Wednesday, December 28, 2011
Sunday, December 18, 2011
Capital is, of course, anything that is a means to satisfying some ultimate goal.
I have been reading a book on linguistics, because i am becoming increasingly curious about the potential relationship between the study of language and the study of the economy. Language is, of course, unpredictible in its future course, just as new capital combinations are by their essence unpredictable (because to envision a future, profitable, combination of capital is to bring it about; that doesn't mean that one cannot imagine new innovations or, for that matter, the direction of language).
I'm also becoming convinced that the term 'labor' is vacuous. To work on is necessarily to apply higher order goods to solving an economic problem. Labor without any previous knowledge or experience in the world would be useless - everything that is in labor is.the accumulation of a lifetime of experience, and is a specific type of capital. The only question that hangs out there is regarding time; but that is not something specific to 'labor.'
To start, here is my reasoning: The use of tools is universal among humans, just as language use is. It also has no meaning outside of those subjectively given. The capital structure, just like language, is built up from ever more complex combinations of simple factors, which can then be used to combine with other simple and complex entities to form even higher level entities. The complexity only arises when the nature of what must be communicated (produced) calls for it - complex, large combinations of words (capital) don't necessarily crowd out simpler ones, but the large ones depend on the small ones... The problem with much development policy seems to be putting the cart before the horse, introducing complex physical elements into a populace whose experience does not match...
Edward Sapir, who's "Language: an introduction to the study of speech" I'm reading, breaks down a 'word' thus: 'unknowingly' - the root word is "know", un, ing, and ly are adjuncts, thus (b) + A + (c) + (d) where.he parentheses note an element of a word that has no fundamental meaning on its own. (Of course, fundamental meaning is determined only in context; in the case of a discussion of language all of the adjunct elements of speech become independent elements on their own.) One could do a break-down and map the elements and relations in a short story, but that would be a lot of work.
The 'radical' (or fundamental) element is the simplest symbol that corresponds to anything we would recognize, yet on its own it cannot convey a thought (outside of a context suggesting another element). For example, if I were to come up to you and just say, "know," you would have no clue what I mean. Any attempt to communicate a thought requires three things: two fundamental elements and a specific relation between them. Thus, the farmer kills the duckling.
The same seems to be true for any capital good as well - a single capital good has no value, until it is combined (in some specific way) with a second piece of capital, usually a skilled person or people. It is the combination and the relation that is important: each on its own does not make a production process.
Different words mean different things at different times, which is true for capital as well. Words are also never single-specific: if you can't remember a word, you can usually come up with some close substitute, or approximate the word using other words. The same is true for capital goods: a hammer might be the most useful tool in the situation you're in, but a rock will substitute for whatever you need to hit. Words, like capital goods, carry different meanings as time advances, some becoming obsolete and some being invented, and others still being plucked from obscurity into a surprising role.
The structure of a language (all of the elements and their relations) is also analogous to the structure of production. Simple language elements, like words, must be understood in order to construct a sentence, a more complex thing. Whether an epic poem, a short story, a novel, or an academic paper, the more and more complex elements that make up a language rest on the strength of the simpler objects. If the simple objects are ambiguous or ineffective at drawing ideas out of the reader, the whole novel will surely be worse. Business organizations will involve as many elements and relations as a novel. Picturing an organization using its net worth captures as much of the image of the whole organization about as well as a page count does the contents of a novel (organizational economists, of course, know this well, as do management/economic sociology scholars)...
The main deviations between capital and language, I think, primarily involve the fact of scarcity, which is necessarily true for capital, but I'm not sure is meaningful in language.
My primary interest in this is wondering whether the methods of linguistics can be applied to the study of the economy. The more belief-ideologically based our conception of the economy is, the more relevant my work is, so I am, of course, simply pursuing my self interest in this case...
Monday, August 1, 2011
Tuesday, April 26, 2011
The example that Walter Williams gave in class was that one would expect that couples with children would be more likely to go on nice dates to the theater than a cheap one to the movies, because the couples with children must pay a flat fee to a baby-sitter regardless of their choice of date.
The objection was raised in class (by Sam, I believe) that the baby-sitter should not enter into the decision making calculus because at the point where the couple makes the decision of which date to go on the babysitter is a sunk cost. The couple with children, therefore, would be just as likely to choose the movie over the theater as the couple without children.
