Küresel Isınma ve İklim Değişiklği Bağlamında Dışsallıklara Farklı Bir Bakış

Dışsallık, bir ekonomik faaliyet ve işlem nedeniyle o işlemin tarafı olmayan üçüncü şahıslar üzerine düşen maliyet ya da faydaları ifade eder. Bir ekonomik birimin üretim veya tüketim faaliyetlerinden elde ettiği özel faydanın yanında, diğer ekonomik birimlere fayda sağlıyorsa "dışsal fayda" veya pozitif dışsallık; zarar veya maliyet yüklüyorsa "dışsal maliyet" veya "negatif dışsallık söz konusudur. Bir fabrikanın atıklarının tarlaları tahrip etmesi, bazı balıkçıların karlarını azamileştirmek  arzusuyla sığ sularda gırgırla balık avlaması negatif dışsallıklara örnek iken; bir GSM operatörünün yeni teknoloji kullanması sonucu tüketicilerin telefon görüşmelerini daha ucuza gerçekleştirmesi, bulaşıcı hastalıklara karşı aşı olmak pozitif dışsallıklara örnektir. İlk defa Knut Wicksell tarafından dile getirilen bu kavram daha sonra Cambridge Okulu'nun kurucusu olan Marshall tarafından geliştirilmiş; Ellis, Falhlner, Scitovsky, Coase, Buchanan ve Stubblebine dışsallıkların teorik çerçeveye oturtulmasında katkıda bulunmuşlardır.

Fakat  negatif dışsallıkları içselleştirmeye yönelik ortaya atılan teori ve yöntemler lokal düzeyde oluşan sosyal maliyetleri incelemiş; küresel ısınma, iklim değişikliği gibi global düzeyde etkileri olan dışsal maliyetlerin bugünün ve geleceğin nesilleri açısından oluşturduğu tehditler dışsallıklar bağlamında göz ardı edilmiştir.

Bugün, küresel ısınma ve iklim değişikliğinin 143 milyondan fazla insanı kasırgalar, fırtınalar, deniz seviyesindeki yükselmeler, aşırı kuraklığa bağlı olarak ortaya çıkacak gıda ve su kıtlığı ve salgın hastalıkların artacak olması nedeniyle iklim göçmenine dönüştüreceği öngörülmektedir. Bütün bu göç hareketi gelişmekte olan dünya nüfusunun %55 ini temsil eden Sahra altı Afrika, Güney Asya ve Latin Amerika'da gerçekleşecektir. Küresel ısınma ve iklim değişiklğinin tetiklediği kıtlık ve doğal felaketlere ek olarak Orta Doğu ve Batı Afrika'daki siyasi istikrarsızlığın sonucunda milyonlarca insan 2013 yılından beri Avrupa'ya göç etmektedir. Bu da Avrupa'nın ekonomik kaynaklarını küçültmenin yanı sıra yabancı düşmanlığına sebep olmaktadır. Küresel ısınma ve iklim değişikliği bazı canlı türlerinin neslinin değişen iklim şartlarına ayak uyduramamaları sebebiyle tükenmesine, bazılarının göç etmelerine neden olmaktadır. Salgın hastalıklara yol açan sivrisinek, kene ve zararlı böcek türlerinin dünyanın doğal dengesinin bozulması sonucu yakın gelecekte hızla çoğalması öngörülmektedir.

Yani kısaca, iktisadı açıdan bakıldığında hem bugünümüzü hem de gelecek nesilleri tehdit eden global düzeyde negatif dışsallıklar oluşmaktadır. Peki, global negatif dışsallıkların oluşturduğu sosyal ve ekonomik maliyetlerin bedelini kim ödeyecektir? Yerküreyi bir gün daha yaşanabilir kılmanın marjinal sosyal faydası için katlanmamız gereken bir günlük marjinal sosyal maliyet nedir? Yoksa, yukarıda bahsi geçen global çaplı negatif dışsallıkların maliyetleri sonraki nesillere yansıyacak olması sebebiyle çıkarlarını dar çerçevede ve rasyonel biçimde ele alan homo economicus un ele alması gereken iktisadi ve sosyal bir sorun değil midir? 

