Imagine a world nearing material limits, and a population where each individual owns the same fraction of those materials.
Can’t we imagine something either more useful or more fun? This doesn’t resemble reality at all so I don’t see the point.
I’ll freely concede that you can imagine a world where the markets won’t work at all—so what?
But most “market incentives will fix it” arguments assume rational reactions to incentives to begin with
No they don’t. These arguments point to the empirics of human history. Humans are not rational and yet markets work (again, empirically) remarkably well.
I was intending to offer a deliberately oversimplified example to illustrate a much more general point.
If your physics professor talks about conic section orbits, it doesn’t mean that he’s an idiot who thinks there are only two astronomical bodies in the universe, that astronomical bodies are point masses, that general relativity doesn’t exist, that quantum mechanics doesn’t exist, etc.
(I am not suggesting that you are currently enrolled in a physics class, but am again using a simple example to illustrate a more general point.)
In both cases, do you see the point I was intending? This isn’t a rhetorical question: I would be happy to try to “imagine something more useful” if it’s actually necessary to communicate, but I’m afraid I get the impression that the failure to communicate here is that you’re not trying to meet me halfway.
Your specific point before was not “empirically, markets work, therefore by induction they will always continue to work”, it was “prices create incentives to use less of scarce things”. I’m pointing out that when things necessary to survive and reproduce become really scarce, we empirically stop using markets and start using politically-directed rationing. Even attempts to trade temporarily scarce necessities at non-shortage-inducing prices are vilified as “profiteering”. Do you disagree?
do you see the point I was intending? This isn’t a rhetorical question
No, I don’t. The point that human societies can and sometimes do override or simply just ban the markets is rather obvious and I fail to see the relevance to the topic under discussion.
it was “prices create incentives to use less of scarce things”
Not only. Notably prices create incentives to use substitutes, as well as invent and produce new and better substitutes.
when things necessary to survive and reproduce become really scarce, we empirically stop using markets and start using politically-directed rationing.
Sometimes we do and sometimes we don’t. All politically-directed rationing is invariably accompanied by a black market anyway. And I still don’t understand your point.
Well, “I don’t understand your point” is a big improvement over “you’re just talking about something imaginary”, so let’s start from here.
Let’s see what the remaining inferential distance might be composed of:
Is there even such a thing as “overpopulation”? I.e. is it even possible for humans to reproduce faster than they can increase their effective resources to support the increased population? I’d say “yes”, but it’s starting to sound like your answer would be “no”.
If we were in an “overpopulated” world, what would the market solution be?
What would actually happen in that world when we tried to implement the market solution?
is it even possible for humans to reproduce faster than they can increase their effective resources to support the increased population?
Possible, yes. But there are two further questions: is that likely? and would resource constraints cause a “soft landing” for the global population or will there be a massive crash to numbers far below what the resources can sustain?
If we were in an “overpopulated” world, what would the market solution be?
Make it more expensive and less valuable to have children.
What would actually happen in that world when we tried to implement the market solution?
No idea, depends on the particulars. Not to mention that the “market solution” generally doesn’t need to be implemented—all it needs is for the government not to interfere.
It looks like we’re closer than I feared—I’d agree with your first two answers, and “no idea” is hard to disagree with on the third. I’d have to also answer “no idea” to “is that likely?”, I’m afraid. If really pressed for an answer I’d say it’s probably not likely to happen (sub 50%), but it’s likely enough (greater than 5%?) to be worth worrying about, considering the magnitude of the consequences.
Answering your second question then only depends on a couple issues:
First: is it possible to “save” and “spend” wealth? I.e., can we turn long-term capital into short-term consumables and vice-versa? I’d say the answer is “yes”, there are lots of ways we can divert resources between luxury/maintenance/upkeep and immediate survival. This is usually a good thing, since it means that we can accumulate savings against disaster in a way that isn’t just pushing accountants’ numbers around or shifting wealth between demographics… but it also opens up the possibility of a massive crash, in which it’s possible to “eat our seed corn” and continue to grow and survive in an unsustainable way which can have sudden discontinuities when the savings start to run out.
Second: what would actually happen when we allowed the market solution to occur? (is that better language? you’re right that “tried to implement” had some dubious connotations)
“No idea” is a good honest start, but it’s not hard to make a few educated guesses. If poor kids are too numerous for their parents and voluntary charity to pay for, but there are still wealthy people around too, what happens? We might ask for “the government not to interfere”, but even if you can make a case for that being the correct default normative expectation, is that truly your positive expectation? Is this a world where governments typically don’t interfere with markets, and they won’t let some hungry kids stop them from sticking to those non-interference principles?
can we turn long-term capital into short-term consumables and vice-versa? I’d say the answer is “yes”
I am considerably more doubtful about that. A resource shortage is about lack of particular molecules or atoms (or, maybe, cheap enough energy). Long-term capital mostly exists as financial instruments, land, buildings, and such. As the old saying goes, you can’t eat money.
