Hi Lynne, just wondering about the place of honor in the analysis. Certainly, if we care for our neighbor, then the system will be more efficient. If the paper mill owner considered the interests of the community and the fish in the river above profit, "honoring" these things, even though a law did not yet exist to counterdict polluting behavior, then the system would be closer to global optimum without the need for the regulatory effort. The lack of time spent developing regulations can be seen as an efficiency gain. But you also need a population that honors good and doesn't buy paper from the unscrupulous unregulated paper mill. (In that sense, it seems that globalization harms the efficiencies and beauties of honor since it lives outside the local relationships where honor can thrive.)
Or thinking of the gardener--one of her/his motivations is likely the joy that the garden brings to the neighbors. My expression of joy (whether to stop and admire, share kind thanks, or give $20) encourages the gardener. This honor is not required. Does it fit into the Pareto equilibrium discussion? As you say, "economies are social systems and complex". It seems to me that a wise city council recognizes and honors the beautiful positive externality while on the flip side regulating or removing the unjust negative externality. I think there are also just negative externalities, such as the profitable business or economically-stable citizen caring for the poor. Honor creates efficiency gains, gains in joy and positive relationships, gains in sharing surplus with those who are in lack creating a more equitable society, etc.
Good stuff. I would further emphasize the point that attempting to internalize externalities may be too costly. In the real world, as distinct from idealized economic models, we know that interventions in market are rarely, if ever, driven solely by sound economic theory. It is unrealistic to give politicians and bureaucrats a mandate to "internalize all externalities" and to expect it to be used without error, bias, or hidden agenda.
Hi Lynne, just wondering about the place of honor in the analysis. Certainly, if we care for our neighbor, then the system will be more efficient. If the paper mill owner considered the interests of the community and the fish in the river above profit, "honoring" these things, even though a law did not yet exist to counterdict polluting behavior, then the system would be closer to global optimum without the need for the regulatory effort. The lack of time spent developing regulations can be seen as an efficiency gain. But you also need a population that honors good and doesn't buy paper from the unscrupulous unregulated paper mill. (In that sense, it seems that globalization harms the efficiencies and beauties of honor since it lives outside the local relationships where honor can thrive.)
Or thinking of the gardener--one of her/his motivations is likely the joy that the garden brings to the neighbors. My expression of joy (whether to stop and admire, share kind thanks, or give $20) encourages the gardener. This honor is not required. Does it fit into the Pareto equilibrium discussion? As you say, "economies are social systems and complex". It seems to me that a wise city council recognizes and honors the beautiful positive externality while on the flip side regulating or removing the unjust negative externality. I think there are also just negative externalities, such as the profitable business or economically-stable citizen caring for the poor. Honor creates efficiency gains, gains in joy and positive relationships, gains in sharing surplus with those who are in lack creating a more equitable society, etc.
David
Good stuff. I would further emphasize the point that attempting to internalize externalities may be too costly. In the real world, as distinct from idealized economic models, we know that interventions in market are rarely, if ever, driven solely by sound economic theory. It is unrealistic to give politicians and bureaucrats a mandate to "internalize all externalities" and to expect it to be used without error, bias, or hidden agenda.
Lots of words, I hope no one gets paid for writing them. After all, I do not get paid to read them.