Where is the invisible hand now?

We see a dramatic decrease in consumption and production, but at the same time, we can observe that the big businesses cry for the government to rescue them? Where is the invisible hand that magically coordinates the market in such an efficient way that we will always reach the most efficient, wealth maximizing outcome? Although all those hardworking CEOs beg the government to help them in bad times (once again), in good times they argue that a free market is the best solution while taxes, regulations and government intervention just undermines the optimal outcome.

Everyone arguing for a market-based solution should now celebrate that the invisible hand will destroy all those inefficient companies because they did not save enough capital in good times or were imprudent to adjust themselves to the prospective economic situation. After this creative destruction, we will see new and innovative companies rising. Airlines were mismanaged by spending money on share buybacks instead of having enough cash to withstand an epidemic. Shale oil companies knew that an oil price below 50 USD would make them unprofitable. Huge profits were harvested for the entrepreneurial risk in the good years, but no one wants to take the entrepreneurial risk in bad times. According to neoclassical (financial) economics, those huge profits exist precisely because of the possibility of a significant downturn, and they are a risk premium that is paid for taking this risk.

CEOs and businessmen publicly tell you in good times that low skill workers have to adjust to the new economy, that they will temporarily lose their job, but by acquiring new skills they can get better jobs and contribute to the economy. However, as soon as it is  faced such a situation as a company, they cry for the government to rescue them with taxpayers' money which is the money of those workers that are laid off without a second thought. Capital gains and business tax rates are lower than the tax rate on labour, but companies are rescued first with the taxpayers' money. At the same time, workers are dying because of a privatized and broken healthcare system. Instead of funding a nationalized healthcare system with taxes on labour, mismanaged companies are rescued.

All those free-market enthusiasts are now experiencing the destructive and cruel power of the invisible hand and do not want to bear it, but in good times the invisible hand is their friend. Privatize the profits and socialize the loss. That is not a free market nor capitalism - that is a crooked economic system based on the exploitation of the lower and middle class.

How can you justify that within a neoclassical framework arguing for capitalism and a free market?

Malthusian Theory Of Population, Sociological and Economic View of The Population Issue

Industrialization, revolution in agriculture, deep-rooted economic and social transformations such as immigration from the countryside to cities, and rapid urbanization took place in Western Europe in the 19th century. In the same period, there was a significant demographic change. Throughout the 19. century, deaths in the West, especially infant deaths, declined. Despite this change in fatalities, the fertility rate did not decrease immediately. Prolonged life expectancy and not falling of fertilities immediately caused the rise of the population rapidly.

	1801	1850	Rate of Increase
France	28,2 million	36,4 million	%30
England	16 million	32 million	%100

In the first half of the 19th century, while the population increased by 30% in France, in England.

There was a 100% population increase. In 1911, the population of England reached 45 million. The culminating point has been realized between 1870 and 1880 in Western Europe.

Malthus: The Controversial Name of Modern Demography

Malthus argued in his "An Essay on the Principle of Population" that

"population, when unchecked, increases in a geometrical ratio; subsistence only increases in an arithmetical ratio." (Chapter I, paragraph 18, lines 1-2)

His second argument is that population growth reduces material welfare due to diminishing returns to labor on fixed land supply.

According to Malthus, the difference between population growth and food sources needs to be balanced. But how? The fertility of the population has to be controlled.

There are two ways to do it:

1. Repressive or negative obstacles: They are defined as "the uncontrolled obstacles," such as famine, wars, plagues that increase the death rates.
2. Preventive measures: These measures aim at reducing the fertility rate. For instance, prostitution (non-reproductive sexual activity), moral restrictions (moral values that do not allow to have children without getting married), later marriage age (thereby delaying the age of having children), preventive checks to the population that limited birthrates.

