Thursday, August 10, 2006

The Greater Pie Theory of Economics

From William Greider's Conversation with Robert Rubin

Rubin: Bob [Reich] and I used to have a discussion--if you could trade off some part of growth to have some better distribution, would you do that? I always said I wouldn't, because I figured you want to get maximum growth and then try to figure out how to get the distribution. Bob used to feel--and look, it was a reasonable position, it wasn't where I was--that if you have somewhat less growth and better distribution, that was a better place to be.

Greider: Did you change your mind about that?

Rubin: No, because I still think that once you get the better growth, you can figure out the other part, the distribution. I still think I'd get the most pie I could and then figure how to get the distribution that results in everybody getting it--broad participation in it instead of the very limited participation we've had.

I seem to remember back when I started studying economics most definitions of the study included some reference to managing limited resources. Today when I search for definitions I don't find that reference as often as I recall but perhaps I'm just getting old and my memory is fading.

One definition I found had me laughing, the science that deals with the production, distribution, and consumption of wealth. I guess the poor don't practice economics.

Yesterday when I suggested that I couldn't tell if, in the event of a radical changing of the guard, things would improve, it was, in part, with Rubin's "greater pie theory" in mind.

If Mr. Rubin is one of the Democrats' shining stars and his economic philosophy is as stated, I can't see how things will get better, particularly if things like oil and water become, relative to growing populations, scarcer and scarcer.

I wonder if widespread belief in the "greater pie theory" is what aligns the elite of the right and the left in the US...and what is, in my view, driving us over the cliff.

Perhaps I am naive but if you can't be happy with what you have, and your major products are financial innovations and armaments, eventually you will have to take somebody else's stuff. If too many people play that game, well, you get what we see now. If even more people play then the planet will become very small indeed.

I much prefer the old definition of economics.

Not knowing the power of flame, the insect falls into it.
The fish swallows the bait, not knowing the hook inside.
That, well aware of the vanity and dangers of the world,
We cannot give it up —
Such is the power of Delusion.