T/F: Capitalism flaw is, unless monetary values for all inputs is incl, all the economic calcs are incorrect?

Question

Microeconomics is a man-made decision-making system which works efficiently only when all the elements incl social values are monetized, are included in the economic calculations & are made real to both producers and consumers alike.

No yes/no answers please. I want your opinion and your experience esp if you have had to value business decisions and economic activities and do the associated economic calculations.

TWH 08232006

Quote From Wikipedia:"microeconomics is one of the main fields of economics. It considers the economic behaviour of individual consumers, firms and industries. (Contrast macroeconomics.)
One of the goals of microeconomics is to analyze market mechanisms that establish relative prices amongst goods & services & allocation of limited resources amongst many alternative uses. Microeconomics analyzes market failure, where markets fail to produce efficient results, as well as describing the theoretical conditions needed for perfect competition. Significant fields of study in microeconomics include markets under asymmetric information, choice under uncertainty & economic applications of game theory."

To the above I add this: microeconomics covers all these analytic/decision tools

finance economics, managerial economics/accounting & engineering economics & operations research. All are part of the economics of production, distribution & consumption activities for goods and services

Would you assign no value to the "social cost/value" of complying with safety and pollution costs. What about the social value/cost of implementing anti-terrorism measures? Are not medical insurance and pension plan costs in a sense social values which have been added into the costs of goods and services?

Korinne, air, water, soil are public goods which move about. Private property owners make use of or pollute them and they usu do not include the costs of pollution and clean-up. WHY? Because these costs are left out of the economic equations unless they are imposed by the government by law or regulation, the economic values placed on or involving their use are both incomplete and incorrect. This also means human decisions about consumption/use, production/supply and distribution are incorrect and inefficient. The government is supposed to be guardian of the commons on behalf of the people, but they cater to private property owners instead of to the general public. In addition the laws and regulations that govern use of the commons are often valued incorrectly and the science used to vallue it are distorted by politics and other non-economy considerations. This is just one example of what I think of when I evaluate the mathematics of economics.
TWH 08302006

Answer 1

First I don't know that I would consider microeconomics man-made because in many ways it is the study of human behavior, unless you consider human behavior man-made. Just as psychology studies human behavior in various contexts microeconomics studies human behavior in the context of how do people provide for themselves materially on a day-to-day basis.

it is true that there are some types of markets that 'fail.' you will learn this in any intermediate and possibly intro micro class. typically the type of markets that fail are ones with either high infrastructure costs or unclear property rights.

utilities, such as electricity, is an example of the high cost of infrastructure. basically the problem is that the cost to build all the power lines is so high that realistically there cannot be more than one provider and hence no competition and in this sense I wouldn't be sure that you would want competition bc it would be a huge waste of resources to have more than one power grid built. they have found that when you separate the pwoer grid and the actual production of electricity into separate markets that the production of electricity does act much like a typical market.

unclear property rights is the major problem for pollution. for air pollution for example, if I could say that the air above my house belonged to me then I could tell the nearby factory that they must purchase the rights from me to put pollution in my air, just as a parking lot can charge me to put my car in their space. of course the physical aspects of 'air' make the literal use of this difficult. I can't phsyically prevent the pollution from entering the air above my house if the factory does not pay me. this is the idea behind using the green credits that factories can buy and sell, they are buying and selling the right to pollute.

monetizing these things for calculations is a difficult thing, but then again actual calculations for any market is difficult bc of the fluid nature of the economy. for things to work right we don't necessarily need to calculate them, in fact that is a major reason why communism can't work bc it is too difficult to calculate everything that you would need to know to direct an economy from a central location. instead people going about their daily lives of going to work and being consumers, and the constant interaction of buyers and sellers autonomizes much the work needed to run a market. the key is simply to work out kinks such as those discussed above, so that these interactions are not hindered

this is actually a very broad topic you brought up and there is so much more I could say, but my repsonse is already too long

Answer 2

False, in a free market system buyers set values. Since there are no buyers for "social values". the actual value is zero. Any other amount is not a real value but an assumed arbitrarily set by who?

I would expect any calcuation made using phoney monetized "social values" in the calculation to suffer the fate of "garbage in = garbage out".

Answer 3

INDIA IS GOT A BAD VAASTU AND NOT ONLY INDIA ALL IT'S CLOSE NEIGHBORS AS PAKISTAN ,BANGLADESH SRILANKA THEY ARE ALL IN ONE VAASTU AREA SO THEY CAN NEVER EVER BECOME DEVELOPED .EVEN IF THERE IS SO MUCH DEVELOPMENT AFTER 59 YRS. OF INDEPENDENCE STILL WE R WAY BEHIND OTHER DEVELOPED COUNTRIES .THE ONLY MAJOR REASON IS CORRUPTION AND IT'S LIKE TERMITE AND MAKING US HOLLOW FROM INSIDE .THE POLITICIANS ARE EATING UP ALL THE HARD EARNED MONEY OF COMMON MAN WHICH HE IS PAYING FOR THE DEV ELOPEMENT IN THE FORM OF TAXES.THE RED TAPE ISM AND THE BUREAUCRACY ARE BIGGEST HINDRANCES IN THE WAY OF DEVELOPMENT .AND THERE IS NO RESPITE IN NEAR FUTURE SO CHILL AX CAUSE TILL U OR I OR FOR THAT MATTER ANYBODY WHO IS LIVING TODAY IS ALIVE INDIA CAN'T BECOME DEVELOPED.SO STOP THINKING ABOUT FUTURE ,JUST KEEP GIVING BRIBES AND ENJOY OR LIFE








I would like to see that. I lived with some Indian students while in college. I assume they were rich, at least by Indian standards, some of them didn't know how to cook or wash their clothes. Apparently in India they had servants. Almost no one can afford servants in the U.S.

From the outside looking in, India seems to have turned the corner, away from socialism and toward free enterprise. If they continue on that path it will happen. I'm in the food processing equipment business. 15 yrs ago I never heard of stainless steel components from India, today most of the stainless steel pipe, tubing and fiittings come from India.

15 years ago the only thing that we seemed to import from India was Phd's and most of them managed hotels.