Saturday, 13 August 2016

Dotan Leschem's dotty Economics- part 1

Economics is about economizing- making tough choices because wants are many and means are few.
Was there ever a time when this was not true?
Prof. Dotan Leschem thinks so. He says in a published article in an Economics Journal (albeit a crap one) that-
'In contrast, ancient economics was deeply concerned with ends as such, and in the selection between possible ends. In addition, ancient economics was a science that studied human behavior as a relationship between ends and abundant means, which have alternative uses.'
Wow! It sure must have been swell to live in ancient economies! You could attend a Philosophy lecture and go swimming and climb Mt. Olympus all at the same time! You didn't have to make difficult choices because your time wasn't scarce- it was abundant. So was your land. Did you have to make a choice between growing spinach or carrots on your half acre? Nope! You could grow both simultaneously on the same patch of land. What's more you can also graze sheep upon that land as well as build a house on it.
Does dotty Dotan really believe this shit?
Nope.
He goes on to say- 'In the writings of the ancient Greeks, the life of the head of the household—the oikodesptes who was the addressee of these texts—was conducted in three dimensions: the spiritual realm of philosophy, the heroic realm of politics, and the economic realm. The role of the economic dimension was to secure the means necessary for existence and to generate a surplus that sustained the two other dimensions that were deemed worthy of man. This could be done in two ways: either by increasing production or by moderating consumption.
If means were indeed 'abundant' production could be increased without limit. Even if a man wanted to 'moderate' his own consumption for some 'spiritual' or 'heroic' reason, he would have to be a horrible meanie not to increase his production so as to feed all the hungry people and animals the globe contains.
Clearly Dotan was either lying when he said that ancient economics held means to be 'abundant' or else there is some special meaning which he and he alone invests that word with.
It must be a view at least one or two other Professors find plausible because everything I quote him as saying has been published by a proper Academic Journal or Publishing house.
He writes as follows (my comments are in bold)
The surplus generated by the oikonomia was destined to allow the head of the household to participate in politics and engage in philosophy. 
Dotan lives in a world where surpluses have 'destinies'. Who ordains these destinies? Zeus? Pan? Apollo?
Dotan won't tell us. 
Were there 'heads of households', possessing a surplus, who did not 'participate in politics' or 'engage in philosophy'? 
Yes. It turns out that the vast majority of heads of households, then as now, did not 'participate in politics' save in so far as it safeguarded their surplus or enabled them to appropriate the surplus produced by others. As for 'engaging in philosophy', very few people went in for it because it was widely recognized to be worthless shite- at best providing comic fodder for an Aristophanes, at worst requiring the salutary administration of hemlock.
Dotan may believe that there is some occult alloter of Destinies to 'surpluses' but even he must recognize that most 'heads of households' have kicked that Destiny in the bollocks and used their 'surpluses' in a manner that was only tangentially political or philosophical.
One might indulge in a bit of windy talk at the Symposium- the word means a drinking party, not an Academic talk-fest- and one might attend the Eccllesia to hear a pungent orator rip apart his rival but neither one's getting drunk with Socrates nor voting with Demosthenes constituted genuine 'methexis' or 'participation'. At any rate, that's what we learn from Plato.

If he chose to follow the political ideal type instead of the philosophical one, it also enabled him to be benevolent towards his friends by allowing them leisure time that would enable them to participate in politics and engage in philosophy, as well as supporting the institutions and activities peculiar to the polis—that is, the city-state. This perspective is based on three key concepts: abundance, economic rationality, and surplus. Abundance is an attribute of nature, which is assumed to be able to meet everyone’s needs and beyond—if economized rationally.
The Greeks, like everybody else, had myths of an age of Edenic abundance but believed that it had vanished long ago. Their politics- like that of the Indian Janapadas- arose in the context, not of natural abundance, but contested occupation. Lord Buddha came from a wealthy family. But his community was involved in a dispute about access to a river. If they lost that access, they would slowly but surely perish as an affluent and independent people. 

