In Section 4 of his essay What is Seen and What is Not Seen, Theaters and Fine Arts, Bastiat and Lamartine argue over whether it is good or bad to subsidize the arts. Bastiat says no while Lamartine says yes.
Lamartine argues that the arts "broaden, elevate and poetize the soul of a nation" and defends that countries like France would lack their soul without the arts. He believes that without taxes and regulation, an institution is doomed to fail. He also claims that with subsidies, the arts can support wages of 80,000 workers. After all, the work of artists is just as useful as any other profession.
Bastiat takes the contrary position. At first he just talks about how theaters that support themselves have better profits and that the choice to support an institution should come from the people and not from legislation. He wants to protect the free development of activities "without keeping someone on the payroll at another's expense."
Finally, Bastiat looks at the debate by what we can and can't see. The subsidies and taxes come from somewhere. And if we take 1 franc from each taxpayer to pay for the arts, then that is 1 less franc people can use on other things. Since work of artisans is just as useful as others, why are we hurting the carpenters and blacksmiths who won't have that 1 franc spent on their goods? There is the mistake of public spending replacing private spending. This just reallocates wages.
I found Bastiat's arguments very intuitive and persuasive. People don't realize the hidden costs and where the money comes from. He definitely won the debate.
I am a theater kid so I am biased, but I will try to stay non-opinionated. We cannot afford the destruction of the arts; it is the soul of countries. But today, we saw failing Broadway musicals and other problems in the recession. People today just don't support the arts like they used to so shouldn't we subsidize the arts when people don't attend plays or museums? At a point like this don't we need public spending when there is NO private spending? Also, I know I shouldn't be following the money but look: if the we let the arts fail by not subsidizing, then they will have no money to spend at the tailor. This could cause a trickle effect. Isn't it better to take 1 franc away from the tailor (and everyone else) to support the arts and thereby not destroy an institution and let the money come back to the tailor by the artist. I feel like Bastiat doesn't even touch on this. Finally, the arts are tricky. This seems like one of the only industries where there is no trade and even looks mercantilistic. Is there a way that we can make the arts more of a trade? We need more over seas showcases and shows. We need Miss Saigon in Saigon! Then competition comes and then we stop or mercantilistic ways.
We read this too elaborate on the effects of what is seen and not seen. Through the Broken Window Fallacy we saw a little about this. In class we have learned not to follow the money but to look at the resources instead. This essay looks at yet another aspect of hidden costs.
Saturday, October 8, 2011
Destruction is NEVER good. It hurts singers and Duffman!
This week we looked at the Broken Window Fallacy: that destruction is never good and that while a broken object may increase the economy of the industry that has to replace the object, it hurts another industry where other objects were never bought.
Rizzo always brought up natural disasters and wars as examples. He would then ask "if it's soooo profitable, then why don't we destroy things ourselves?" Well, here are some examples.
I was watching the Simpsons, and there is an episode where Bart wants a new bike so he throws his old one in front of a car (Dr. Hibbert's). Dr. Hibbert buys him a new bike. I immediately thought of class and the whole idea that now the world was now poorer thanks to Bart. (I am making everything up from here on. This did not happen in the episode). Yes Bart has a new bike, and yes the bike company profited, but the world didn't. Dr. Hibbert had money and Bart had a bike. Now Bart has a bike and the doctor has no money. Not only does the world lose the resources for making bikes, the metal and rubber, the world looses out on the Duff Beer that Dr. Hibbert was about to go buy. The Duff company then doesn't get as much money and is forced to fire Duffman. Bart's selfishness to get a new bike has caused the world to be poorer and cost a man his job. ¡AY CARAMBA!
Here's another example.
