SIXTEENTH ESSAY 1-18-01
Moral Economics - Essays On The Relation of Economic Theory to the Moral
Perspective in POVERTY AND DEVELOPMENT: AN INTER-FAITH PERSPECTIVE.
[www.wfdd.org.uk/]
This is the sixteenth of an occasional series of short essays about how
economic theory interacts with a moral perspective. Readers are invited to
discuss and to re-post widely, but please quote the source.
DEVELOPMENT WHICH HURTS SOME MEMBERS OF A GROUP IS NOT ACCEPTABLE
"...it is not possible to understand humanity merely by focusing on the
individual...Development strategies need to embrace the notion of community
by strengthening the natural social bonds of the poor."
[POVERTY AND DEVELOPMENT: AN INTER-FAITH PERSPECTIVE, para 6.0]
ECONOMICS FOCUSES ON THE INDIVIDUAL
Economics has an inherent conflict with faith based communities in that
economic practice measures material gains by individuals in order to
determine if progress is made. By doing so, economics misses the point that
the well-being of the community may be made worse off if some members of the
community are made worse off. Faith based thinking says that all members of
the community should be better off if progress is made.
Many economic growth policies allow social inequality to increase during
economic growth. Such policies "...almost always benefit the better off,
while often actively harming the poor, and they certainly do not contribute
to the building of peaceful communities or to true social cohesion."
[POVERTY AND DEVELOPMENT: AN INTER-FAITH PERSPECTIVE, para 6.0]
ECONOMIC PRACTITIONERS MUST CHANGE THEIR FOCUS
Any economic practice which ignores the overall effects on a community and
counts only the average material gain of a community runs the risk of
creating active harm to communities. It will be difficult for economists to
change their thinking in this regard since most training in the subject
deliberately avoids such issues.
NEW FOCUS MUST BE EXTERNALITIES
It is the writer's opinion based on some forty years' experience in the
field that the single biggest failure of economics is its persistent and
deliberate ignorance of external costs, or 'unintended consequences'.
For example, automobile manufacturers calculate their profits based on the
sales price of their products less the costs of their products. But, no
automobiles could be driven or sold without roads, service facilities, air
pollution or fuel. The costs for these necessities is born by society as a
whole and not by the automobile manufacturers; these costs are external to
their profit calculations.
However, these are very real costs to the community. Similarly, the cost of
increasing social inequality from poorly designed growth policies is a very
real cost to the community which is not factored into the calculations of
cost and benefit derived from these programs.
Economists who begin to calculate those external costs into their policy
recommendations are acting morally, in this writer's opinion.
Michael Pierce McKeever, Sr.
Economics Instructor, Vista Community College, Berkeley, CA
URL: www.mkeever.com [Note: no 'c' in mkeever]
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