Besides, Malthus strongly opposes social aids, which can be defined as the core of a social state. According to him, these aids spread poverty, contrary to ending poverty. The struggle for life is by nature and prevents people from laziness. Poverty is the guilt of the poor!

After Malthus, Neo-Malthusians, who was influential in the 20th century, suggested controlling poverty through contraceptions. What surprising is that even though contraceptives were suggested to prevent poverty, they were used to guarantee the future of kids by non-poverty families. Families had children as they can provide a bright future to their kids. That is to say; it made an adverse effect.

When Malthus asserted his theory, the world population was 990 million. Now, the world population is 7,8 billion. In this period, agricultural production increased due to developments in agricultural technology. However, the increase in the production of food products is continuously progressing in a way that will disrupt the balance of nature, pollute the environment, change the structure of foods, and make living conditions difficult for the next generations. 

It is necessary to look at Malthus' thesis again from this point of view and to answer the question of what we can do to leave a better world to the next generations without polluting the environment more.

The Economic Policy of Wearing Mask In Consideration of Externalities and Turkey Example

In economics, an externality is a cost or benefit that affects a third party who did not choose to incur that cost or benefit. Externalities might be both positive or negative. Positive externalities are benefits that are infeasible to charge to gain; negative externalities are costs that are infeasible to charge to avoid. In other words, in both negative and positive externalities, consumers don’t pay, and producers are not paid for costs or benefits. Planting trees is an example of a positive externality, while air pollution is an example of a negative externality.

Externalities stem from the selfishness of people, and it undermines the social benefits of the public. Despite the fact that people consider their own interests in their economic and social activities, they ignore the social benefits and costs of their activities.

If we adapt mask example to externalities, not wearing a mask and infect other people is an external cost while wearing a mask and prevent other people from infection is an external benefit. People suppose that other people wear mask, or they ignore the social benefits of wearing a mask because some people have low-risk perception. Thus, the consumption and production of masks remain below the social optimum level. At that point, the most rational political selection is to subsidize and mandate the use of masks. In other words, It is the best way to be given masks to free to the public by the government. Because the cost of wearing one mask and shortening the spread of pandemic one day is much less than the cost of causing one more COVID-19 case.

In Turkey, the government has started the distribution of masks freely through pharmacies and obliged to wear mask in public places in the early days of April. The graph below shows the positive impact of subsidizing wearing mask. After the third week of April, daily new cases start decreasing clearly. It definitely prevented the uncontrollable spread of cases. It needs to be lasted until shortening the marginal benefit of pandemic one day economically becomes equivalent to the marginal cost of wearing a mask.

Başlık ekle

(source:https://www.worldometers.info/coronavirus/country/turkey/)

How Physiocracy inspired Karl Marx and Liberal Economics and Their Conflicts

Physiocracy inspired Karl Marx and liberal economics thinkers despite being developed in the second half of the 18th century, lasting from 1760 to 1770 in the short term.

The term of physiocracy means “rule of nature.” According to Physiocrats, natural law is perfect and ideal order governed by God. They suggested the functioning of society occurs in a “natural law” as it happens in physical events in nature. This argument of Physocrats is asserted “Laissez Faire Laissez-Passer” statement by Vincent de Gournay, who is the pioneer of Physiocracy. This slogan, which is attributed to Liberal Thinkers, particularly to Adam Smith, was stated the first time by Vincent de Gournay, and it was adopted by Liberal economic thinkers later on.

However, there was a conflict between physiocrats and liberal economic thinkers concerning the source of natural law. In both Physiocracy and Liberal Economics, the reason why it has not to be intervened to economic activities is the existence of natural law. But, according to Physocrats, natural law is a divine law. In this law, producers and consumers have the right to behave for their own interests, and this natural law based on the personal property and the freedom of economic activities continue by itself. On the other hand, Adam Smith claims that the source of natural law is not divine; it is the result of the economic behaviors of producers and consumers. He claims that without government intervention, an economic balance is provided by the lead of human interests. Created this economic balance, producers reach a maximum profit, and consumers reach a maximum benefit. The power that provides this balance is the interests of humans. Adam Smith names this power as an “invisible hand.”

