James,

=0A

T= hanks for offering to end this thread, though I'm sure plenty of other= s out there are hoping to keep it going, but I'm ready to put down my = keyboard too. So you know, I have agreed with almost all of= the specific statements you've said. I had been trying to focus= the argument on my disagreement with the narrowly defined statement: = "when someone creates wealth, it takes away existing (not future, speculati= ve (i.e. expected income)) wealth from someone else."

=0A

I had no interest in a socialism vs. capitalism = debate, but since it was a big part of your last email, I'll make a fe= w comments on both sides of the issue:

=0A

<= /DIV>=0A

I believe that social welfare programs are moral and will = always be a necessary part of every society. I hope that none of = ;us are put in a position where we are jobless or homeless. &nbs= p;Capitalism is amoral, unless you see freedom to trade your wealth&nb= sp;with whomever you want for whatever you want a moral issue. C= apitalists often assume that because every small decision in a society= is freely made, and advances all parties' personal utility; then the = aggregate result of all those decisions must also be positive for ever= yone, though unbalanced. I essentially agree.

=0A

Though capitalism offers the most freedo= m of choice and maximizes total wealth, it does not require that = the excess wealth is spread evenly. Whether that freedom outweighs th= e unbalanced allocation of increased wealth is a judgment call with no= right answer. There are many examples of how the public's = choices made in a free market have led to painful corrections to certa= in unwanted industries. However, there were also countless unfor= tunate experiments in the 20th century which showed how free-market countri= es flourished, and socialistic countries wained. In general, when a c= ountry learned to guarantee four things: rule of law, an education bas= ed in logic and science, property rights (not just real estate), and free m= arkets; the rich got richer and the poor got richer. It is the lack o= f one or more of these key factors that can keep a given country's p= opulous 10 times poorer than the poorest 10% of Americans. =

=0A

Personally, I am very risk-averse= , and would also choose a significantly-lower (not 10x lower), guaranteed i= ncome than a fluctuating income with the potential for huge gains.&nbs= p; However, I feel very strongly (strong enough that you might ca= ll it a moral issue) that we do not have the right to take t= hat freedom of choice away from someone else.

=0A

<= /DIV>=0A

I'm done too, I hope. Thanks for the fun.

&nb= sp;

=0A

----- Original Message ----
From: James W Mickens = <jmickens Æ eecs.umich.edu>
To: improvetheworld Æ umich.edu
Sent: S= unday, September 9, 2007 8:49:03 PM
Subject: Re: mind the gap

=0A=

> Huge thanks to Melanie, Kevin, and Cam for responding to James be= tter
> than I could.  The response I was working on is pre= tty much obsolete
> now, fortunately for everyone. :)

I am no= t convinced by any of these arguments, and as far as I'm concerned,
the= debate is still open :-P. However, for the sake of everyone's inbox
si= ze, this will be my last post on the matter.

To Melanie:
=
> Even though there is technically a finite number of people out the= re,
> when we're talking about # of people willing to pay for a servi= ce, it
> may as well be infinite.  Computers were once some= thing very few could
> afford... that's not the case anymore. &n= bsp;They've become more affordable
> and the "number of people willin= g to pay for" them has essentially
> become infinite.

This is = spectacularly untrue ;-). There are a lot of Americans who are
poor and who cannot afford computers. Even if everyone could afford= a
computer, it doesn't make business sense to model your customer base= as
unbounded. This is why market research is useful---there are a fini= te set
of consumers whose interests are constantly shifting, and you ha= ve to
tailor your business practices to them, lest they defect to anoth= er
business. When we hear descriptions about the health of a company or= a
nation's economy, we always get bounded, non-infinite statistics (X =
dollars of profit or Y new jobs created). One of my core disagreements =
with Daniel is that I believe that infinity should never show up in economic calculations. It should never show up because it does not have a =
correspondence with anything in the physical economic system.

> Are you saying that it's bad when my widget business does better tha= n
> someone else's and therefor increases wealth while theirs declines?

