Conservation and Economic Efficiency: An Approach to Materials Policy

By Talbot Page; African Diaspora Studies Institute | Go to book overview

it made its decision. It would be hardly satisfying to hear the answer, "We took a vote of all those present and decided to follow our own time preferences."

In the selfish altruism version of the present value criterion so far discussed, there is no way of resolving a conflict between generations over how resources should be allocated. Everything is done from the point of view of the present; it is their time preference, and everything is discounted back to them. While many economists realize the inability of the present value criterion to resolve conflicts across generations, they may not recognize it as a serious failure. They tend to think that the world economy is not a hardtack one, but an investment one in which the future will be better off than the present. For this reason, they argue that such a failure of consistency is not important. Conservationists, on the other hand, tend to think that the world has certain hardtack tendencies and may, unless steps are taken, drift irrevocably into a hardtack economy. For them the failure is more serious.


Notes
1.
Nicholas Kaldor, "Welfare Propositions of Economics and Interpersonal Comparisons of Utility," The Economic Journal vol. 49 ( 1939) pp. 549-552, reprinted in Kenneth Arrow and Tibor Scitovsky, eds. Readings in Welfare Economics (Nobleton, Ontario, Richard Irwin, 1969) p. 388.
2.
Harberger treats the distributional impact of most projects as a minor problem, saying that the distributional impact of one project is likely to be small compared with distributional changes from the general drift of the economy. See Arnold Harberger, "Three Postulates of Applied Welfare Economics: An Interpretive Essay," Journal of Economic Literature vol. 9, no. 3 ( Sept. 1971) pp. 785- 797, and particularly p. 787.
3.
The economy need not be growing for productivity to exist. One hundred dollars' worth of seeds can turn into $400 worth of crop whether or not GNP is sitting still. On the other hand, without productivity the economy would soon starve.

Productivity is a slippery concept that can be defined in many ways. For the purposes of this book, we take "productive asset" to mean one that generates something of value. In contrast, a "nonproductive asset" stores but does not generate something of value. This is all a little imprecise, but the idea may become clear in the examples that follow. A bag of flour is not productive. It has value, but the only way to obtain it is to use it up. It only stores value. Similarly, ore in a mine is not productive. The "something of value" in this case is the metal stored underground. This something may become more or less valuable as market conditions change, but the metal is only stored, not generated. The defining characteristic of a nonproductive asset is that there is no way to obtain its value without depleting it. There are three types of productivity important for our discussion:

1. Machine. A machine is productive when it saves more time and trouble than is embodied in the machine itself. By cleverly designing more roundabout and elaborate processes of production, people are able to generate a greater saving of effort than was originally embodied in the construction of the machine.

-170-

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Conservation and Economic Efficiency: An Approach to Materials Policy
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Foreword xi
  • Preface xv
  • Title Page xix
  • 1 - Introduction: Toward A Materials Policy 15
  • Part One - Material Flows and Uses 17
  • 2 - Virgin Material Intensity and Waste Management 33
  • 3 - Competition Between Primary and Secondary Industries 34
  • Part Two - Intratemporal Efficiency 59
  • 4 - Discriminatory Pricing 61
  • 5 - Disposal 105
  • 6 - Taxes on VIrgin Materials 139
  • Part Three - Intertemporal Equity 143
  • 7 - The Present Value Criterion 170
  • 8 - The Conservation Criterion 188
  • 9 - The Criteria Reconciled 206
  • 10 - Conclusion 208
  • Appendixes 215
  • Notes 221
  • Notes 225
  • Notes 234
  • Notes 251
  • Index 253
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