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<DIV>In a message dated 8/8/2004 6:02:48 PM Eastern Standard Time, paul.werbos@verizon.net writes:</DIV>
<BLOCKQUOTE style="PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: blue 2px solid"><FONT face=Arial>At 11:51 AM 8/8/2004 -0400, Premise Checker wrote:<BR><BR>>The most important, and most thankless, function of the economist is to <BR>>turn problems into non-problems. Oil is a non-problem. All that will <BR>>happen is that oil will be more expensive. As price goes up, the quantity <BR>>demanded goes down. Substitutes will be found, as long as men are free to <BR>>find and invent them, and will be marketed, as long as men are free to <BR>>market them.<BR>><BR>>Economists do not speak of the "demand" for oil (or anything else) without <BR>>reference to price. They (we, since I'm one) speak of a demand *function*, <BR>>which gives the *quantity* demanded as a *function* of price. The *law of <BR>>demand*, the most important law in economics, is that the slope of the <BR>>demand *function* is negative: as price increases, the quantity demanded <BR>>decreases.<BR></FONT></BLOCKQUOTE>
<DIV>hb: this law isn't true and its inaccuracy may go to the heart of economics' failure as system for comprehending mass human behavior. By raising the price of some items you can increase their sales. Think Vuitton and Gucci. </DIV>
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<DIV>Why is this true? Because if you handle pricing right, if you set it sky-high, you can sell something that offers far more than the usual utilitarian values. You can offer prestige.</DIV>
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<DIV>How do you calculate factors like prestige and identity--key elements of almost anything we humans purchase--using standard economics?</DIV>
<BLOCKQUOTE style="PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: blue 2px solid"><FONT face=Arial>By the way, you referred to the price of whale oil. It was a prestige source of lighting in the 19th century. If the figures I found in my research for Reinventing Capitalism are right, whale oil sold for the equivalent of $200 a gallon.</FONT></BLOCKQUOTE>
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<BLOCKQUOTE style="PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: blue 2px solid"><FONT face=Arial><BR>I also took economics one -- and the follow-on courses that were a bit more <BR>precise.<BR><BR>The claim is that a perfect market system yields a Pareto optimal solution. <BR>If the case is<BR>overstated a bit (ignoring distributional aspects), this means that it <BR>provides a least-pain<BR>way of allocating pain.<BR><BR>But it's not a perpetual motion machine. There is no upper bound on how <BR>much pain there can be,<BR>even if optimally allocated. Concrete understanding of the concrete <BR>realities of energy today<BR>is not nearly so reassuring as the words in the protected islands of <BR>culture which have yet to have it shoved in<BR>their face. (Reminds me of the words that the Shah and his friends told <BR>each other<BR>a few years back, that many people are starting to remember..)<BR><BR>Best of luck to us all...<BR><BR><BR>>Actually, it is better to speak of the quantity demanded per unit of time, <BR>>but I think you get the general idea. Alas, few laymen, mediamen, or <BR>>pundits do.<BR>><BR>>I can only guess what substitutes will be made, or whether total energy <BR>>use will go down, put the point is that men will adjust to rising prices. <BR>>Think what the price of whale oil, the main source of indoor lighting, <BR>>would be if electricity hadn't come along.<BR>><BR>>Frank<BR>><BR>>On 2004-08-08, Werbos, Dr. Paul J. opined [message unchanged below]:<BR>><BR>>>At 11:51 AM 8/7/2004 -0400, Premise Checker wrote:<BR>>>>Ecologist calls for creation of an international panel to assess human <BR>>>>behavior<BR>>>>http://www.eurekalert.org/pub_releases/2004-08/su-ecf072804.php<BR>>>>4.8.1<BR>>>> Contact: Mark Shwartz<BR>>>> [2]mshwartz@stanford.edu<BR>>>> 650-723-9296<BR>>>> [3]Stanford University<BR>>>>Ecologist calls for creation of an international panel to assess human <BR>>>>behavior<BR>>>> Stanford University Professor Paul R. Ehrlich is urging fellow<BR>>>> ecologists to join with social scientists to form an international<BR>>>> panel that will discuss and recommend changes in the way human beings<BR>>>> treat one another and the environment.<BR>>><BR>>><BR>>>Ehrlich came to NSF a couple of years ago.<BR>>><BR>>>He wanted to talk about CO2 -- and, implicitly, the big new glorious <BR>>>center at Stanford<BR>>>that is supposed to address such environmental problems.<BR>>><BR>>>I still remember the experience of hearing the talk.<BR>>><BR>>>Initial hope as he said: "we can't just treat this as research into how <BR>>>bad the problem is. we need research into what can be done to solve the <BR>>>problem. Thus we need to broaden our approach to make it more <BR>>>decision-oriented and crossdisciplinary..."<BR>>><BR>>>..<BR>>><BR>>>But then:" So we need to work more with political scientists and lawyers..."<BR>>><BR>>>The oil dependency problem looks scarier every time I look one step deeper.<BR>>>And it correlates very closely with the CO2 problem. One thing is clear --<BR>>>lawyers alone have absolutely no hope of locating the real world here.<BR>>>Without some understanding of technologies and numbers it is hopeless.<BR>>>Kyoto by itself, for example, is a high-price Gucci fig leaf that covers <BR>>>almost nothing.<BR>>><BR>>>Best,<BR>>><BR>>>Paul<BR>>><BR>>>(not representing anyone...)<BR>>_______________________________________________<BR>>paleopsych mailing list<BR>>paleopsych@paleopsych.org<BR>>http://lists.paleopsych.org/mailman/listinfo/paleopsych<BR><BR>_______________________________________________<BR>paleopsych mailing list<BR>paleopsych@paleopsych.org<BR>http://lists.paleopsych.org/mailman/listinfo/paleopsych</FONT></BLOCKQUOTE>
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<DIV><FONT lang=0 face=Arial size=2 FAMILY="SANSSERIF" PTSIZE="10">----------<BR>Howard Bloom<BR>Author of The Lucifer Principle: A Scientific Expedition Into the Forces of History and Global Brain: The Evolution of Mass Mind From The Big Bang to the 21st Century<BR>Visiting Scholar-Graduate Psychology Department, New York University; Faculty Member, The Graduate Institute<BR>www.howardbloom.net<BR>www.bigbangtango.net<BR>Founder: International Paleopsychology Project; founding board member: Epic of Evolution Society; founding board member, The Darwin Project; founder: The Big Bang Tango Media Lab; member: New York Academy of Sciences, American Association for the Advancement of Science, American Psychological Society, Academy of Political Science, Human Behavior and Evolution Society, International Society for Human Ethology; advisory board member: Youthactivism.org; executive editor -- New Paradigm book series.<BR>For information on The International Paleopsychology Project, see: www.paleopsych.org<BR>for two chapters from <BR>The Lucifer Principle: A Scientific Expedition Into the Forces of History, see www.howardbloom.net/lucifer<BR>For information on Global Brain: The Evolution of Mass Mind from the Big Bang to the 21st Century, see www.howardbloom.net<BR></FONT></DIV></BODY></HTML>