The same was true of the Greek Polis. A successful expedition meant 'primitive accumulation'- booty and slaves- an impolitic alliance, on the other hand, might mean famine and enslavement.
The Greeks understood that household wealth management could only take you so far. If the gentry lived on their estates practicing autarky they would be overrun and enslaved by marauding tribes or expansionary City-States.  There was no choice but to hang together or be hanged alone. The Polis existed because land wasn't abundant, it was scarce and viciously contested.

However, the mutual dependence associated with the Polis or Theme, which was required to secure one's bare existence, offered a new horizon- that of 'chrematistics', that of wealth as something de-linked from household consumption and production. This wealth could strengthen fortifications and buy allies but it could also invite marauders or hostile armies.

No doubt, Philosophers- except for Pyrrho who got to Punjab- were just as shite then as they are now and didn't say all this in plain words. However, for most people, it was an 'unthought known'. 
 Surplus, on the other hand, is the product of people’s rational economization of nature’s abundance that is not used for securing existence.
Urm... were surpluses never contested? Was it not the case that, if a man had a nice farm and plump sheep and nubile maids, some other guy didn't want to take all that from him? Was there really no 'mimetic desire' in the ancient world?
Even if land is plentiful, some land will be more advantageous located or have higher productivity and thus command a premium or give rise to contestation. 
Thus, the ancient philosophers thought of the oikonomia as a sphere in which man, confronting abundant means, must acquire an ethical disposition of economic rationality enabling him to meet his needs and generate surplus to be spent outside the boundaries of the economic sphere (that is, in philosophy and politics). 
The ancient priests thought wealthy men should become their patrons because their surpluses should be used to buy them a place in heaven. Ancient prostitutes, however, thought that money was best expended buying a place between their legs. No doubt, there were pedants hawking their wares alongside horse-breeders and hair-dressers and so on but philosophy then as now was widely recognized to be worthless shite.
It is useful to consider these three key closely interrelated components of oikonomia—abundance, economic rationality, and surplus—in more detail.
Useful to whom, Dotan?
Abundance does not exist. Economic rationality does but you have to be rational in order to 'usefully consider' it. Also you have to know a lot of heavy duty Math. As for 'surplus', why consider it at all if it can be used up in a philosophical potlatch? Either a surplus gives rise to what Aristotle and Aquinas and Marx term 'chrematistics'- id est what we call Financial Engineering- or else it doesn't greatly matter if it was expended in an orgy rather than a symposium. In either case, its existence was ephemeral.