When Rizzo talked about Lander Auditorium and the horrible-ness of the classroom for a test/lecture/whatever, a student behind me decided we should just burn it down and make a new one. I looked at the future arsonist with two puzzled looks. First off, Lander Auditorium is where Men's Glee Club rehearses and the acoustics are amazing in that room. (No one knows this benefit!) And yes we shouldn't put classes in that hall because it is a horrible classroom. If we were forced to build a new Lander Auditorium, my rehearsals would have to be moved, and that would be annoying. Perhaps we would go to Harkness during all office hours for practice. The second puzzled look was because of what we had just been learning in class. If the room magically burned down (without the rest of Hutchinson burning down) the world would suffer. Rochester had money and an auditorium. After reconstruction it only has the auditorium. Rochester would have to go get more wood, cement, lights, etc for the new auditorium. The world would then not have these resources. Then Rochester would also have less money and would increase the tuition and donations of the students and alumni. Then we don't have the money to go spend on other things in the world and the chain continues. Also, we are building a lovely new academic building whose construction site is next to our economics class. Now because of the construction, we don't have the materials or money to finish the project. But we admit the students for 2012 assuming it would be finished and now we have an overpopulated university. And we get to keep the eyesore on the quad.
Destruction is NEVER good. Whether or not it "helps" the companies that get to replace the broken things or people get newer things (bikes and auditoriums), the world suffers by destruction. We lose the money and the resources and there will be a trickle effect of hidden costs.
Rizzo always brought up natural disasters and wars as examples. He would then ask "if it's soooo profitable, then why don't we destroy things ourselves?" Well, here are some examples.
I was watching the Simpsons, and there is an episode where Bart wants a new bike so he throws his old one in front of a car (Dr. Hibbert's). Dr. Hibbert buys him a new bike. I immediately thought of class and the whole idea that now the world was now poorer thanks to Bart. (I am making everything up from here on. This did not happen in the episode). Yes Bart has a new bike, and yes the bike company profited, but the world didn't. Dr. Hibbert had money and Bart had a bike. Now Bart has a bike and the doctor has no money. Not only does the world lose the resources for making bikes, the metal and rubber, the world looses out on the Duff Beer that Dr. Hibbert was about to go buy. The Duff company then doesn't get as much money and is forced to fire Duffman. Bart's selfishness to get a new bike has caused the world to be poorer and cost a man his job. ¡AY CARAMBA!
Here's another example.
When Rizzo talked about Lander Auditorium and the horrible-ness of the classroom for a test/lecture/whatever, a student behind me decided we should just burn it down and make a new one. I looked at the future arsonist with two puzzled looks. First off, Lander Auditorium is where Men's Glee Club rehearses and the acoustics are amazing in that room. (No one knows this benefit!) And yes we shouldn't put classes in that hall because it is a horrible classroom. If we were forced to build a new Lander Auditorium, my rehearsals would have to be moved, and that would be annoying. Perhaps we would go to Harkness during all office hours for practice. The second puzzled look was because of what we had just been learning in class. If the room magically burned down (without the rest of Hutchinson burning down) the world would suffer. Rochester had money and an auditorium. After reconstruction it only has the auditorium. Rochester would have to go get more wood, cement, lights, etc for the new auditorium. The world would then not have these resources. Then Rochester would also have less money and would increase the tuition and donations of the students and alumni. Then we don't have the money to go spend on other things in the world and the chain continues. Also, we are building a lovely new academic building whose construction site is next to our economics class. Now because of the construction, we don't have the materials or money to finish the project. But we admit the students for 2012 assuming it would be finished and now we have an overpopulated university. And we get to keep the eyesore on the quad.
Destruction is NEVER good. Whether or not it "helps" the companies that get to replace the broken things or people get newer things (bikes and auditoriums), the world suffers by destruction. We lose the money and the resources and there will be a trickle effect of hidden costs.
Class 16 - Is the Titanic a Sunken Cost?
Today we talked about the margin. The margin is a little bit more or less.
The phrase "Cassie is unselfish" means nothing. It causes the listener to compare it too what we believe is an unselfish person. Someone who knows a saint might believe that Cassie is basically God while someone from a bad neighborhood might believe that Cassie is just someone who won't mug them.
