So if a rich person cranks up the heat to 80 degrees as they will in a
market economy are you going to criticise this on efficiency grounds? How?
So it is irrational
and artificial to pay for the hospitalisation costs of a homeless person
with no means of support or friends to donate funds? Certainly it is
inefficient in terms of standard nc welfare theory. There is no potential
Pareto Improvement. Any expenditures on hospital care is going to make
people worse off (cost them money) with no possibility of offsetting
compensation.
You can criticize on efficiency grounds without resort to market
conceputalisation. Productive process X is more efficient than Y if it
produces Z plus n products
,,given the same level of inputs.. Where "n" is a positive number and Z is
the number of products produced by Y for the given inputs.
An allocation process X is more efficient than Y if it allocates Z plus "n"
units of a good for the same level of inputs as Y. Note that although some
type
of price measurements might be helpful in operationalising these formulae
they are not a necessary condition for doing so.
Cheers, Ken Hanly
----- Original Message -----
From: David Shemano <[EMAIL PROTECTED]>
To: <[EMAIL PROTECTED]>
Sent: Wednesday, December 27, 2000 9:42 PM
Subject: [PEN-L:6560] Natural v. Artificial
> <<The problem, David, is that no price is "natural.">>
>
> My point is, even if you are correct that no price is "natural," you still
> need to explain why the "artificial" price generated by a market is not
> presumptively preferable to the "artificial" price generated by a
non-market
> method.
>
> Cannot we agree that some prices or more irrational, if not artificial,
than
> others? If we agree, then I would suggest that you have to concede that a
> market price, in the abstract, is the baseline you use to measure the
level
> of "irrationality" or "artificiality." OTOH, if you disagree, you are in
> effect saying that cranking the heat up to 80 degrees cannot be criticized
> on efficiency grounds.
>
> Again, this is not to say that you may not have a good reason for
deviating
> from the presumptive market price. But that is far different from saying
> that the market price does not provide intrinsically valuable information.
>
>
> David Shemano
>
