Re: Efficiency

[Herbert Gintis <gintis@xxxxxxxxxxxxxxx>]

Allan Schmid writes:

>Efficiency is a relationship between input and output.  The relevant input
>and output categories are determined by institutions (property rights) and
>thus there are as many different efficient outcomes as there are systems of
>institutions.

	This sounds very relativistic, whereas I think that if we take
an evolutionary approach to economic systems, an absolutist approach
is warranted--i.e., some systems succeed and others fail because they
cannot compete with the ones that succeed (this doesn't mean the one's
that succeed are nicer, fairer, smoother and virtually wrinkle-free,
etc.). One of the characteristics of systems that success is that
they're productive (I used this term, not 'efficient'). I am looking
for alternative institutions that are as productive as the ones we
have, but have less deleterious side effects.

>The dichotomy between efficiency and equity is troublesome:
>since different prices emerge from different distributions of income and
>other rights, unless the distribution is legitimated, any particular
>efficiency calculation from a particular price set has no legitimacy
>either.  It might be more useful if we contrasted efficiency # 1 and
>efficiency # 2, rather than efficiency vs. equity.

	Example? I don't understand this. How is 'equity' a form of
'efficiency,' unless by definition?

Herb gintis@xxxxxxxxxxxxxxx