If poor kids are too numerous for their parents and voluntary charity to pay for, but there are still wealthy people around too, what happens?
The usual. That’s the normal state of being for most of humanity’s history. It’s happening right now—look at Africa. All historical lessons (about the comparative utility of markets vs direct government intervention) are fully applicable.
Can’t we imagine something either more useful or more fun? This doesn’t resemble reality at all so I don’t see the point.
I’ll freely concede that you can imagine a world where the markets won’t work at all—so what?
No they don’t. These arguments point to the empirics of human history. Humans are not rational and yet markets work (again, empirically) remarkably well.
I was intending to offer a deliberately oversimplified example to illustrate a much more general point.
If your physics professor talks about conic section orbits, it doesn’t mean that he’s an idiot who thinks there are only two astronomical bodies in the universe, that astronomical bodies are point masses, that general relativity doesn’t exist, that quantum mechanics doesn’t exist, etc.
(I am not suggesting that you are currently enrolled in a physics class, but am again using a simple example to illustrate a more general point.)
In both cases, do you see the point I was intending? This isn’t a rhetorical question: I would be happy to try to “imagine something more useful” if it’s actually necessary to communicate, but I’m afraid I get the impression that the failure to communicate here is that you’re not trying to meet me halfway.
Your specific point before was not “empirically, markets work, therefore by induction they will always continue to work”, it was “prices create incentives to use less of scarce things”. I’m pointing out that when things necessary to survive and reproduce become really scarce, we empirically stop using markets and start using politically-directed rationing. Even attempts to trade temporarily scarce necessities at non-shortage-inducing prices are vilified as “profiteering”. Do you disagree?
No, I don’t. The point that human societies can and sometimes do override or simply just ban the markets is rather obvious and I fail to see the relevance to the topic under discussion.
Not only. Notably prices create incentives to use substitutes, as well as invent and produce new and better substitutes.
Sometimes we do and sometimes we don’t. All politically-directed rationing is invariably accompanied by a black market anyway. And I still don’t understand your point.
Well, “I don’t understand your point” is a big improvement over “you’re just talking about something imaginary”, so let’s start from here.
Let’s see what the remaining inferential distance might be composed of:
Is there even such a thing as “overpopulation”? I.e. is it even possible for humans to reproduce faster than they can increase their effective resources to support the increased population? I’d say “yes”, but it’s starting to sound like your answer would be “no”.
If we were in an “overpopulated” world, what would the market solution be?
What would actually happen in that world when we tried to implement the market solution?
Possible, yes. But there are two further questions: is that likely? and would resource constraints cause a “soft landing” for the global population or will there be a massive crash to numbers far below what the resources can sustain?
Make it more expensive and less valuable to have children.
No idea, depends on the particulars. Not to mention that the “market solution” generally doesn’t need to be implemented—all it needs is for the government not to interfere.
It looks like we’re closer than I feared—I’d agree with your first two answers, and “no idea” is hard to disagree with on the third. I’d have to also answer “no idea” to “is that likely?”, I’m afraid. If really pressed for an answer I’d say it’s probably not likely to happen (sub 50%), but it’s likely enough (greater than 5%?) to be worth worrying about, considering the magnitude of the consequences.
Answering your second question then only depends on a couple issues:
First: is it possible to “save” and “spend” wealth? I.e., can we turn long-term capital into short-term consumables and vice-versa? I’d say the answer is “yes”, there are lots of ways we can divert resources between luxury/maintenance/upkeep and immediate survival. This is usually a good thing, since it means that we can accumulate savings against disaster in a way that isn’t just pushing accountants’ numbers around or shifting wealth between demographics… but it also opens up the possibility of a massive crash, in which it’s possible to “eat our seed corn” and continue to grow and survive in an unsustainable way which can have sudden discontinuities when the savings start to run out.
Second: what would actually happen when we allowed the market solution to occur? (is that better language? you’re right that “tried to implement” had some dubious connotations)
“No idea” is a good honest start, but it’s not hard to make a few educated guesses. If poor kids are too numerous for their parents and voluntary charity to pay for, but there are still wealthy people around too, what happens? We might ask for “the government not to interfere”, but even if you can make a case for that being the correct default normative expectation, is that truly your positive expectation? Is this a world where governments typically don’t interfere with markets, and they won’t let some hungry kids stop them from sticking to those non-interference principles?
I am considerably more doubtful about that. A resource shortage is about lack of particular molecules or atoms (or, maybe, cheap enough energy). Long-term capital mostly exists as financial instruments, land, buildings, and such. As the old saying goes, you can’t eat money.
The usual. That’s the normal state of being for most of humanity’s history. It’s happening right now—look at Africa. All historical lessons (about the comparative utility of markets vs direct government intervention) are fully applicable.