Bruce doesn't release an album every day and men don't say I love you because when they do, the value is so great at the margin. (marginal value).
For example: teachers (water) vs athletes (diamonds).
The skills for athletes are more scarce so at the margin we value athletes more. If 200 of each group disappeared, the athlete group would be more affected (maybe lockouts would happen....) But if there's none of each group, the teachers matter more. Or if there's one of each - we want that teacher more. The total value of the teachers out ways the athletes.
This is why we pay the worker making drugs more than the worker making a bouncy ball even though they might be doing the same work. The skills for the drug guy are more scarce so we value him at the margin.
Then we talked about how oil isn't a resource, but its function is. Like how people pay money for water when it's "free". We pay for the function of having water on the go.
Then we talked about sunken costs - the opposite of marginal costs. No matter how we change our decisions, these costs don't change. They are costs from the past - they are sunk. For example: if Rochester ended the football program, the mortgage on the stadium is a sunken cost - it's already spent, in the past. But scholarships and tickets would be a marginal cost.
Then there's the law of unintended consequences. Seen through seat belts in cars, yes we do save lives but what has happened? People speed more, the cost of driving badly has decreased. The accidents have increased but they are now safer accidents. But who suffers? The pedestrians.
The phrase "Cassie is unselfish" means nothing. It causes the listener to compare it too what we believe is an unselfish person. Someone who knows a saint might believe that Cassie is basically God while someone from a bad neighborhood might believe that Cassie is just someone who won't mug them.
Bruce doesn't release an album every day and men don't say I love you because when they do, the value is so great at the margin. (marginal value).
For example: teachers (water) vs athletes (diamonds).
The skills for athletes are more scarce so at the margin we value athletes more. If 200 of each group disappeared, the athlete group would be more affected (maybe lockouts would happen....) But if there's none of each group, the teachers matter more. Or if there's one of each - we want that teacher more. The total value of the teachers out ways the athletes.
This is why we pay the worker making drugs more than the worker making a bouncy ball even though they might be doing the same work. The skills for the drug guy are more scarce so we value him at the margin.
Then we talked about how oil isn't a resource, but its function is. Like how people pay money for water when it's "free". We pay for the function of having water on the go.
Then we talked about sunken costs - the opposite of marginal costs. No matter how we change our decisions, these costs don't change. They are costs from the past - they are sunk. For example: if Rochester ended the football program, the mortgage on the stadium is a sunken cost - it's already spent, in the past. But scholarships and tickets would be a marginal cost.
Then there's the law of unintended consequences. Seen through seat belts in cars, yes we do save lives but what has happened? People speed more, the cost of driving badly has decreased. The accidents have increased but they are now safer accidents. But who suffers? The pedestrians.
Class 15 - Don't Throw Rocks at Windows. Especially if You Live in A Glass House - or if you value the world....
Today we talked about the Broken Window Fallacy. If Rizzo's window breaks it is bad. Destruction is bad.
1. Rizzo did not want the new window. The destruction did not happen at the same moment Rizzo decided that the window needed to be replaced because it was foggy.
2. Rizzo had money and a window. Now he spent the money and only has a window. Also he has no new driveway since he spent the money. Now the driveway people have less money. We shouldn't look at the money - only the resources.
3. Even if the window makers are unemployed and in a recession, it is bad. Creating jobs and taxing people today will only hurt us in the future.
Wars are costly - if we wanted to build a new road in Japan why did we need to bomb Hiroshima? - cheap demolition? No, wars are not worth the death or the waste of resources. WWII did NOT get us out of the Great Depression.
4. Costs are subjective. Costs that influence behavior aren't recognized because we will never know the benefits/costs of doing something else.
