William J. Polley

Huh... don't worry! There are takers, but just not right now. ;-) In a few hours, in my case, since now I only have time to skim your post.

Re: opportunity cost, we learned to list "regular" cost and benefits for each alternative, calculate the "accounting" profit and then use this as cost for all other alternatives to get "economic profit". So (50-40) = 10.

From memory the statement is that: 'The love of money is the root of all evil'.

It's tough to come up with good econ examples. I remember my econ 101 prof* illustrated sunk cost like this: you go for a ski weekend. Your car is stuck in snow all day on Saturday. Should you press on? He thought yes, because you wanted to go on Friday. The correct answer has to be "depends on how much you want to ski," because while the cost is still the same, the benefit has shrunk from 2 days of skiing to 1 day.

* http://www.econ.washington.edu/people/emeritusdetail.asp?UID=rthomas

Gavin,

You are correct. I missed that. Actually to be honest, I didn't find his answer to the question itself to be very satisfying at all, and it definitely was not my intent to suggest that it was. But the way he answered it served my purpose in motivating this question, so I went with it from that perspective.

The quote itself is biblical. And the theological implications of the quote are not without their economic consequences. We could start this as another thread in the discussion if there is interest.

"The love of money" is an unfortunate mistranslation. Greed is the root of all evil. Greed is defined as rapacious desire for more than one deserves - what economists call "rent seeking".

Actually, "love of money" is a more literal translation, but because the English word "love" has so many meanings, there are perhaps better ways to get the point across in English. The Greek is "philarguria" (same root as "philia" which is usually translated as love implying affection, fondness, or friendship--as in Philadelphia, the city of brotherly love). However it can be taken to mean avarice or greed as well.

[I'm not a Greek scholar by any stretch of the imagination, but I have studied a little Latin. I do occasionally look up ancient texts like Plato and Aristotle for their original meaning. The internet has some truly amazing resources for that now that can really help you get into the texts.]

Suppose we do translate it as greed or avarice. Is it then right to equate greed and rent seeking?

And here I distinguish between rent seeking as Tullock described it versus ordinary profit maximizing behavior.

Who decides whether an act is a ‘rapacious desire for more than one deserves’? Who decides what someone ‘deserves’? Since when in economics have we entered the real of making these kinds of judgements?

We call the difference between one income from an activity and another, where there is a material difference, its ‘rent’, but this, now widespread, notion of ‘rent seeking’ as meaning ‘undeserved’ is becoming unhelpful.

Adam Smith argued that seeking to ‘better oneself’ is the basic urge for all humans experienced from the ‘cradle to the grave’ and without which the change from savagery to civilisation would not have occurred.

The Bible’s admonition that the ‘love of money is the root of all evil’ seems appropriate; ‘greed for money is the root of all evil’ drains it of its impressive literary power. The former is an example of a classic English language use of understatement to make a poignant point; the latter is a suited to a hectoring Bible puncher’s shrill voice in a carnival tent.

It’s amazing what the pond between the two languages we share can do to a beautiful translation from a dead language and to the measured words of a Scotch Moral Philosopher who was fluent in both English and Greek (and who learned his King James’ Bible at his mother’s knee)!

Who decides whether an act is a ‘rapacious desire for more than one deserves’? Who decides what someone ‘deserves’? Since when in economics have we entered the real of making these kinds of judgements?

We call the difference between one income from an activity and another, where there is a material difference, its ‘rent’, but this, now widespread, notion of ‘rent seeking’ as meaning ‘undeserved’ is becoming unhelpful.

Adam Smith argued that seeking to ‘better oneself’ is the basic urge for all humans experienced from the ‘cradle to the grave’ and without which the change from savagery to civilisation would not have occurred.

The Bible’s admonition that the ‘love of money is the root of all evil’ seems appropriate; ‘greed for money is the root of all evil’ drains it of its impressive literary power. The former is an example of a classic English language use of understatement to make a poignant point; the latter is a suited to a hectoring Bible puncher’s shrill voice in a carnival tent.

It’s amazing what the pond between the two languages we share can do to a beautiful translation from a dead language and to the measured words of a Scotch Moral Philosopher who was fluent in both English and Greek (and who learned his King James’ Bible at his mother’s knee)!

"Who decides whether an act is a ‘rapacious desire for more than one deserves’? Who decides what someone ‘deserves’?"

Economics does, given a definition of social costs and benefits, which would likely involve some sort of moral judgment. Adam Smith arguably originated the "rent seeking" concept when he stated that "as soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce." As for the "basic urge to better oneself", Smith also wrote that "avarice and ambition in the rich, in the poor the hatred of labour and the love of present ease and enjoyment, are the passions which prompt to invade property, passions much more steady in their operation, and much more universal in their influence."

