Comments on: Frederic Bastiat

By: Weekend Roundup at Steven Landsburg | The Big Questions: Tackling the Problems of Philosophy with Ideas from Mathematics, Economics, and Physics

Sat, 05 Jun 2010 06:02:34 +0000

[...] jumped the gun on Tuesday, celebrating Frederic Bastiat’s birthday about a month early. Fortunately, our commenter Cloudesly Shovell saved me from [...]

By: Benkyou Burito

Benkyou Burito — Fri, 04 Jun 2010 06:59:10 +0000

TYVM. I have a feeling I have a book on both the subject and the man somewhere I’ll dig it up.

It does kinda sound like Pigou though. But I think I’m thinking out of time.

By: Steve Landsburg

Steve Landsburg — Thu, 03 Jun 2010 07:34:08 +0000

Benkyou:

Who showed that any position along (or maybe within)the PPF can be maintained if transfer payments are employed? I swear it came up on this blog but now I cannot find it.

This is known as the Second Fundamental Theorem of Welfare Economics. It holds under a great variety of assumptions, and is due to different people under different assumptions. My history is a little hazy but I suspect the first rigorous version is due to Walras.

By: Benkyou Burito

Benkyou Burito — Thu, 03 Jun 2010 04:48:30 +0000

Neil– (or anyone who has been paying attention since last November).. An economist was raised as a topic on this blog (I think)and I read up on the guy but now cannot remember his name.

Who showed that any position along (or maybe within)the PPF can be maintained if transfer payments are employed? I swear it came up on this blog but now I cannot find it.

Anyway this is more-or-less what you are getting at I think. The window doesn’t need to break for the glazier to get enough money to eat. If the community values having a glazier, the same effect can be had without the economic loss of a broken window vis a vis transfer payments.

This sounds an awful lot like Pigou. The father of welfare capitalism maybe?

By: mobile

mobile — Wed, 02 Jun 2010 17:32:27 +0000

@ErikK To fix the broken window, the glazier must spend some of his own time and energy on materials and labor. His revenue is 6 francs, but his net income on the transaction is less than that, and so he actually has less than 6 francs to spend with the “shoemaker”. It is seen that the glazier is better off and the shopowner is worse off. What is not seen that the shoemaker is also worse off.

By: Steve Landsburg

Steve Landsburg — Wed, 02 Jun 2010 12:33:08 +0000

Neil: Excellent observation. Thanks.

By: Neil

Neil — Wed, 02 Jun 2010 04:16:30 +0000

All you need to argue here is that the shopkeeper can simply give the glazier 5 francs and everyone is better off. Breaking the window is just an inefficient way of effectuating the transfer.

By: Ryan Mulligan

Ryan Mulligan — Wed, 02 Jun 2010 02:39:34 +0000

Ken,

Don’t the banks also loan money for unproductive things, like letting someone own a home?

-Ryan

By: Ken

Ken — Wed, 02 Jun 2010 02:24:11 +0000

“Money is somehow transferred from people who wouldn’t spend it immediately to people who would” – EricK

Is this not what banks do? Don’t banks lend out savers’ money to spenders?

This is definitely not the same as government transfers, though, since banks lend money to people who are likely to pay that money back, thus replenishing the savers’ money. In other words, banks put unused money in the hands of producers to use that money productively. While government transfers go to everyone as a “tax credit”, or to the politically favored, to be spent however productively or non-productively as they want.

By: Ryan Mulligan

Ryan Mulligan — Wed, 02 Jun 2010 01:49:32 +0000

Hello, Harold.

The benefit they might say about Keynesian actions is they trick people.

- Ryan