Chapter 20 FINAL Flashcards
(18 cards)
positive economics
describing, explaining, or predicting economic events
normative economics
making recommendations or arguments about what economic policy should be
most economic theory is
positive economics
objections to “is it always true that trade makes people better off”
- the problem of exploitation
- meddlesome preferences
- fair & equal treatment
- cultural goods and paternalism
- poverty, inequality, and the distribution of income
- who counts? should some count for more?
exploitation. is the seller being exploited in some cases? argument rebuttal response rebuttal
the argument: poor people are more willing to sell goods like kidneys that entail risks
the rebuttal: people at all income levels voluntarily take jobs that involve risk
the response: poor people have fewer choices & paths to prosperity and are therefore forced into risky trades
the rebuttal: it’s hard to say from the outside what is exploitive to another person.
meddlesome preferences
preferences over what other people do, even when they don’t interfere in any direct way with what you do
fair & equal treatment
is it preferable to convert all buses to accommodate wheelchairs even if its more expensive than hiring cabs for all wheelchair users for life?
is “equal treatment” more valuable
economics cannot answer this question (rt if u cry everytim)
cultural goods and paternalism
is the french gov’t right to place quotas on foreign shows to subsidize french music?
should the government support some goods even when the public isnt willing to pay for them?
does it: improve culture & help french firms or waste money, reduce competition, and meddle with free choice
poverty, inequality, and the distribution of income
the BIG question: what is a "just" distribution of income three influential views 1. Rawls's maximum principle 2. utilitarianism 3. nozicks entitlement theory of justice
rawls’s maximim principle
justice requires maximizing the benefits to society’s most disadvantaged groups
the worst-off group should be the priority of all policy
the maximum principle
the most just society is the one where the worst off person makes the most
economists argue that the maximim principle is
inadequate for evaluating policy bc it ignores tradeoffs
utilitarianism
the idea that the best society maximized the sum of utility
it tries to implement policy outcomes which bring the greatest sum of utility (or happiness) to society
utilitarianism recognizes the role of
incentives when redistributing income
taking money away from richer people may decrease their incentive to earn additionally giving dollars to poor people is not always the best way to improve their welfare
most economists do support a
“safety net” as insurance against job loss, health care problems & other disasters
nozicks entitlement theory
income distribution is irrelevent and what matters is the process by which income is acquired
“all capitalist acts between consenting adults should be allowed” (as long as not infringing on someones rights) because if a trade is going to happen clearly they are both going to benefit or one would not be agreeing to the trade
philosphers focus on ______ while economists focus on __________
the distribution of existing wealth/ how wealth is produced in the first place
who counts? immigration?
economists say we should measure the benefits and costs to all people involved
in politics domestic citizens preferences are worth much more than the preferences of foreigners
either way immigration costs and benefits are small compared to the size of the US economy.