First point: I also prefer "love of money" since it is pretty clear that the Greek refers to "philia" (fondness or affection). The phrase then refers to an affection for money. An affection or fondness for something can suggest that you place a priority on it, perhaps displacing other things. For example, I have a fondness for chocolate that sometimes causes me to eat too much of it when I should eat other things. Read that way, the phrase works and (I agree with Gavin) is more beautiful than "greed." However, I accept greed as being roughly equivalent to "fondness for money" in the same sense that I accept gluttony as "fondness for chocolate". It's not as beautiful or descriptive but it gets the point across. It should be noted that when the New Testament was translated from Greek to Latin, "philarguria" became "cupiditas" which is usually translated as "greed".

Second point: "Rent seeking" (as distinguished from normal profit maximizing behavior) is often meant to imply some kind of wasteful activity by someone trying to transfer or preserve wealth. For example, lobbying Congress to enact regulations that benefit one party at the expense of the other.

To return to your initial question... does expressing everything in dollars leads readers into drawing unintended conclusions? This is a hard one...

The most dangerous implication, one that has been actively and willingly fostered by some economists, is to do implicit interpersonal comparisons of utility by simply assuming that 1 dollar for me is somehow equivalent with 1 dollar for you and then to go ahead and simply add or subtract the costs and benefits of different people.

A moment before we lose our perspective. ‘Guest’ moves from the statement using a word ‘love’ that we are discussing to a difference in interpretation, calling it ‘greed’, and elides into a definition of ‘greed’, as a ‘rapacious desire for more than one deserves’ to which I asked who decides what is ‘greed’ or what somebody ‘deserves’, to which I am told it is ‘economics’. Funny, I missed that course somehow.

To argue that something stands, ‘given a definition of social costs and benefits’ dodges the issue. Which definition decides that an instance of self-betterment (which could be self-esteem through to frugality as a source for moving into a division of labour and all that followed – including Smith’s arrow maker and the hunters’ transaction in Wealth of Nations) comes under the ‘love of money is the root of all evil’ admonition?

Smith was clear: he applauded the frugal person (particularly the one who saved as his net income rose and invested it or loaned it out at interest) over the prodigal; he applauded the rent payer towards the end of feudal power over the feudal lords, whom he mocked, who spent their sources of power (the ‘rents’ in kind taken from serfs) on ‘trinkets, baubles’ and etc.

In contrast, the urge to self betterment, present in all people, said Smith was a driving force for the transition from savagery toward modern society and, by implication, it would continue to drive commercial society beyond the 18th century. To wrap up all of this behaviour under the rubric of a ‘love’ of money, or worse, a ‘rapacious desire for more than one deserves’, belongs properly in a pulpit.

The entrepreneurial urge resides in individuals, not the mass of others who have views on what they deserve – roughly what they have got – until the entrepreneur shows in markets what they could also have, which awakes a a desire to better themselves.
Smith’s verbal tirades against the super rich were directed not at their richness, but at their use of it for trivial ends. He bemoaned too, the futile urges that drove the son of a poor man to extraordinary ends extremes of self-betterment. That is part of the rich inheritance he left in his books and lectures, which unfortunately sometimes gets lost in salvoes of quotations and counter-quotations from his remarkable life’s work.

Well said!

You're right; if one person is being hurt so that ten people may gain, I don't consider that to be "all the same".

Hey everyone! I am taking this econ class and I am confused by one of the questions we talked about. i was wondering if you could help me out. The question goes like this: You bought a 30 dollar ticket to go see a play. On the day of the play it starts to snow heavily, making the trip much more unpleasent. YOur friend on the other hand, didn't buy a ticket to the play yet, but was planning on buying it at the door for 25 dollars. Are you and your friend equally likely to actually go see the play? Assume both of you are rational. THANKS SO MUCH FOR ANYONE ABLE TO HELP

Katherine,

"Hey everyone! I am taking this econ class and I am confused by one of the questions we talked about. i was wondering if you could help me out. The question goes like this: You bought a 30 dollar ticket to go see a play. On the day of the play it starts to snow heavily, making the trip much more unpleasent. YOur friend on the other hand, didn't buy a ticket to the play yet, but was planning on buying it at the door for 25 dollars. Are you and your friend equally likely to actually go see the play? Assume both of you are rational. THANKS SO MUCH FOR ANYONE ABLE TO HELP "

Assuming that the $30 ticket is non-refundable and cannot be re-sold to anyone else, it is a sunk cost and can have no effect on economic decisions about the future.

Therefore, your friend has an extra $25 burden to overcome in order to decide to see the play.

Regards, Don