Wednesday, April 7, 2010

Super Freakanomics

by Steven Levitt & Stephen Dubner

1. People respond to Incentives.
2. Declared preferences are how people say they behave. Revealed preferences is how people actually behave.
3.Gary Becker - "the economic approach" - a systematic means of describing how people make decisions and how they change their minds.
4. Natural experiment is a set of conditions (in the natural world) that mimic the experiment you want to conduct (in a lab, eg) but for whatever reason, you cannot.
5. Rational decisions - a typical person makes rational decision in line with his own self-interest.
6.Altruism - what about giving money away?
Experiment: - the game Ultimatum - demonstrates seemingly kind behaviour in Ultimatum are inextricably tied in with potentially selfish motivations. the game Dictator - show that human being seem hardwired for altruism.
7. But, John List's experiments showed that when a person comes into some money honestly and believes another person has done the same, he neither gives away what he earned nor takes away what doesn't belong to her.
8.So how to explain the games that show altruism? Could be because lab experiment results are unbelievable because:
a. selection bias in terms of volunteers;
b.scrutiny - effect on the behaviour of the volunteers;
c. context - ie the incentives/social norms/ framing references/past experiences which results in a productive way to act;
d. forced cooperation.

Note too that US tax codes are the most generous in allowing deductions for contributions.

9. Impure altruism or warm-glow altruism.
10.Externality is what happens when someone takes an action but some one else without agreeing, pays some or all the costs of that action. It is an economic version of taxation without representation.
11. How to address a negative externality?
To make sure the doer faces the full costs of his action ie to "internalize" the externality.
12. Not all externalities are negative.

Monday, April 5, 2010

Social Capitalism in Theory & Practice

by Robert Corfe
http://yunusphere.net/2008/03/06/social-capitalism-robert-corfe/

"In the first volume of my book, Social Capitalism in Theory & Practice, I’ve

explained how industrialised societies in the developed world are ready for such a transformed view of humanity and such a fresh approach to politics.

37 – In the same volume I’ve also elaborated on the need for such a viewpoint, on the grounds that a fair and egalitarian society can only be achieved through the willing cooperation of all sectors of society.

38 – I’ve also argued strongly that a fair, free, and egalitarian society can never be achieved by Socialism as we’ve known it, for a host of reasons, but primarily because:- 1. The spirit and aims of collectivism contradict the needs of freedom and the individual; 2. The resentment of class consciousness oppresses aspirational values; 3. The bureaucratisation of enterprise destroys the business dynamic, and hence imposes an authoritarian elite for production and distribution; and 4. and most significantly, the idealisation of a proletarian class – however that is defined – has not led to a free and egalitarian society, but on the contrary and everywhere, to a society which is shackled by the restrictions of its limited vision.

39 – Social Capitalism, as described in the second and third volumes of my book, is dependent on the ownership and management of the means of production, distribution, and exchange, not by any abstract collective entity, but by individuals at the grass roots level, and through their influence on the hierarchy of authority.

40 – This is made practicable through changes to company law in conjunction with proven systems of co-determination and employee share-ownership. It leads to what I have described as the Responsible Society."

Sunday, April 4, 2010

Labor and social capital: disengaging from social justice?

by Dr. Lou Wilson and Keri Chiveralls


Idea of social capital started from Marx. "For Marx capital is both the accumulation of wealth and a social relation, which leads to the formation of social classes and social power".

Pierre Bourdieu began to publish on the forms of capital in French language journals in the 1960s and 1970s. His work was not accessible to English language audiences until the publication of Many Forms of Capital in 1985. According to him, capital can present itself in three different forms: cultural capital, social capital and economic capital. Critically, Bourdieu (1985: 241-248) suggests social capital has three elements:
1. The social relationship that enables individuals to gain access to resources possessed by their associates.
2. The amount of those resources. 3. The quality of those resources

Bourdieu’’s work was extended by James Coleman (1988), three types of capital are physical, human and social capital. Like Bourdieu, for Coleman, social capital is an endowment of social structure, located in the spaces between and among individuals.