Aristotle, like other pedants, castigates spending on luxuries because he was competing with hair-dressers and horse-breeders for the limited amount of time available to the gilded youth of his day. However, like all other ancient people, he was aware of the 'curse of Wealth'- a Polis which accumulates Treasure invites invasion from without and internecine rent contestation within.
There is a way to 'hedge' against both evils such that security can increase in proportion to affluence. This has to do with 'Mechanism Design'- changing the incentives that prevail- and 'Chrematistics' in which Financial Engineering plays a big part.
However, it takes brains to understand this subject- which is why Physicists command a premium over Philosophy Majors in the relevant job market.
Aristotle may not have been much of a physicist but he wasn't entirely stupid.
Dotan writes-
The ancient Greeks saw economic behavior as rational when it was frugal in its use of means towards what they deemed as worthwhile ends. In order to assure the achievement of economic rationality in the sense of the use of means towards praiseworthy ends they appointed the virtue of “soundness of mind” (sophrosyne) as the virtue in command of the economy. Aristotle (Eth. Nic. 1140b) said that this virtue is called “sophrosyne” because it keeps unharmed (suzei) economic rationality (phronesis). “Economizing with a sound mind” meant keeping the distinction between needs and desires intact and making sure that the two were incommensurable: needs are to be fully satisfied, while a limit must be set to the otherwise never-ending pursuit of desire gratification. Such an ethical oikonomia generates surplus, and the nature of the surplus generated serves as the ultimate test to the quality of oikonomia.
It wasn't just the ancient Greeks, was it Dotan? Everybody at all times has had the same belief. Nobody ever said 'Rational Economic Behavior is about being prodigal in the use of means towards unworthy ends.' At Harvard Business School, the Professors don't say 'take plenty of l.s.d. Go completely nuts. Cultivate Schizophrenia not 'sophrosyne'.'
It is quite true that worthless pedants, like Amartya Sen, pretend that their more utile rivals are all evil little shits so as to pose as 'the Mother Theresas of Economics'. However, Sen also believes that Bengalis are gluttonous sociopaths. Back in '42, those in the Cities managed to eat twenty times as much food as they ordinarily did so as to ensure that their cousins in the countryside starved to death.
An 'ethical oikonomia' does not 'generate a surplus'. It redistributes it in an incentive compatible manner. 'The nature of the surplus generated' does not serve as any sort of test of the quality of oikonomia. Suppose we have a surplus of grapes. We turn it into wine and sell it in return for something in which we have an absolute or comparative disadvantage. What if we have a shortfall of grapes but a surplus of olives? It does not matter. We sell olive oil and buy wine.
Perhaps Dotan meant to write- 'how a Society distributes its surplus is the ultimate test of the quality of its oikonomia'. If so, why did he not write it? 
Moreover, in the literature concerning oikonomia, acquiring a rational disposition was seen as reflecting an ethical choice. This position is very different from contemporary economic theory, which presupposes every economic action as rational without moral qualification and assumes that people’s rational disposition can be inferred from their revealed preferences.
Contemporary economic theory is stuff we know a lot about unlike ancient literature on the subject which has come down to us only in fragmentary form.
No economist has ever said that every agent's revealed preference is a proof of rationality and mental competence. Suppose a modern day Sophocles, suffering senile dementia, decides to liquidate the Family Trust so as to buy goblins from Mars. His son asks the Court to declare the old man mentally incompetent. The Judge may say 'I find this old codger's literary skill to be un-impaired and so decline your petition.' This is not wholly unreasonable though, in my view, an appeal is likely to succeed because modern Medical Science has advanced to a point where it can refute the empirical supposition on which the Judge's decision is based. What can't happen is the Judge saying 'A widely respected Professor of Economics has explained that on the basis of the old man's revealed preference for goblins from Mars it is clear that he possesses unimpaired economic rationality.' Why? No such 'widely respected Professor of Economics' exists now or has ever existed.
Many Economists do believe that 'by the law of large numbers' something like 'Rational Expectations' exists at the macro level and this hypothesis can be empirically tested, if not refuted completely. But this is a statistical regularity based on ergodic processes of a Darwinian sort.

