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Economic Rationalism
At the risk of sounding as if I'm merely attempting to be as intellectual as other bloggers such as Alstin, Fards (sorry ben) and Patty, I want to talk today about Economic rationalism. Also, it may not make sense to people who haven't done economics (this excludes people like Ben).
Last year, having done anticipated SL Eco with Mrs Wong, I learned the way economists rationalize decisions in today's society. An example of this is Micro-economic reform (MER) which is a supply side policy, and a process whereby markets are deregulated, increasing the level of competition and efficiency in domestic and international economies. MER involves the reduction in trade barriers, and the re-allocation of resources to reflect market forces.
Ok, so this MER all seems pretty good, efficiency is increased, due to an increase in competition. Of course, an increase in efficiency means an decrease in the wastage of resources, and therefore a decrease in the cost of production. If everything goes to plan, a decrease in cost of production would be passed onto consumers, who would be left paying less for their goods. This would result in a long-term increase in the standard of living.
MER of course comes with a small catch, short term decrease in standard in living. This all seems well and good, considering that in the long-term, everyone's better off, as long as you look at it from a utilitarian perspective.
So this was all well and good, I considered MER a necessity in the current day an age, ensuring that our country remains competitive in the international market place, and we maintain our high standard of living. This was all until I started reading The Grapes of Wrath. Thanks Robotnic. I'm left thoroughly confused. Everything I learnt last year in Economics must now have a human face.
For those who haven't read The Grapes of Wrath, it's about the migration of hundreds of thousands of dispossessed Oklahoma farmers, to California in search of jobs. These farmers, who had lived on the land for generations, were evicted by the banks, who had replaced the share-cropping system with mass farming. Human labour was replaced with capital, and hundreds of thousands of people were left unemployed, homeless and in search of a livelihood.
From an economist's perspective, this action would be considered reasonable. The farmers were experiencing a short-term decrease in standard of living, in order to make way for a far more efficient and cost-effective form of production. Then again, from a humanitarian's perspecuting, these people were kicked off of the land they had owned for generations, and left with nothing, except the advice to travel to California, where supposedly, jobs were plentiful.
On the one hand, I can understand the economist's perspective, the system which had been in place with the share-croppers had failed multiple times, and had to be replaced. Replacing labour with capital is something that has happened increasingly with the progress of technology, and I can say, that on the whole, it has provided long-term increases in standard of living.
Anyway, I guess the Oakies are an extreme case of the failure of Economic rationalism, and it is in these circumstances, that government intervention is needed to provided monetary and economic relief to the under-privileged.
Anyway, I apologise for my ramblings and I'm not even sure whether I've made any sense, but it's helped me sort my thoughts, and basically, I don't care what any of you think.
Tomah, out.
[ posted by Tom @ 6:32 pm ]