While Coleman (1988) saw social capital in terms of its benefits to individuals or groups, Bourdieu (1985) saw social capital as an explanation of social stratification.

the concept was not popularised until the release of the works of Robert Putnam (et al. 1993, 1995. In this seminal study, Putnam argues that governmental effectiveness in Italy can be tied to levels of social capital in the regions through the rubric of civic engagement. Putnam’’s work suggests that in order to attain economic growth, community development initiatives must consider the importance of civic groups that may seem to have little to do with either politics or economics. An important conceptual shift takes place in Putnam’’s writings as social capital becomes no longer a property residing in relationships between individuals but the property of groups and even nations.

Latham (Australian labor politician)
In his book with Peter Botsman, The Enabling State: People Before Democracy, Latham (2001) argues that we live in a period of relentless insecurity, which threatens the cohesion of our society. The welfare state is said by Latham to have failed to provide certainty in this time of insecurity. The new insecurity is associated with economic prosperity but some people are being left behind and excluded from the benefits of the new order, which is attributed by Latham to the provision of ““passive welfare services”” that encourage welfare dependancy. Passive welfare services are programs that provide social security to citizens without requiring mutuality in the form of work for the dole schemes and similar forms of obligation (Latham 2001).
Latham is often accused by his political opponents of simply lifting his ideas from Tony Blair’’s New Labour and the Clintonian Democrats. Without wishing to unpack politically motivated accusations of plagiarism against Latham, it is clear that Latham’’s ideas on social cohesion and social exclusion are in accord with the so-called ““Third way”” project of Bill Clinton and Tony Blair.

In broad terms, Latham (1998: 31-36, 126, 165, 223-231) argues that the cost of providing social welfare must be reduced and wage earners made to pay more for their retirement, the education of the children, their health and periods of unemployment because the state can no longer raise taxation from capital as it has in the past. The advent of transnational corporations and the new international mobility of capital means that rather than taxing nationally-based capital, governments are increasingly involved in a bidding war to attract capital investment. Therefore social welfare assistance must be reduced or made to pay for itself.

Conclusion

The concept of social capital is not new, having received theoretical attention from the time of Marx’’s conception of the term as a form of social power related to the formation and reproduction of social stratification and from scholars as diverse as Bourdieu, Coleman and Putnam.
Mark Latham clearly prefers Robert Putnam’’s normative reconception of social capital as a virtuous, singular entity. Latham believes social capital in this sense is capable of transforming the Australian social protection system to make it more compatible with neo-liberal economic reforms, which Latham also favours. Unlike his predecessors in the Labor Governments of the 1980s and 1990s, Latham does not advocate redistributive social justice policies to alleviate the impact of neo-liberal economic reform on Labor’’s core supporters. Latham argues that the redistributive welfare state undermines the ““risk positive culture”” that so many cultural theorists hold to be the hallmark of ““late-modern”” society. Instead he favours an expanded ““user pays”” system of social protection and substituting redistribution with relatively inexpensive social capital nurturing programs which will reduce the tax burden on ““risk takers”” and build virtuous cycles of trust, reciprocity and prosperity.

Bowling Alone: America's Declining Social Capital

Robert D. Putnam

"social capital" refers to features of social organization such as networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit.

For a variety of reasons, life is easier in a community blessed with a substantial stock of social capital.

In the past, America has been very famous for civic engagement and an active civil society. This seems to be a prerequisite for democracy.

US has been enriched by this social capital through conventional civic associations. There used to be a lot of social connections and neighbourliness. But this has changed in recent times (1970s to 1990s). This is evidenced in declining voter turn out, church attendance, associations and clubs, union membership, parent teacher associations. Volunteering in mainline civic associations had also fallen from 24% of adults in 1974 to 20% in 1989.

But there has been a countertrend - in large organizations like environmental groups or feminist groups. They have large numbers of members - but mostly tertiary associaitons (ie 3rd level involvement) eg writing out donations. they don't get involved in each other.

a 2nd countertrend is the rise of non profit organizations.
a 3rd countertrend is the rise of small support groups eg Alcoholics Anonymous

The reduction in social capital is due to females going into workforce, mobility of the workforce, changing family units, technological advances changing habits (tv, computer, internet)