Dotan may be excused ignorance of contemporary economic theory- after all, we have plenty of senile Professors still coining money out of beating up straw men- but he seems to misunderstand even the work of a specialist in his own field- viz. Cosimo Perrotta, who teaches in the lovely city of Lecce.
Perrotta (2004, p. 9) uses the economic concept of surplus, defined as “wealth which exceeds a society’s normal consumption,” to distinguish between ancient and modern economics. 
The economic concept of wealth is that which can be expended without reducing future income. Under Knightian Uncertainty- i.e. in real life- we can never tell how much wealth we have. If Income falls tomorrow, we realize that we had less wealth than we thought. This is why 'Chrematistics' is difficult. It's about risk and predicting the future. Stupid pedants need to stay away from it. That's why they say 'Don't spend. Save. Instead of going to the barber, grow a beard and talk philosophy.'
He argues that in modernity the surplus is channeled back into the economic sphere of production, as part of the process of generating economic growth. 
Perrotta is not an idiot. He knows that ancient civilizations weren't potlatch based. The guy has been teaching for more years than I've had to shave. He knows very well that successful- i.e. relatively long lived- ancient economies were highly innovative in chrematistics. That's why they were successful. They got the mechanism design right. 
In contrast, the ancient Greek philosophers distinguished between four uses of surplus (as discussed in Leshem 2013b). The first use of surplus was channeling it back to the economy. This choice was deemed slavish, as it entailed submerging oneself to never-ending economic activity. 
This choice was only deemed slavish by pedants peddling shite. Ultimately, they became slaves and peddled their shite to their new masters in Rome or wherever mechanism design was being done right.
As such, it missed the end of economic rationality—which was meant to free the head of the household from economic occupations altogether. 
No. The patron was still doing something economic- i.e. hedging- with his time. If you study philosophy and end up a slave, you have the consolation of philosophy. It is a hedge against misfortune. So is religious askesis or aesthetic cultivation.
The latter three uses of surplus are found outside the economic domain and are labeled by Aristotle (Nic. Eth. 1095b) as political, philosophical, and luxurious forms of life. Although a few schools of thought (such as Cynics and Epicureans) disagreed with Aristotle’s assertion the good life could only be philosophical or political, they all agreed that a luxurious life (as well as an unending focus on economic life) is a perversion of the good life.
Philosophers were competing for the limited time and cash, or carnal attention, of a certain class of males. Those that succeeded did so by crying up their own wares and denigrating those of purveyors of 'gross substitutes'. Philosophers who wrote well or who analysed literary culture gained salience in literary circles. Some of that literature has come down to us. In addition, pedagogues saw a method of defending their amour propre by pretending that their witless shite wasn't witless shite but actually something ennobling and worthwhile. Economic theory explains why worthless Academic Credentials can nevertheless give rise to a 'separating equilibrium'. 
These texts offer some embryonic discussions of how to set incentives for labor in the context of what we would now call a principal-agent problem. The authors suggest various ways of managing slaves by setting up complex schemes of positive and negative incentives that are meant to make the slaves act in a way that will best serve both their interest and the interest of their master. The incentives recommended were mostly material incentives, and a preference for positive over negative incentives can be easily detected. Theano, for example, justified this preference in her letter to Kallisto on the grounds that “the greatest thing . . . is good will on the slaves’ part. For this will is not bought with their bodies.” In setting his scheme of incentives for slaves, Xenophon’s Ischomachus set negative incentives for conduct he deemed unworthy and positive incentives for conduct he deemed worthy (Ec. 14: 3–6).
So there you have it. Botan just gave his own game away. Philosophers pretended that no incentive compatibility was required in their own field because no tradesman wishes to call the quality of his own wares into doubt. But, since slaves couldn't be patrons of philosophers, incentive compatibility came back into its own once their management was concerned. Philosophy turned out to be useless for the flourishing of the Polis and became an occupation for slaves and eunuchs and mendicant miracle mongers. Still, there was a period when an adolescent Squire sent to Athens to acquire a bit or urbane polish might have heard a little common sense from his tutors as this extract from a recent book on Philodemus of Gadara's Epicurean critique of the hoary & risibly sententious literature on Property Management illustrates-


Philodemus, as becomes a poet praised by Cicero for elegans lascivia, has no truck with the older notion that the master should curtail his own sleep so as to spy upon or set an example for his slaves. A true Epicurean doesn't hedge every risk and maximize every profit- rather, wealth is a means to a hedonic end which aesthetic cultivation can qualitatively enhance. This is a Pateresque, not Ruskinian, critique of such stodgy fare as adolescent Squireens were obliged to endure and its chief interest arises out of the circumstance that Philomedus inspired this portion of the In Pisonem.


