Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.3 4.3bsd-beta 6/6/85; site ucbvax.BERKELEY.EDU Path: utzoo!lsuc!watmath!clyde!burl!ulysses!ucbvax!ernie!tedrick From: tedrick@ernie.BERKELEY.EDU (Tom Tedrick) Newsgroups: net.politics.theory Subject: Re: Re: Re: Newsflash! [JoSH on Socialis Message-ID: <11047@ucbvax.BERKELEY.EDU> Date: Thu, 21-Nov-85 04:36:58 EST Article-I.D.: ucbvax.11047 Posted: Thu Nov 21 04:36:58 1985 Date-Received: Tue, 26-Nov-85 21:26:51 EST References: <876@water.UUCP> <28200245@inmet.UUCP> <233@gargoyle.UUCP> <266@meccts.UUCP> Sender: usenet@ucbvax.BERKELEY.EDU Reply-To: tedrick@ernie.UUCP (Tom Tedrick) Organization: University of California, Berkeley Lines: 41 Keywords: property rights, justice >It is a pretty fundamental theorem of Welfare Economics that given >any initial property endowments, eventually the property will >be distributed to those who are most efficient. One can >see this process continuing every day. Any firm that stops >making a profit (producing social benefits better then >their competitors) will go out of business and be replaced by someone >who can. The above is a nice model for certain purposes, but is too simplistic for others. For one thing, an individual with a relatively large amount of wealth can use this to further increase his share, even if he is less efficient than a poor individual. Efficiency in an individual is not static but varies with time. The model seems to assume some form of fairness governing the process of distributing wealth. If we are more realistic and assume that a certain amount of corruption exists, wealth will tend to accrue to not only the efficient producers, but also to the efficient criminals. The more wealth one has, the more power one has to manipulate and corrupt whatever system of regulation is in place. The assumption that making a profit=producing social benefits is not realistic in practice. For example, consider spillover costs. If an oil refinery can produce petroleum products more cheaply by polluting the environment the social costs of this pollution are not necessarily reflected in the profits. In general, the idea that a competitive market allocates resources well has a lot to be said for it, but the competition needs to occur within an overall framework of cooperation/regulation. Without this regulation what is to stop the competitors from lieing, cheating, stealing, destroying the environment, and killing each other? An unregulated market is really likely to result in concentration of wealth in the hands of the most efficient, clever, lucky, ruthless, brutal, unscrupulous, etc., individuals in the society. That is one reason why we have political systems, to protect some individuals in society from exploitation by others.