Don’t Confuse Economics With Pizzas

One of the flawed premises of “Social Justice” is that it approaches economics like a pizza.  Think of a pizza equally sliced 6 ways and set before 6 children. We would rightly expect that each child would get one slice.  That would be fair.

This is simple, at least as it pertains to pizza equality.  There is nothing abstract about it.  In this idea, “fair” is definable.  If any one child gets more than his “fair” share,  someone else will have to do with less, and we all know that that just wouldn’t be fair.

These children then grow up and the same ideas of “equality” remain intact and are then applied to complex economic systems.  We look around and see all kinds of unfairness because it would appear that life has given a few people very large slices and the rest only slivers.

But the world’s economy is not a pizza magically set before us by some cosmic, parental hand.  And any person we select to play the cosmic paternal role is not only incapable of baking up the world’s economy in his kitchen, he doesn’t have the omniscience to cut it into “fair” slices either.  That’s because “fair”  means different things to different people at different times.  Even in the example of the  six children above we must make assumptions like, they all like pizza, there are no alternatives, they are all hungry, and so on.

It is easy to critique what is by comparing it to what is not based on an ambiguous and undefinable standard like “social justice”.  But it is much more difficult to clearly define what ought to be.  Wisdom would suggest that if we set out to abandon what is, on the basis of what is not, we ought also to clearly understand what ought to be in universally accepted and understood terms… don’t you think?

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5 Comments

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5 responses to “Don’t Confuse Economics With Pizzas

  1. Justice, compassion, fairness, equality…….these are not economic terms; they have no economic definition. Microeconomics seeks to answer the question: is our output produced efficiently? Are we producing too much of one thing and not enough of another? And as long as the market forces are in balance, then the market is deemed to be operating efficiently. That is why we can have people starving in one country and great wealth in another and economists can still look at the market and say that resources are being allocated efficiently. Also, to look at efficiency at a microeconomic level, we have to assume away the macroeconomic problems of inflation and unemployment.

    It’s great to be an economist.

    Also, “demand” in an economic sense, means not just the presence of desire for something, but also the ability to pay for it. So efficiency says nothing about income distribution either.

    I share some of your frustration with social justice movements such as Occupy etc. I probably sympathise with them a little more than you, but the answers to these problems need to be found outside of economics.

    • Just curious, did you read the “economics defined” and “mission” posts on the header?

      I, like most others of average intellect, possess above average knowledge about only a few things and only a little knowledge about most everything else. But limited knowledge, I have learnt, doesn’t have to mean stupid, or dare I say it, moronic. I am convinced of two things here, 1) everyone doesn’t know this, 2) there’s a lot of mischief taking place in the shadows of complexity.

      It is for this reason that I try not to stray far from first principles. I think that one can venture so far from these principles, especially in the social sciences, that they get lost in a morass of emotion, hopes and idealism under the guise of scientific complexity. here is an excellent example of this very thing.

      I did a quick google search on the definition of economics because you introduced a new term into the basic definition, “efficiency”, that I’d not seen. The word efficiency wasn’t in the first three I pulled up, Webster, Investopedia, and “Economics, what is it”. All of them defined it very closely to the definition I have above.

      Yes, efficiency is important in economics, i.e. resources produced in a shorter span of time with less effort equals more resources to allocate. And yes: 1)economics can explain why one man can enjoy a more lavish lifestyle because he introduced efficiencies into his plantation by buying his slaves shovels and hoes. 2) in the strictest sense, economics explains how the resources produced by those slaves are then allocated. 3) that the slaves are not free to pursue their own acquisition of resources is, technically I suppose, the subject of another science.

      But, since I, and the vast majority of other people in the world, would qualify more as slaves than plantation owners, it would behoove all of us to seek economic policies that would free us to acquire our own resources, and not be subject to the whim and benevolence of a capricious master. This series I’m doing on “social justice” seeks to point out the flaws of so-called “social justice”, and that in the end the economic policies that result as a call for this justice will ultimately enslave and impoverish, not the rich who desire to be our masters, but the average person.

      I do, so enjoy your comments. They are thought provoking, and absent of antagonism. I do apologize for my long response, but your comment “got me to thinking”.

      • No need to apologise for long replies – my reply to your reply is likely to be even longer 🙂
        In a way, this is really all about definitions. I didn’t mean to add efficiency to the general definition of economics. It’s more specific to the definition of microeconomics. As to the general definition, there seem to be a few definitions out there. The one you have is quite popular; personally I’ve always found it to be rather bleak, because of what I see as the limitations of classical economic theory. When you say:

        A piece of wood can be used to build a piano or a house for example. But which one ought it be used for? Economics answers that question.

        I would add yes, but only to the point that we are satisfied that the market forces that led to the production of the house or piano are in balance, that the supply and demand curves intersect at the price exchanged for the product. If the demand for pianos is high (and remember “demand” means not only the desire to own a piano but also the ability to pay for the piano), then making the piano is an efficient solution to the question. Likewise with a house. In a competitive free market, a homeless person who can’t afford to live in a house is just as efficient a solution as the rich man who lives in a mansion. What economics cannot answer is which solution benefits society the most, because there is no known way of comparing the utility or satisfaction one person gets from a good with the utility someone else gets. With only so many houses to go around, we simply cannot say whether it would be better to put the homeless guy in the mansion and the rich guy on the street, or leave things as they are. Classical microeconomics has no answer to the problem of homelessness because it was never part of the question. We leave it to other disciplines to solve that one.

        I still have my economics textbook from college (by Ronald and Paul Wonnacott) – see I don’t just have this all in my head, no no. It ventures a definition that is quite broad:

        Economics is the study of how people make their living, how they acquire the food, shelter, clothing, and other material necessities and comforts of this world. It is a study of the problems they encounter and of the ways in which these problems can be reduced.

        Alfred Marshall described economics as “the study of mankind in the ordinary business of life”. Nice, but a bit broad. Even more broad is George Bernard Shaw’s: “Economy is the art of making the most of life”

        As to economic policies; that’s the realm of macroeconomics. And here it is the departures from orthodoxy that have created so much controversy. Keynes, for example, observed that the free market tends not to move toward full employment under certain conditions, and he produced a lot of theoretical work to show why this is so. His ideas are based on a very simple premise: your income is my expenditure and vice versa. If we all try to balance our budgets at the same time, the economy crashes, or slips further into recession, as the case may be.

        I too enjoy both your posts and your comments; you have an insight I’ve not always encountered among other bloggers and comments.

        One of my favourite quotes about economics is from David McWilliams:

        As we have observed over the years in economics, what is important is rarely complicated and what is complicated is rarely important.

        I know from reading your posts that you would agree with this assessment – it’s about what works and what doesn’t. It’s a study of success, and a study of failure.

  2. It’s a bad analogy for the economy for another reason is because it presupposes the economy is the same whereas when one works hard and wisely in increasing capital often times they are making the pizza grow rather than just take portions of a pizza that remains stagnant in size.

    • I think slimjim that those presuppositions are largely responsible for America’s inability to elect an economically savvy, much less responsible, government. I’ve always called them “static thinking”.

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