'For though you have perhaps considered him (Piso, father of Calpurnia, Ceasar's wife) previously only dishonest, cruel, and a bit of a thief, and though he now appears to you also voracious, and sordid, and obstinate, and haughty, and deceitful, and perfidious, and imprudent, and audacious, know, too, that there is also nothing which is more licentious, nothing more lustful, nothing more base, nothing more wicked than this man. But do not think that it is mere luxury to which he is devoted.
67For there is a species of luxury, though it is all vicious and unbecoming, which is still not wholly unworthy of a well-born and a free man. But in this man there is nothing refined, nothing elegant nothing exquisite; I will do justice even to an enemy,—there is nothing which is even very extravagant, except his lusts. There is no expense for works of carving. There are immense goblets, and those (in order that he may not appear to despise his countrymen) made at Placentia. His table is piled up, not with shell-fish and other fish, but with heaps of half-spoilt meat. He is waited on by a lot of dirty slaves, many of them old men. His cook is the same; his butler and porter the same. He has no baker at home, no cellar. His bread and his wine came from some huckster and some low wine-vault. His attendants are Greeks, five on a couch, often more. He is used to sit by himself, and to drink as long as there was anything in the cask. [Note] When he hears the cock crow, then, thinking that his grandfather has come to life again, he orders the table to be cleared.
68
'Some one will say, “How did you find out all this?” I will not indeed, describe any one in such a manner as to insult him, especially if he be an ingenious and learned man, a class with whom I could not be angry, even if I wished it. There is a certain Greek (Philodemus) who lives with him, a man, to tell the truth, (I speak as I have found him,) of good manners, at least as long as he is in other company than Piso's, or while he is by himself. He, when he had met that man, as a young man, though even then he had an expression of countenance as if he were angry with the gods, did not disdain his friendship, as the other sought for it with great eagerness; he gave himself up to intimacy with him, so as indeed to live wholly with him, and I may almost say, never to depart from him. I am speaking not before illiterate men, but, as I imagine, in a company of the most learned and highly accomplished men possible. You have no doubt heard it said, that the Epicurean philosophers measure everything which a man ought to desire by pleasure;—whether that is truly said or not is nothing to us, or if it be anything to us, it certainly has no bearing on the present subject; but still it is a tempting sort of argument for a young man, and one always dangerous to a person of no great intelligence.
69Therefore, that profligate fellow, the moment that he heard that pleasure was so exceedingly praised by a philosopher, inquired nothing further; he so excited all his own senses which could be affected by pleasure, he neighed so on hearing this statement, that it was plain he thought that he had discovered not a teacher of virtue, but a pander to his lust. The Greek first began to distinguish between those precepts, and to separate them from one another, and to show in what sense they are uttered; but that cripple held the ball, as they say; he was determined to retain what he had got; he would have witnesses, and would have all the papers sealed up; he said, that Epicurus was an eloquent man. And so he is; he says, as I conceive, that he cannot understand the existence of any good when all the pleasures of the body are taken away. Why need I say much on such a topic?
70The Greek is an easy man, and very complaisant; he had no idea of being too contradictory to an “Imperator” of the Roman people.
But the man of whom I am speaking is excessively accomplished, not in philosophy alone, but also in general literature, which they say that the rest of the Epicureans commonly neglect. He composes a poem, so witty, so neat, so elegant, that nothing can be cleverer. In respect of which any one may find fault with him who pleases, provided he does so good-humouredly, treating him not as a profligate, or a rascal, or a desperado, but merely as a Greekling, as a flatterer, as a poet. He comes to, or rather, I should say, he falls in with him, deceived by the same rigid brow of his (being, too, a Greek and a stranger) as this wise and great city was beguiled by. He could not withdraw when he had once become entangled in his intimacy, and he was afraid also of getting the character of being fickle. Being entreated, and invited, and compelled, he wrote so many things which he addressed to him, so many things too about him, that he has described in the most delicate poetry possible all the lusts of the man, all his debaucheries, all his different suppers and revels, and even all his adulteries.

71And, in that poetry, any one who pleases can see that fellow's way of life reflected as in a mirror. And I would recite you much of it, which many men have read or heard, if I were not afraid that even the kind of speech which I am indulging in at this moment is at variance with the general usages of this place; and at the same time, I do not wish to do any injury to the character of the man who wrote it.
For if he had had better fortune in getting a pupil, perhaps he might have turned out a more strict and dignified man himself; but chance has led him into a habit of writing in this manner, very unworthy of a philosopher; if at least philosophy does, as is reported, comprehend the whole system of virtue, and duty, and living properly; and a man who professes it appears to me to have taken on himself a very serious and difficult character.


