Re: Australia's economy

"Greendistantstar" <pde63539Oremovethis@xxxxxxxxxxxxxx> wrote on Sun, 29 Jul 2007:
"Don Geddis" <don@xxxxxxxxxx> wrote in message
news:87tzro6zy5.fsf_-_@xxxxxxxxxxxxx
"Greendistantstar" <pde63539Oremovethis@xxxxxxxxxxxxxx> wrote on Sat, 28 Jul
2007:
It's called the labour theory of value, refer to Adam Smith and David
Ricardo.

That's a pretty silly theory of value. It is not predictive of the actual
behavior of human beings in economic situations.

Don, it's economics 101.

Introductory economics courses at modern universities talk about the Labor
Theory of Value only in a historical context. It was a primitive attempt by
early economists to understand how economies work.

It is _not_ the understanding used by the vast majority of economists today.
And for very good reasons: it is not predictive of actual human economic
transactions that occur.

As Wikipedia says
http://en.wikipedia.org/wiki/Labor_theory_of_value

Different labor theories of value prevailed amongst classical
economists through to the mid-19th century. [...] Since that time it
is most often associated with Marxian economics; while among modern
mainstream economists it is considered to be superseded by the
marginal utility approach.

"Econ 101" at a modern university is going to teach you the marginal utility
theory of value.

It isn't that I don't know what LTV is; it's that it isn't a useful theory.

Diminishing marginal utility is part of the same group of axioms and
doesn't nullify LTV. Really. Maybe I don't know much about some ***, but
economics is my baby...my first major and my profession.

Good argument from authority. Nonetheless, it's the case that virtually no
modern mainstream economist subscribes to the Labor Theory of Value. So, if
you think that's what you learned, you've got a lot to answer for.

If I was in the US, I'd be concerned about titanic unfunded govt
liabilities, foreign debt and a currency with lots left to lose.

I don't disagree. But we were discussing how Australia's "1st-world" economy
was odd, among the other 1st-world nation's economies. The US surely has its
own problems, but that's a different topic.

That the earth is receiving solar energy is indisputable, but that doesn't
make the earth an open system.

Isn't that the definition of an "open" vs. "closed" system?

Stuff simply gets converted from one state to another. Ultimately, all
resources will run down as they get converted from energy holding to
inert. Ya can't escape entropy.

As long as the sun continues to burn, the Earth can easily increase in order
rather than increase in entropy. An energy source is a simple way for an
open system like the earth to violate thermodynamic entropy laws.

and resources are essentially infinite.

No, I never said that.

It's implied if you take the position that the earth is an open system.
Some of the environmental problems we face today can be traced back to
economic assumptions that resources were essentially infinite. We now know
how deeply flawed that assumption was.

You draw odd conclusions.

If you want to talk in theory, it is certainly true that you could use solar
power to drive particle accelerators, and via that you could make as much of
any raw material as you want. You could churn out an endless supply of gold,
for example, by creating it via fusion.

But it takes a bucketload of energy to make a tiny amount of gold. Not
generally worth it.

The contrasting view is the cheap mining of gold out of hills. That kind of
cheap extraction of gold does indeed run out over time. So anything that
depended on an assumption that new supplies of gold (or oil, or ...) would
always be cheap was of course flawed.

The earth is an open system. But we're still going to hit Peak Oil in a few
years.

-- Don
_______________________________________________________________________________
Don Geddis http://don.geddis.org/ don@xxxxxxxxxx
I think it was Grandpa who taught me the value of nature. He said the bear is
worthless, trees are trash, and the eagle is a piece of crap.
-- Deep Thoughts, by Jack Handey [1999]
.