Umair lays out something that I've niggled about for years. When it comes to assigning resources to productive activity, how do we make that decision? If the choice is between a cocktail umbrella maker and a child health programme, why can the cocktail umbrella maker ever win?
Chad Syverson asks a very interesting question: what are the fundamental determinants of productivity? He reviews many of the orthodox answers, nicely and concisely.
My answer, as I've discussed at length, is a little different. Though all the factors Chad reviews are certainly important - high quality inputs, managerial practices, competition, input market flexibility, and the like - I'd like to ask a question. What if there's a missing variable entirely from the production function as we know it?
I suspect there might be - and I call it ethical capital.
Read the whole thing.
In a world of ever scarce resources we will face this question more and more often in more places. It bubbles under the radar at the moment, occasionally surfacing as someone tries to deal with health care rationing and how it is done, but its coming up in other places too,
Right now we are having a public discussion about whether "healthy" food should be zero-rated for GST/VAT. The figleaf is that we should be encouraging healthy food choices but the sub-text is that more of us are waking up to the reality that, in food producing nation, we have more and more of our community going to bed hungry, waking up hungry and having to make do with crap food.
The real question is how do we prevent, or at least hide, malnutrition for a bit longer and probably, how do we get to blame the malnourished for their plight because "healthy food is zero-rated so your malnutrition MUST be your own choice."