72But the same chance has polluted the man, who was quite ignorant of what he was professing when he called himself a philosopher, with the mud and filth of that fellow's most obscene and intemperate flock.
Cicero's point is that Philosophy had become a servile trade. Chance alone determined whether the Philosopher would be ennobled by his student or debased by him. Poetry, on the other hand- such as Cicero's own verse which his adversary blamed for the orator's misfortunes- retained a sovereign maieutics such that the poet in giving birth to himself gained a manumission from even the stigma of being a 'novus homo'.
Dotan, by his usual method of stating arrant falsehoods as incontrovertible facts, finds something very novel in Philodemus-
As a result of the emphasis of the ancient Greeks on human resources, the economy of property is barely discussed. Philodemus criticizes his predecessors for treating 'human resources' as chattels- including Socrates's self-parodic notion that a man's enemies made their enmity his property. The problem with the theory of property management was that those who knew the subject weren't literary stylists and, in any case, one could always buy a slave with the necessary 'expert cognition'- thus little could be said on the subject which wasn't obviously trite or foolish. Most of their discussion aims over and again at defining the proper limit to the production and accumulation of wealth, either for the political or the philosophical ideal type. There is no discussion at all about how to limit or reduce the profit from one's possessions. No one in their right mind would read, let alone write, a book titled 'how to get poorer' unless it were penned by a genuine humorist. The discussion of methods of production, distribution, and accumulation, once the proper limit has been set, is rather dull. No 'proper limits' were set on revenue. Only  on expenditure. Why? Because Nature is not abundant at all. In general, it does not go beyond prosaic advice such as “the oikonomos must . . . have the faculty of acquiring, and . . . that of preserving what he has acquired; otherwise there is no more benefit in acquiring than in baling with a colander, or in the proverbial wine-jar with a hole in the bottom” (Pseudo-Aristole, Econ. I: 1344b). Philodemus of Gadara, WHO WAS NOT the only author who dedicates his book solely to property oikonomia, essentially focuses on offering a critique of the commonly held view that one should maintain a fixed level of expenditure and spread one’s investment in order to minimize risk. Instead, he argues for more flexibility in asset management on the philosopher’s behalf (Philodemus 2012: 30–32). Rubbish! Philodemus is saying that an Epicurean Philosopher would look ridiculous if he sacrificed his own comfort in order to maximize profit. 'Satisficing' was the way to go. Furthermore, mindful of the altered conditions in which he was writing, Philodemus quite sensibly values fungibility over 'high beta' realty.
Dotan ends his article by giving us a valuable clue as to why he has told us a bunch of obvious, utterly risible, lies about 'ancient economics'- which, clearly, had nothing at all to do with ethics, as we understand the term, because the whole thing was based on pitilessly exploiting slaves and women.
 Dotan, poor fool, has been reading Amartya Sen and is seeking to emulate that clown.
One recent attempt to rejoin economics and ethics is Amartya Sen’s “capability approach.”  Mahbub ul Haq, Sen's pal from College, was hired by the World Bank in 1970. He came up with 'Human Development indices' as an alternative way to measure the neediness of a Nation so that really poor countries could be denied assistance if that's what Washington wanted. Dictators of really needy countries liked having a high 'HDI' index based on imaginary achievements in Health and Nutrition and Education and so on.  Sen jumped on the bandwagon because he thought that proving that Bangladesh was actually richer than the U.S was a patriotic thing to do. Sen's 'Capabilities', like his 'Entitlements' are things which can't be defined or measured. So, you can massage the figures to prove anything you like. Thus, if you like Cuba but don't like Costa Rica, you can prove that Cubans are flourishing- though they keep trying to escape- while Costa Ricans are miserable slaves. 
This sort of shite has nothing to do with either Ethics or Economics. It's just shite is all- fit for aspiring bureaucratic turds or academic blathershites.
 As Sen (1993) notes, his approach has links to Aristotle’s understanding of human flourishing. Sen may have noted this, but he was wrong. Aristotle's 'eudaimonia' depends on 'phronesis' which includes foresight- i.e. it aims at a dynamically sustainable equilibrium. Sen, however- as Partha Dasgupta has pointed out- can't distinguish between an increase in 'Capabilities' or 'Entitlements that are economically unsustainable and those which follow an incentive compatible 'golden path'. Sen’s approach argues for assessing the performance of the  economy based on people’s “capability” to attend to “functionings.” So Venezuela under Chavez was worthy of a gold star though clearly headed for ruin! The former includes both life necessities such as access to food and shelter, as well as access to functionings necessary for what the ancient Greek philosophers deemed as prerequisites for a good life, such as access to literacy and participation in democracy. For slave owning males soon be enslaved themselves, which is why their worthless psilosophy survived as part of the Credentialized ponzi scheme we miscall PaideiaThe functionings sought after are not solely based on people’s subjective assessments of their own situation as with approaches based on ordinal utility or, more recently, happiness indices. Sen shite isn't based on anything at all except lies and fabrications.  