Bad Economics

Charles Mudede is not impressed with our friend Tyler Cowen’s new book:

Cowen is pushing the idea that you must watch these movies in this way because of the “scarcity of attention.” But that is completely the wrong way of looking at it. One must watch these movies in this way not because of scarcity but because of the abundance of images. But, in the first place, why does Cowen come up with such an idea as “the scarcity of attention”? Not for existential or psychological reasons, but because scarcity is the ground on which his whole economic concept stands.

“The critical economic problem is scarcity,” he says in his book. Like all other capitalist economist, Cowen is ideologically welded to this bad idea of lack and shortages as the key problem. However, scarcity is rarely real but manufactured. There is an abundance of energy in the world. The sun gives it to us daily for free. All this talk about there being not enough energy, food, fuel has been essentially false. And the wars that have been fought to protect the little there is for survival have been false wars—wars whose only truth is that they benefited those who in this or that period of history owned the means of production.

If scarcity was an authentic problem (rather than a fabricated one) then Africa would not be poor.

I think that Mr. Mudede is very far off on several points so let’s take them one by one.

1.) “If scarcity was an authentic problem (rather than a fabricated one) then Africa would not be poor.” This is what we call a conspiracy theory. I guess we can just stop considering things to be scarce and the poverty problem would be solved. Who knew? In reality, Africa’s poverty problems stem from corrupt government institutions, failed financial assistance efforts and programs, and an inability of developed countries to allow them to compete freely on a global scale (i.e. free of competition with subsidized production).

2.) Mudede claims, “There is an abundance of energy in the world. The sun gives it to us daily for free. All this talk about there being not enough energy, food, fuel has been essentially false.” Sure, many things are abundant, but they are not infinite. The word economists use to differentiate between these concepts is “scarce.” Prices, as Hayek explained, provide the ex ante role of describing relative scarcity.

3.) Tyler claims that it is better to go from movie to movie at the multiplex rather than sit through just one. His argument is that it is pointless to wait around for a predictable ending when some great scene might be airing on the neighoring screen. Mr. Mudede replies that, “One must watch these movies in this way not because of scarcity but because of the abundance of images.”

Again, this ignores to scarcity of time. Time cannot be produced, it is finite. If time were abundant Tyler could afford to sit through the predictable ending and then move to the next screen. However, since Tyler values his time, he deems the opportunity cost of watching the predictable ending too high to warrant sitting through.

One response to “Bad Economics

  1. Good point about the scarcity of time. This seems overlooked in many proposals to “fix” the world. Such as public transportation, no processed foods, and recycling. What about all the extra time it takes from people lives. This might be the most precious resource we have.

    As somebodyorother said, “I can always make more money, but I can’t make more time.”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s