5. Marginal Thinking is the reference point that tells values. For example a cup of water vs a cup of diamonds. The water has high value and low cost but the diamonds have low value but high cost. If each was the last of its kind - last water/diamond, what would I want? I would want the water - proving it has higher value.
Marginal cost is the change in cost when making a decision. If I get on a plane that has one seat left - it costs the plane nothing to fly me so why not charge me less to make some profit - the plane's going to fly anyway. But if the plane is full, the plane should charge me the cost of flying a whole plane for me to fly. The cost changes based on the situation.
1. Rizzo did not want the new window. The destruction did not happen at the same moment Rizzo decided that the window needed to be replaced because it was foggy.
2. Rizzo had money and a window. Now he spent the money and only has a window. Also he has no new driveway since he spent the money. Now the driveway people have less money. We shouldn't look at the money - only the resources.
3. Even if the window makers are unemployed and in a recession, it is bad. Creating jobs and taxing people today will only hurt us in the future.
Wars are costly - if we wanted to build a new road in Japan why did we need to bomb Hiroshima? - cheap demolition? No, wars are not worth the death or the waste of resources. WWII did NOT get us out of the Great Depression.
4. Costs are subjective. Costs that influence behavior aren't recognized because we will never know the benefits/costs of doing something else.
5. Marginal Thinking is the reference point that tells values. For example a cup of water vs a cup of diamonds. The water has high value and low cost but the diamonds have low value but high cost. If each was the last of its kind - last water/diamond, what would I want? I would want the water - proving it has higher value.
Marginal cost is the change in cost when making a decision. If I get on a plane that has one seat left - it costs the plane nothing to fly me so why not charge me less to make some profit - the plane's going to fly anyway. But if the plane is full, the plane should charge me the cost of flying a whole plane for me to fly. The cost changes based on the situation.
Class 14 - The Cost of Hearing Copacabana Over Born To Run = My Ears!
Today we talked about the axiom of scarcity and how people make choices.
We talked about how people are forced to make tradeoffs by scarcity and how these choices show our values. We talked about equity vs efficiency. Equity is making things more equal for everyone, like taxing people that do the same work, and efficiency is defined economically as producing things that people want at a low cost.
A cost is anything that consumes resources.
We then talked about opportunity costs and an in depth discussion on an example involving Bruce Springsteen tickets. Opportunity costs are what you must give up to get things - the net value of the next best option. (Benefits - costs). In class we talked about a free Bruce ticket vs a Barry Manilow ticket that I value at $50 but I can buy for $40. If I valued Bruce for nothing, the opportunity cost of seeing Bruce is $10 (the saved $10 of seeing Barry).
However, everybody values Bruce! So what is the minimum that I have to value Bruce at to see him? Well if I valued Bruce at $11 then I am saving $11 over the $10 of Barry so I should go to Bruce. But I could also value Bruce at $1 million and then I would definitely go to Bruce. I may or may not value Bruce more (I do.) But the value of Bruce must be at least $11.
We talked about how people are forced to make tradeoffs by scarcity and how these choices show our values. We talked about equity vs efficiency. Equity is making things more equal for everyone, like taxing people that do the same work, and efficiency is defined economically as producing things that people want at a low cost.
A cost is anything that consumes resources.
We then talked about opportunity costs and an in depth discussion on an example involving Bruce Springsteen tickets. Opportunity costs are what you must give up to get things - the net value of the next best option. (Benefits - costs). In class we talked about a free Bruce ticket vs a Barry Manilow ticket that I value at $50 but I can buy for $40. If I valued Bruce for nothing, the opportunity cost of seeing Bruce is $10 (the saved $10 of seeing Barry).
However, everybody values Bruce! So what is the minimum that I have to value Bruce at to see him? Well if I valued Bruce at $11 then I am saving $11 over the $10 of Barry so I should go to Bruce. But I could also value Bruce at $1 million and then I would definitely go to Bruce. I may or may not value Bruce more (I do.) But the value of Bruce must be at least $11.
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