It has nothing to do with Economics because it has no means of, or interest in, tracking sustainability. That's why Sen's policy prescriptions are always shite. He talked about a 'Kerala model'. It didn't exist.  Kerala exported a lot of people who sent money home specifically for things like housing, education and health as opposed to brandy and tickets to the cinema. Of course, a lot of the money supposedly earmarked for getting younger brother a degree, or sister a dowry, or Daddy a hernia operation, actually leaked away into expenditure on booze and biryani. Still, there was a 'Demonstration effect'- mimetics, and laziness, dragged up wages. Demographic transition, however, was what did the heavy lifting. This is because people who face lives of deprivation, sickness, and limited opportunities may not be able to know or to enunciate what they are capable of, or what they should want. Sen believes that reported morbidity is lower in low income households. It isn't. It is higher.  The problem is not that those with shitty lives don't know they have it bad but that the incentive for reporting morbidity is lacking. Sen’s approach is also different from indices that measure the overall performance of the economy in terms of aggregate GDP.  Which idiot does that? Per capita Income is useful but we don't know what that is because the future is uncertain. The word 'Income' in Econ. means what you can spend without having a lower Income later on. We don't know how much we need to be saving or whether that saving is being properly invested.  We can get a sense of the dynamics- if there are properly functioning futures' markets but there is a good reason why Mass Poverty militates for badly functioning or wholly black futures' markets. Sen chooses to remain blissfully ignorant of all this.  Sen’s approach is not indifferent to how income is distributed among the members of society or the extent to which people have basic human and civil rights. Sen's approach is indifferent to the Truth. According to his acolytes, Communist West Bengal had human and civil rights. Gujarat didn't. That's why evil Capitalists pulled out of Bengal and set up factories in relatively high wage Gujarat. It's also why North Korea is such a paradise compared to its Southern sibling. Much like the ancient Greek philosophers, Sen’s vision of capabilities is not neutral between ends. Ends means something that happens after the Means have been implemented. The notion is quintessentially dynamic. There is no dynamics in Sen's Capability approach whatsoever. That's why it is useless. Sen abstains from enunciating a precise and explicit definition of what functionings should count as necessary for a good life, in part because he is taking into account the extent to which perceptions of this may vary across countries with different income levels and cultural traditions. Sen, as a Moral Philosopher, refuses to answer any substantive questions which are essentially ethical.  The ancient Greeks weren't so pusillanimous. Is abortion good or bad? Sen is clear that killing female fetuses is bad but won't condemn the killing of male fetuses. Why? The Social Evil in question could too easily remedied by returning to customary morality. But that would make him look bad to the Feminists. Of course, one can also suggest a variety of other ethical underpinnings for a modern economics. But many of these approaches would argue that the ends of economic analysis should be open to an ethical discussion and that economic rationality should be defined in terms of how best to approach the goals that emerge from an ethical framework. Quite false. Economics is about economizing on one's time and resources. Talking to Ethics guys is a waste of time. Mechanism Design, however, has to be ethical because it deals with human beings- i.e. agents with an inward ethos affected by their actions. This ethos can support superior correlated equilibria and that is why research in behavioral econ pays for itself. By contrast, Sen-tentious shite wastes money and time. Indeed, as many parts of the world attain an ever-higher state of economic progress, an ethical framework might call into question the pursuit of economic goals as an end in and for themselves. Either what Dotan calls Ethics is about human behavior or it isn't. If it is, there is an incentive to do ethical mechanism design and so it will happen anyway. Ethics can call anything it likes into question. The rest of the world hasn't just called its own utility into question, it has made up its mind that Ethics is just a wank. At least in this sense, the ancient ethical oikonomia—stripped of the abusive qualities characteristic of its time—may serve as a source of inspiration for seeking to mix the practicalities of economic life with an articulated ethics of human purpose. Dotan, your essay is the only evidence you provide but it is evidence that wholly refutes your case. Your 'source of inspiration' has proved to be utterly noxious. Come to India and smoke some weed. That's a type of 'inspiration' young Israelis in India appear to find quite salutary. Indeed, I understand they have chased out the Nigerians from that particularly lucrative field of oikonomia.





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