Not at all. I'm just pointing out that an increase in one= business' wealth
may induce a decrease in another's wealth. I understa= nd that the incentive
to build wealth drives competition and often lead= s to better goods and
services.

To Kevin:

>= ; I'd like to chime in for just a second on this one.   The fact = that
> companies prefer to represent some of their data in a pie cha= rt doesn't
> automatically validate the daddy model, you're going to= have to work a
> little harder than that:
>
> company = A builds 90 widgets
> company B builds 90 widgets
>
> th= e total "market" for widgets is 100.
>
> Both comapanies have = still created wealth of 90 widgets, they're just
> going to have to = reduce their prices for widgets in order to sell their
> inventories= .  Widgets have now become cheaper because of the extra
> "widget wealth" that has been created.  Pie charts are = only reflecting
> the fact that companies restrict production to max= imize prices.

Every definition of wealth that I've encountered inclu= des money as a type
of wealth. Thus, when I purchase an object, I excha= nge wealth for
wealth---money for an object. Given a finite amount of m= onetary wealth
that people will exchange for widget wealth, the decisio= n to give money to
Company A is a direct loss of wealth for Company B. = The only time that
this won't be true is if Company A has already sold = its full capacity of
90 widgets. In this case, it has no surplus supply= , so a sale to Company
B is not stealing an opportunity for Company A t= o generate additional
monetary wealth.

An over-supply of widgets= may indeed force both companies to reduce their
widget prices, but thi= s doesn't change the fact that both companies are
chasing after a constrained set of dollars. As with Melanie's example,
there are not= an infinite number of dollars waiting to be exchanged for
widgets.
=

To Daniel and Cameron:

> The factory worker example d= oesn't make sense to me though.  The factory
> owner pays = the worker the market price for the labor/expertise they are
> contr= ibuting.  No problem there.

Why is the market price of the= wage relevant to whether the worker's
wealth is decreasing? Your incom= e counts as part of your wealth. Thus, if
your wage decreases, your wea= lth decreases, independently of whether your
new wage is closer to or f= urther from the "market price" of your labor. I
agree that the economy = as a *whole* may have produced extra wealth, but
that doesn't mean that= *everyone's* wealth increased---in fact, some
people's wealth may have= decreased. This contradicts Daniel's claim that
his wealth generation cannot negatively impact my own wealth. When I say
that the= worker with the cut salary has less wealth, I'm not making "an
appeal = to emotion" as Cameron claims. I'm making an objective statement
about = that worker's ability to purchase goods.

> Capitalism is = at its core fair and the injustices, even if so big as to
> cast a s= hadow over the whole system, are nonetheless at the periphery
> and = not the other way around.

It's absolutely heartbreaking to read this= . Billions of people are
starving, despairing, and dying around the wor= ld precisely because of
capitalism's failures. Their welfare should not= be at the periphery of the
economic debate; it should be one of the fo= cuses of the debate. I dare you
to go into disease-ravaged Africa and s= ay that capitalism's approach
towards pharmaceutical patents is a perip= heral issue. I dare you to go
into the inner city of an America metropolis and tell the jobless,
hopeless youths that they shouldn't w= orry because capitalism is on its
way. It's very convenient for us to s= ay that capitalism is the answer when
we are reaping its rewards. It's = not quite so easy when you're on the
other end. It's not so easy when y= ou're the person who's dying because you
lack access to cheap medicine.= It's not so easy when you've been laid off
or had your wages cut in th= e name of "ultimate efficiency." Capitalism is
not inherently immoral, = but it is amoral. It is driven by profit, not
compassion. I agree that = capitalism has many fine features, but we have no
reason to think that = a system designed to maximize earnings will optimize
moral outcomes as = well.

I'm extremely dispirited by the outcome of this debate. I stro= ngly believe
that many of the economists on this email list are out of = touch with the
real-world impacts of their economic theories. As I mentioned above, this
will be the last public post that I make on th= is subject. However, I'm
still available for private dialogue.

D= efiant,
   ~j

=0A

--0-650408994-1189407440=:22492--