods and services for things like coronary bypass surgery.

Of course, over a period of decades, no matter how much obesity stimulates the economy, it is a net drag on a society.

Do you see what I mean by rightsizing the economy and the balance of sectors, the balance of classical economic activity versus the intangible human values of time just sitting and talking with friends and family?


6 Responses to “Rightsizing 2: Arson and obesity good for the economy”

  1. Dave, I don’t feel this disproves the idea that free markets find the optimal size to meet the needs being asked of them. Of course, all of these things stimulate a market, and of course all of them are bad and end up as a net cost to society.

    My point is the market will meet what is asked of it if you put in property rights and contract law and let the people do business. And over time, if there are enough actors, it will optimise itself. If the people ask the market to provide them with an excessive amount of cheap high-calorie food, then market will do that. If there is an externality from this particular interaction, such as the need for extra energy to transport them or the need for medical care, then the market will provide that too.

    The requests driving the market may not come from ‘collective wisdom and rational decisions’ but the market will answer these requests using both these things.

    Each human needs to decide what her/his needs are. This is an ethical decision. If you get that right the market will follow and, by your definition, ‘rightsize’.

    In true lefty fashion, you think that you can change people’s wants by interfering in the way the market satisfies those wants. At best you may manage some small short-term aberration, but in the long term you won’t create any permanent value. Drugs are illegal but people still get them, and society has no net benefit from this drug enforcement. In fact, if you factor in all the costs society is probably worse off. If Conroy bans internet porn it still won’t go away. People’s sexual desires won’t change. And people will still get porn. The market will find a way to deliver it just like it has with drugs.

    Furthermore, the problems you are referring too exist because people don’t understand how to value their own life. And they don’t need more ‘community’ or ‘engagement’ to fix this. They need to live their lives for their own ends, stop seeing themselves through other people’s eyes, and pursue their own happiness with honesty and rationality.

  2. Dave Bath said

    (BTW: I’m assuming from your other comments, and your blog, that you are one of the "righties" I don’t mind… like The Economist, pro-free-market philosophically, but more interested in just outcomes and decreasing misery rather than pure acquisitiveness.)

    You’ve got me wrong with your following comment:

    "In true lefty fashion, you think that you can change people’s wants by interfering in the way the market satisfies those wants."

    Actually, I think the only way of changing people’s wants are through education and socialization. This is the real failure: Aspirationalism aimed at having more assets than others rather than contributing more than others seems to have been promoted by politicians, used by the markets, and unrefuted by schools. (Give me Hsün Tzu/Xun Zi over Mencius/Meng Tzu/Meng Zi any day!. Unfortunately, it’s darn hard to find any Hsün Tzu in print in English. But he is worth chasing up.)

    I suppose I’m arguing that the simple "commandment" of Epicurus/Epikouros, "Live small" needs more airplay.  I’m pretty sure we’d both agree with many of his teachings: again you’ll find it hard to get much work of his (he didn’t write much, and much was lost), but the wonderful "De Rerum Natura" by Lucretius is fairly solidly Epicurean (in the traditional sense), and quite good poetry if you can mouth it in the original (although the Loeb translation is soooo dated).

    I’ll be posting more on the themes of rightsizing and achieving balance later. I thank you for your helpful comments, and hope you’ll keep indicating where I am unclear. But in the meantime, check out Hsün Tzu and Epicurus… they form a large part of where I come from, I think you’d find much in common with them, and we can argue about implementations at our leisure.

    BTW: When are you going to post again here, or have you moved to another blog – and if so, where to?

  3. Dave Bath said

    …. Hmmmm …. I’ll rework my previous comment into a standalone post sometime: I think highlighting these two philosophers, Hsüun Tzu (荀子 to my Chinese friends) and Epikouros (Ἐπίκουρος to my Greek friends) is soooooooo worthwhile. Those guys are way under-rated by the general public. Actually, they aren’t even recognized!

  4. BTW: I’m assuming from your other comments, and your blog, that you are one of the “righties” I don’t mind…

    I’m more libertarian with a tolerance to right-wingers. I believe morality extends from seeking positive outcomes, and that the quality of human life is the only yardstick of value.

    I’m familiar with Epicurus, and I believe he was on the right path but his philosophy was not complete. Although this is definitely quite accurate:

    It is impossible to live a pleasant life without living wisely and well and justly (agreeing ‘neither to harm nor be harmed’).
    And it is impossible to live wisely and well and justly without living a pleasant life.

    I know very little of the Eastern philosophers, so I’ll await your posts.

    My blog will happen again. I post in lots of places but I’ve got lots of half finished writings that need to go up there, particularly from an Objectivist perspective. I’m just moving house to QLD at the moment. Big job.

  5. Dave Bath said

    Mike: “Human life is the only yardstick of value”
    You speciesist you!
    So when the little green men come to your place for a visit, do you want them to reciprocate your views (and therefore get out their fabled proctological kit)?

    (And nothing can be both complete and consistent)

    Good luck with the move.

  6. So when the little green men come to your place for a visit, do you want them to reciprocate your views (and therefore get out their fabled proctological kit)?

    If they’re being’s of reason, then sure. I assume if they’ve crossed the galaxy then they have the ability to reason. We can afford each other some rights and live in the peace of civil society, voluntarily interacting to mutual benefit. However in the context of our planet we are the only species to develop this capability at this point, with the possible exception of some ‘pack animal’ relationships we enjoy with dogs or chimpanzees etc.


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