The extent to which a thing is "efficient" or "optimal" is entirely based on a desired outcome being comparing to actual outcomes. All magical market theory is completely silent on the desired outcome or who would be the beneficiary...
The hyperbolic paraphrasing "market competition solves all problems", is for the purpose of pointing out that making a few of the richest people much richer, while impoverishing the rest of the world's population, may be "most efficient", but it's not really helping make the world a better place to live, even for the most wealthy...
This is a pet peeve. Everyone has learned this meme that “economics is dumb”, and now people assume that the most basic difficulties they can imagine are probably valid criticisms. Modern economics has limitations, but they’re not so simplistic and obvious as the ones you’re raising.
The problem isn’t that magical market theory takes an average and determines we’re all better off because we all got poorer and one guy got way richer. But it might say that we’re all better off if everybody DID get richer, but one guy got _extra_ rich. That we still might object to the latter situation is a valid concern, but it’s a very different level of oversight on the part of the economist.
Another one that comes up is that people seem to think that because the consumer is assumed to be ‘rational’, this implies that the economist is imagining people as unfeeling automatons incapable of valuing experiences over material wealth. When really it’s more like “if I offer you two paid vacation options for the same price, you will choose the one you prefer”. Even that, it turns out, is inaccurate and incomplete - but it’s a much more defensible simplification.
Outside of all of that, both previous rebukes to my comment fail to address the main point, the majority of people are not better off even given massive economic growth of recent decades.
> The ultimate veto power of the third option is evident all around us.
...
> The main difference between theory and reality, is that in theory they're the same, but in reality they're not.
> This applies doubly to economic theory...
Economic theory is based on assumptions of human behaviour. This makes it fundamentally a study in sociology.
So while there are some brilliant mathematical mechanisms used, relying on those numbers to mean something in the real world that humans inhabit is a stretch, and has very often had a hard time when comparing it's own predictions to the historical record.
Hayek argued that the best health care outcomes would come from private investment, and Keynes predicted we'd be working 15 hour weeks. Both of these are in stark contrast to the reality on the ground in the world today.
Well, ok - I’ll grant that you can find simplistic narratives that overly rely on GDP to stand in for “overall goodness”. But my point is more that the field of economics is not doing that. Modern economics understands what GDP does and doesn’t tell you, and they have better tools at their disposal to unpack the deeper picture. It seems a little unfair to level that criticism at practitioners when it’s really politicians or non-economists “playing with dad’s gun”.
I agree with that. Both in terms of your statement regarding the understandings of economists working in their field, and in a sense of trying to meet in the middle here, because I don't think we're that far apart.
My main objection is not against what specialists do when working within their field of expertise, it's that the main impacts of economics on society at large is via the:
> politicians or non-economists “playing with dad’s gun”.
And like the outcomes of the literal interpretation of that analogy, the results are often deadly, and usually for innocent bystanders.
Wealth often presents actions as if they are shown to be mathematically correct, via "economic theories", when they are primarily used as justification of exploiting others for more gain for the people that already have the most.
If economics is going to be beneficially applied outside of experts working in their field, then it needs to be corralled by bounds that consider the impacts on society as a whole in the real world, and unfortunately that's not what's happening.
More efficiently for whom?
"Efficient" in what way?
The extent to which a thing is "efficient" or "optimal" is entirely based on a desired outcome being comparing to actual outcomes. All magical market theory is completely silent on the desired outcome or who would be the beneficiary...
The hyperbolic paraphrasing "market competition solves all problems", is for the purpose of pointing out that making a few of the richest people much richer, while impoverishing the rest of the world's population, may be "most efficient", but it's not really helping make the world a better place to live, even for the most wealthy...