Wednesday, February 9, 2011

Time Horizons

Matt posts a quote from David Ricardo:
the comforts and well being of the poor cannot be permanently secured without some regard on their part, or some effort on the part of the legislature, to regulate the increase of their numbers, and to render less frequent among them early and improvident marriages. The operation of the system of poor laws has been directly contrary to this.

And then Matt writes:
I stand with common sense that if you give poor people more money, that makes poor people better off.

Look at time horizons here. David Ricardo uses the words "permanently secured," i.e. long fucking time horizons. Matt, short time horizon liberal that he is, is talking about instantaneous welfare. If you give a poor person $1, then they are $1 better off than right than they were before that. That's common sense only if you have short time horizons. Those with longer time horizons, like Ricardo, say that not very long after giving that $1 it will be consumed and the expectation that dollars will be given is created. This leaves the poor worse off.

But to Matt common sense is limited to static analysis.

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