Tuesday, March 27, 2012

Sustainability and the solar constraint

This is a set of remarks I gave back in October, 2007, but this perspective still has a large influence on how I think about issues of resources and the environment.

The occasion was an awards dinner hosted by the Otsego County Conservation Association, and my remarks came on the heels of an award having gone to Ed Lentz, a tireless local advocate of environmental sanity.

It’s an honor to follow Ed Lentz, who’s done so much in Otsego county both to raise awareness of environmental issues—global warming in particular—and to actually get something done about them.

I’d like to start with a pair of definitions of sustainability, an intuitive one and one that is keyed more to how an economist thinks.

The intuitive one says that an activity is sustainable if you can keep doing it forever.

The economic conception says that something is sustainable if you can do it without compromising the ability of future generations to be as well-off as we are.

The problem with the economic one is that it's a lot harder to define.

Wednesday, March 14, 2012

Bring on the state

This is the fourth in a series of posts on money.  Part IPart IIPart III.

We now have two types of stories about money. In one, money is accepted because it represents some specific person’s promise. The tally sticks on which medieval innkeepers recorded customers’ debts, and which themselves could be used as a means of payment. The statements of ownership of grain in temple storehouses in Mesopotamia, statements that could change hands to buy things without the grain itself moving an inch. The tokens in my mill parable.

In the other kind of story, money is a completely arbitrary social convention. I accept these things as money because I know that you will do the same, and you accept them because you know that someone else will, and so on. But nobody has taken upon themselves an obligation to accept them. We have an infinite regress, floating free from any specific promise by any specific entity.

Is there any reason we should prefer a story of money as a debt or a promise, over an idea of money as a pure social convention? After all, what matters to you as a user of money in your everyday life is that others will accept it in the same way as you do. Why they accept it isn’t important. It turns out there are two reasons to go with a debt story: evidence, and origins.

Monday, March 12, 2012

A case of mistaken identity

(This is the third in a series of posts about money.  Here are links to the first and the second posts.)

Looking for the most contentious issue in political discussions of economics today?  Here's a candidate:

Can government spending lead to an overall increase in economic activity and employment?

It's something of an embarrassment to the field of economics that this is such a question.  I'm trying to think of the right analogy--maybe this one works:

In this post I’m only going to half-answer the question, because our mill parable is still a kind of free-market paradise, unsullied by the tawdry doings of government. But even so, we have some tools to start understanding what role a government might play. I’ll come back to a more careful treatment of government in a later post.