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I have seen the enemy,and he is an economist
Economic lessons for the ecologically literate
Jon D. EricksonRubenstein School of
Environment and Natural ResourcesUniversity of Vermont
Academic Autism
Autism, a disorder characterized by:• Absorption in self-centered subjective
mental activity (such as daydreams, fantasies, delusions, and hallucinations)
• Marked deficits in communication and social interaction
• Marked withdrawal from reality• Abnormal behavior, such as . . . excessive
attachment to certain objects
Pareto Efficiency
When no one can be made better off without harming someone else
Fundamental Theorems ofWelfare Economics
1. Pareto Efficiency implied by:a. Maximization of consumer preferences
under budget constraints.
b. Maximization of profits under technology constraints.
2. Any Pareto Efficient outcome can be supported with lump sum transfers.
Policy Implications
Theorem 1 Exhaust Pareto Improvements
Theorem 2 Exhaust Potential Pareto Improvements
MB = MC
Organization of Society
Maximize individual well-being (utility)Maximize per capita consumption Maximize per capita GDP (production) Maximize GDP Specialization & exchange Free market capitalism World trade Globalization Maximize GWP
Pillars of the First Theorem
1. A theory of human behavior based on an isolated, rational, self-maximizing individual at a point in time
2. A theory of firm behavior based on perfect competition, production as allocating fixed resources, and exogeneous technical change
The Efficiency Criterion requires we:
• Ignore interpersonal, intergenerational, and interspecies comparisons
• Accept the rational actor model of human behavior
• Accept perfect competition
• Accept an economic system devoted to material production, free of social and biophysical constraints
The Ecological Economics Umbrella
• Human economy as a social system embedded in a biophysical universe
• Efficiency as a third-tier goal, behind sustainable scale and equitable distribution
• Allocation of scarce means among alternative desirable ends