3/31/2005

Steady-State Economy

Herman Daly came up with an idea called the steady-state economy. This is where there is no absolute limit of efficiency in the use of natural resources. He basically thinks that the more population there is there will not be enough natural resources to support everyone. So he thinks that the government should have a policy that there is no more population growth. They should also set a level of goods that should be produced. Last the government should limit the amount of wealth each person has. Well I personally do not agree with any of these principles. I think that the government has enough say in what we do already. How do you feel about the issue?

8 comments:

Mack said...

As people need more of anything the price goes up and demand goes down. Economic law in that way has already put a cap on the population- it will grow until people cant aford to have kids and then they won't or at least they will have less. we don't need any one telling us what to do because the market will take care of it.

kenny said...

Herman Daly sounds like he may be a communist who would rather see every human live in poverty and eventually starve to death than see one tree be cut down.

Jane said...

This type of attitude is exactly what gave economics the name, "the dismal science." Time has proven some early economists wrong, and I believe Herman Daly will be proven wrong, as well. As Mack said, the market fluctuates to allocate resources. In addition, as some resources become too scarce, innovation finds ways to improve on our current methods.

Preventing population growth and assigning wealth to individuals sounds a little too socialist/communist for my taste.

Philipe Berman said...

Of course the market has its problems, but the State intervention on the economy has bigger ones...

Dr. Tufte said...

-1 on Mack's comment for spelling mistakes.

Daly's got a pretty frightening set of ideas, eh?

The idea that population growth is a problem goes back to Malthus, and is widely discredited.

The idea that our resources are used inefficiently and dangerously is almost as old, and again widely discredited (although it has recently been revived by The Guardian, a London newspaper).

Most of Daly's ideas amount to a move away from decentralized exchange and towards centralized exchange. Unfortunately, there is a lot of literature in economics - promulgated by the supporters of centralized planning - that it is a lot harder to do in practice than most people believe. Of course, this is why my most centrally planned economies have not been able to sustain themselves.

An alternative way to look at all this is that perhaps some people's (like, say, Daly) primary goal is centralized decision-making. If that is your primary goal, then it is pretty easy to conclude that growth is not sustainable - largely because centralization seems to inhibit growth. There is a certain circular logic to it.

Dr. Tufte said...

Oops: -1 on Harry's post, and I'll make sure I don't take off that point from Mack.

John Fernbach said...

"Beware of the leaven of the scribes and pharisees. For having eyes, they see not, and ears, hear not; and neither do they understand."

A large, but finite earth cannot support an infinitely expanding human population. Or an infinitely expanding human economy. The part cannot grow to be greater than the whole, or both the part and the whole will ultimately die.

I think you and your students have "hardened your hearts" to Herman Daly's economics, to borrow a metaphor from the Christian gospels, because you have invested so heavily in a certain model of the economy that you need it to be true - whether it is or not.

It's a little tendentious and cranky of me to call this "idolatry," because I'm not really a religious person, but I think in a way it is. Because the idea of perpetual growth has served the economics profession well for - what? two centuries now, out of the long sweep of human and geological history? - you can' imagine that it might be superseded by newer information and newer thinking. But in the real world, mere theories and intellectual models become obsolute all the time, as Thomas Kuhn has pointed out in his provocative "Structure of Scientific Revolutions."

There is another Biblical quote I want to use, which is that "if the blind lead the blind, both shall fall into the ditch." You probably recognize the speaker.

I urge you to rethink your opinions from the perspective of physical and biological reality, not allegiance to any set economic theory, either capitalist or socialist. I doubt you'll do this, but you should.

You might even discover that a "decentralized" approach to a steady state economy is conceivable. It's arguable some of the Native American tribes had one.

Dr. Tufte said...

This is a blog that belongs to my students. I just comment here. I will offer a rejoinder, but this really isn't the appropriate forum for an argument.

First off, it is a factual error to claim that economists have been well served by a model of perpetual growth for the last 2 centuries. In fact, until about 20 years ago economic models routinely suggested that grwoth was not infinitely sustainable - that is what I learned as an undergraduate from 1981-5. It was the repeated failure of that prediction to be confirmed that led growth theorists to move in a different direction. In point of fact, unsustainable growth is the old theory that is getting a run for its money, not the other way around.

My heart is not at all "hardened" to Herman Daly's ideas. It is hardened to the preachers of nonsense who abuse the ideas of serious thinkers like Daly. In this case, your position is defined by saying quite early that there will be an infinitely expanding human population. This is an idea that requires that parents care more about the quantity than the quality of their children. This is patently not the case: the actions of virtually every couple in the developed world scream out a decentralized solution to this problem. Yet, the inability to solve this problem is the linchpin of your argument.

As to Daly, check out his parting words to the World Bank. He is correct - I do agree with his first two points, and have trouble with the last two. I find the third unvisionary (if that is a word) and the fourth deeply reactionary.

His third point requires a great deal of hubris to ingest, since it's basically a claim that we know all we need to know about resources. Our inability to forecast resource depletion well, and the stunning absence of recognition of the tragedy or the commons as an addressable problem prior to 15-20 years ago make this abundantly clear.

His fourth point is basically a siren-call for a return to state sponsorship. Excuse me, but we have thousands of years of practice with that, and only a hundred or so with corporations. Funny though, the places where the latter are flourishing seem to be doing better. To me, his views on the state amount to a claim that with just a little more totalitarianism we will be OK. I don't buy that.

If I may be forward, your repeated reference to Christian imagery underscores your faith in central planning. All Western religions are fundamentally about the centralization of power and authority in a hierarchical manner. Daly is probably an atheist, but his ideas fall right square in the middle of multi-millenial Western tradition of better living through individual sacrifice dictated by (what Sowell calls) "the annointed".

P.S. Your comment about idolatry is fine - there may be an element of that in what professor's do.

P.P.S. I believe you mean obsolete, not obsolute.