Walter Williams, then, was wrong, if the problem is framed as it is above. William framed it in such a way that he would be right – that there is a sorting effect due to the flat cost which makes the couple who wants to go to the theater more likely to pay for a babysitter, with the end result being that you see more couples with children at the theater than at the movies. There’s also the possibility that both prof. Boettke and Charity-Joy suggested, that couples make the choice of a high-quality or a low-quality date before hiring the baby-sitter, and don’t change their plan once they make the choice. Which saves Prof. Williams’s example as well.
That misses the main point of controversy though, which is this: if someone makes a plan to do one thing over an alternative because of a flat cost involved, do they change their plans if they pay the flat fee before making the choice between alternatives?
Option 1: Once the babysitter cost is paid, the couple with children will choose the same way they would have if they were childless. The A-A effect does not apply, except potentially in the selection effect.
Option 2: (my argument) At the point in time after the babysitter is paid but before the couple actually goes to either the theater or the movie, the couple still takes into account the flat cost because going to either the movie or the theater requires that the flat cost be paid again. So the cost, after the baby-sitter is paid, of going to the theater is the price of the theater ticket and the foregone movie, and the cost of going to the movie is the price of tickets and the foregone theater trip. The value of both the foregone theater trip and the foregone movie include the price of the babysitter because either choice in the future necessitates the hiring of a babysitter. Thus, even once the babysitter is paid this time, the movie and the theater still cost the same.
My intuition comes from the claim that on a trip to Maine, tourists will more likely choose expensive lobster than cheap lobster because in order to get expensive Maine lobster ever again one has to take a trip to Maine, so even though the current trip to Maine is a sunk cost the A-A effect still applies.
I’m interested in getting this resolved so that I can stop thinking about it.
Thursday, January 13, 2011
15 years ago, I don’t think I would have imagined it possible to look someone in the eye as I chatted with them from 5000 miles away. Not, that is, unless I paid substantially for the privilege. Today, a webcam-and-microphone combination is cheaper than dinner for two at Applebees and Skype software costs nothing but the time to install it. E-mail is ubiquitous, texting is close to free, facebook is available on cheap telephones, and twitter can seemingly show up on anything that runs on batteries. Rapid communication is shockingly inexpensive, with the predictable result that a whole hell of a lot more messages make it past the quality filter. The benefits of the communication revolution are readily apparent to anyone who has had to coordinate anything on the hoof (imagine how different is the procedure to make lunch arrangements with friends today than a decade and a half ago).
For Soldiers in the field, this means that instead of waiting weeks for APO deliveries (I’m not fond of the “snail mail” moniker), messages that takes seconds to compose whisk their winsome way around the world in mere milliseconds, fresh as a daisy. This, combined with the negligible out-of-pocket expense, means that messages that were once far too trifling to send come pouring in at a rate of knots. The Soldier of yore might have expected to hear about Uncle Frank’s surgery or the fire out by the ol’ barn, but by no means did he help junior with his homework. Today’s combat-deployed Soldier has one boot in theater and if not all of the other, then at least some of the laces still at home to a degree that was unimaginable to the average infantryman of previous wars.
Under normal circumstances, most of us handle split attention fairly deftly. We can track careers, family, football scores, pop culture minutiae, fashion, art, or any of the other tiny stars of interest in our personal galaxies with relative ease. Under normal circumstances, we are not under enemy fire. Think of two competing goods: mission-relevant information and all other information. Like other resources, attention is finite, and plain ol’ microeconomics show that if we make irrelevant information cheaper, people will consume more of it. Logorrhea from home is a tax on Soldiers’ attention and may contribute to a decline in readiness.
Without taking a closer look, it’s impossible to say exactly where the margins are, so the details end up in the good ol’ “it’s an empirical question” pile, so beloved by classroom economists, but that’s fine. There’s also a big steaming policy question I wish I could just ignore. Part of the equilibrium solution is that we’d have to compensate Soldiers for giving up the luxury of staying in contact with family back home (assuming we don’t have Jonesian 0-MP Soldiers), which may or may not be substantial and could hurt morale. At any rate, I’d like to run those crazy regressions. I imagine the data is out there.
H/T Dave Gauntlett