larry d. sanders
DESCRIPTION
2. WHAT BASIC VALUE SYSTEMS & ECONOMIC THEORY FORM THE FOUNDATION TO STUDY NATURAL RESOURCE ISSUES? AGEC 3503 SPRING 2006. Larry D. Sanders. Dept. of Ag Economics Oklahoma State University. INTRODUCTION. - PowerPoint PPT PresentationTRANSCRIPT
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2. WHAT BASIC VALUE SYSTEMS & ECONOMIC THEORY FORM THE
FOUNDATION TO STUDY NATURAL RESOURCE ISSUES?
AGEC 3503SPRING 2006
Larry D. Sanders
Dept. of Ag Economics Oklahoma State University
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INTRODUCTION
Purpose: to understand the ethical & economic foundations of natural resource issues
Learning Objectives:1. Explain the fundamentals of ethics & relation to
environmental/natural resource issues.2.Provide a summary review of economic theory basics.
References (in addition to Hackett text)– Hite, J.C., & W. D. Mulkey. Natural Resource Economics : An Introductory
Textbook, draft unpublished text.– The Internet Encyclopedia of Philosophy
(www.utm.edu/research/iep/e/environm.htm)– Rolston, H. Environmental Ethics, Temple University Press, 1988.
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Class Activity: Ethics
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Whether or not we are aware of it or can express it, “ethics” seem to matter. . . .
“That there ought to be some ethic concerning the environment can be doubted only by those who believe in no ethics at all. For humans are evidently helped or hurt by the condition of their environment.”--Holmes Rolston, 1988
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Natural Resource Disciplines/Approaches
Environmental Policy
Ethics
BiologySocial Sciences (i.e. Economics)
Adapted from Wilson, E.O., Consilience, Knopf, 1998.
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Some “environmentally ethical” claims...
1.As long as more people are better off, development should proceed.
2.Humans should be responsible for the welfare of animals.3.Animals have a right to a quality of life and protection.4.Land owners should be free to do what they want on or
with the land.5.The world was made for man and man was made to rule
& conquer earth.
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Ethics: Some Fundamentals
Ethics--branch of philosophy concerned w/moral duty & ideal human character
Intrinsic rightness (Deontological Ethics) – what’s desirable (hypothetical imperative)– what’s necessary (categorical imperative)– Rawls “Justice” (fairness concept)– Leopold & “Deep Ecology”
Instrumental value (Teleological Ethics) – end justifies means if desirable consequences result
(consequentialism)– Natural Law & Utilitarianism
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Ethics: Some Fundamentals (cont)
Logical fallacy to believe that sciences of “what is” can be applied to “what ought”
Environmental Ethics--examines the moral basis of environmental responsibility; 3 competing theories1. Anthropocentrism2. Species rights3. Ecocentrism
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Class Activity: Teams
Return to teams for “top 3 issues”
Briefly identify ethical dimension of each issue
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Utilitarian Principles & Economics
Benefit Cost Analysis– preferred policy or choice: B > C & Net Benefits are
greatest Pareto Efficiency Criterion
– policy can’t reduce the welfare of others Pareto Superior
– winners must compensate losers Kaldor-Hicks Criterion
– winners must have potential to compensate losers
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Alternative Methods of Economics relate to inclusion of ethics
Positive Economics– evaluates “what is” (the observable)
» the scientific method– objectivity is key
Normative Economics– determines/suggests “what ought” to be done
» based on the norms/standards of society/culture– biased is assumed/explained in the process
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The Key Fundamental Questions of Economics
1.“What” goods/services are produced?2.“How” are goods/services produced?3.“Who” gets benefits & costs?NOTE: Often not discussed are related &
important ethical questions such as:--Who decides?--Who/what/how to represent the voices of those
who don’t have a voice?--What’s fair & to whom?
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Market Allocation
Pure/perfect markets don’t exist Market capitalism--independently-functioning
institution to allocate scarce resources/goods/services w/capital privately-owned & individuals driving the system motivated by self-interest– centuries old & evolving– “golden age” during Industrial Revolution in 19th
century– the ethical dimension has driven market evolution
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Market Allocation (cont.)
Flow of spending & markets & efficiency Supply & Demand & market equilibrium Consumer Surplus--when willingness-to-pay is
greater than price paid Producer Surplus--when price received is greater
than willingness-to-sell Market failure--when any of conditions required for
well-functioning competitive market not met
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The Flow of Spending in the Economy
RENT, WAGES, INTEREST
LAND, LABOR, FINANCIAL CAPITAL
HOUSEHOLDSBUSINESSES
GOODS & SERVICES
MONEY PAYMENTS FOR GOODS & SERVICES
GOVERNMENT
FINANCIAL MARKETS
LOANS
SAVINGSSAVINGS
LOANS
TAXES
TRANSFER/FACTOR PAYMENTS
TAXES
PAYMENTS FOR GOODS/SERVICES
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Efficiency of Market System
Market efficiency:Qd = Qs MB = MCNet Benefits maximized for private market
Social Benefits maximized ifMBs = MCs
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Market Equilibrium
Price
Quantity
P1
Q1
D=MBp=MVp=MWTPp
S=MCp=MWTSp
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Market Failure—Costs
Price
QuantityQ1
D=MBp=MVp=MWTPp=MBs
S=MCpS’=MCs
Q2
P2
P1
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Market Failure—Benefits
Price
Quantity
P1
Q1
D=MBp
S=MCp=MCs
D’=MBsP2
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Market Failure
Inefficient allocation of resources MBp = MCp MBs = MCs Sources
– Imperfect Competition (market power)– Imperfect Information– Public Goods--property rights not assigned– Externalities--costs/benefits that don’t accrue to
economic unit that creates them
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Market Efficiency Issues
Equity– Efficiency may not be Equitable
» Distribution may be a problem» “Best” is determined by Society
Dynamic Efficiency– Static: 1 time period or multiple time periods
independent of each other– Dynamic: Multiple time periods, dependent on
each other [Pt+1 = f (x,y, Pt, z)]
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Class Activity: Teams
Return to Teams Sketch MC & MB
for Team’s “top issue”
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Anatomy of a Public Decision
F a c ts
P u b lic D e c is ion
M yth s V a lu es
P u b lic P ro b lem
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Transition to a Post-Modern Era
Modernism: pursuit of scientific truth(s)“The Victory of Science over Ignorance Ignorance is the curse of God Knowledge is the wing wherewith We fly to heaven.”
--Missouri Botanical Gardens, St. Louis, MO:Victory Sculpture (1885); Italian artist Carlo Nicoli copy of a piece by Cosani in Pitti Palace, Florence, Italy; installed in 1885 as a gift from Henry Shaw, Gardens founder.
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Transition to a Post-Modern Era (cont.)
Postmodernism – a simple definition:
The philosophical viewpoint in which “All pretense to objectivity is abandoned in favor of the position that there are many different [individual] standpoints, each telling a different story about how the world is, and no one of these stories is better than any other. Science, [values, and any form of policy analysis are] just one possible story.” (Curd and Cover)
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Transition to a Post-Modern Era (cont.)
Key Features of Modernity(ism)– Industrial/Capitalist society– Urbanization– Bureaucracy (strong central govt)– Knowledge from science/rational thinking– Progress based on science/technology is good
& preferred
Note: Info on this and the following slides found at http://www.hewett.norfolk.sch.uk/curric/soc/POSTMODE/key.htm
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Transition to a Post-Modern Era (cont.)
Key Features of Post Modernity(ism)– Growth of service sector, decline in mfg,
increase in part-time work and home business, rising unemployment
– Globalization– Fragmentation—increasing diversity– Science in disrepute– Enlightenment in disrepute—no progress,
instead a “playful celebration of chaos”
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Transition to a Post-Modern Era (cont.)
Implications of postmodernism for U.S politics and policy:– Objectivity of value knowledge and scientific knowledge
are impossible and can even be undesirable.– All knowledge regarding policy alternatives and
consequences is subject to “encyclopedic skepticism” (“Global warming is a hoax”-Sen. Inhofe)
– “The [postmodern] political culture, like the new popular culture, is skeptical of certainties and fixities and welcoming of novelties so long as they provide the audience with the satisfactions it seeks at the moment.” (Schier) (“Intelligent design”)
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L2: Homework
Read Ch. 2, Hackett (17 Jan) Do # 1, p. 35 (17 Jan) –5 points Read Ch. 3, Hackett (19 Jan) Do # 1, p. 50 (19 Jan) –5 points Refer to “Internet Links” (19 Jan) –5 points
– Select 2 links (one from pp. 35-6; one from pp50-1)– Briefly review, including
» Content» Bias or objectivity» Likely use of material
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References
Hackett, text.http://www.hewett.norfolk.sch.uk/curric/soc/POSTMODE/key.htmSanders, various notes.Schweikhardt, D. selected notes on postmodernism (see instructor
for specific citation)Ward, G. Teach Yourself Postmodernism, Hodder Education,
Great Britain, 2003.