Tableau economique written by F. Quesnay inspired Karl Marx, and “surplus” production term constituted one of the headstones of his theory. However, Marx argued that surplus is the qualification of labor in the economic process, while Physiocrats argued that surplus is in the production power of land and his arguments on this known as “surplus value theory.”

According to Karl Marx, surplus value is the excessive value that the capitalist owns over the wages that workers are paid.

Moreover, Physocrats not only inspired Karl Marx and Liberal Economics thinkers, and they also inspired American political economy theorist Henry George and promoted the “single tax” theory on land because the income of land and real estate owners increased excessively in the growing population of 19th century. Besides, Wassily Leontief, who is Russian origin and awarded with Nobel economics, was inspired by Tableau Economique in his Input-Output Model that shows product and service flow in the economy of a country in a fixed term. Today, the Input-Output model is used in economic planning in many countries.

In conclusion, even though Physiocracy didn’t spread around the world and had influence in the short term, its arguments had a significant impact on famous political-economic thinkers and schools of thought for economics. Therefore, its importance in economic history has never been ignored while studying economics.

What Is A Tariff?

In March, President Donald Trump set two tariffs. He set a tariff on steel imports and aluminum imports. Import is goods that are bought from another country. Export is goods that are sold to another country.
Tariffs are a tax on imported goods. Businesses and people inside the country will pay extra money when buying goods from another country. That extra money is the tariff. It goes to the U.S. government.
Governments use tariffs to help their own businesses. They want people to stop buying goods from other countries. Tariffs also help the government make money.

The Effects Of Tariffs
Here is an example. Cocoa beans are used to make chocolate. Turkey needs to import cocoa beans.
Turkey imports many cocoa beans from the Republic of Cote d’Ivoire, a country in West Africa. Imagine if Turkey set a tariff on imported cocoa beans. Three things would happen.
First, cocoa beans from the Republic of Cote d’Ivoire would cost more. Chocolate makers in Turkey would have to pay the extra tariff. However, what if Turkey had its own cocoa bean farmers? Then, these Turkish farmers could sell cheaper cocoa beans than those from the Republic of Cote d’Ivoire. Chocolate makers would buy more beans from Turkish farmers because they are cheaper. Turkish farmers would make more money.
Second, the tariff would harm the Republic of Cote d’Ivoire. The farmers in the Republic of Cote d’Ivoire would have to lower their prices. Otherwise, people would stop buying cocoa from them. These farmers would make less money.
Finally, Turkey would buy less cocoa from the Republic of Cote d’Ivoire. The two countries would not trade as much as before.

The Risks
There is also another problem. In our example, farmers in the Republic of Cote d’Ivoire would lose money because of the tariff. So, the Republic of Cote d’Ivoire might want to do something about it. It might set its own tariffs on goods from Turkey. It would hurt companies in Turkey.
These kinds of actions can lead to a trade war. That is when countries punish each other with tariffs. It is why experts usually do not like tariffs.

Capitalism Needs a New Economics Theory

The theory of today’s economy, that is, the neoclassical economics method, which was first modified by the theory of monetarist economics and then the theory of rational expectations, is, in fact, the theory of economy of the capitalist system. Thirty years ago, there were countries in the world with a mixed economic system that emphasized the capitalist system and its imitation of crony capitalism, as well as socialist systems. At that time, the neoclassical theory did not dominate by itself. For that reason, its universality was controversial. Because the market model, which is the decision-maker, has a limited place remarkably, a kind of centralized market management system called the planned economy model was the decision-maker. Today, the market economy has become dominant everywhere, with the globalization trend spreading all over the world. Thus, at first glance, the theory of neoclassical economics, which is the theory of capitalism, has become the universal theory of the economy in the global system. However, even if the dominancy of capitalism seems in the closest way to pure capitalism in some countries, in some other countries, it took place in the form of crony capitalism. Therefore, the universality of the neoclassical economic theory is still arguable.

Neoclassical economic theory is based on several assumptions. The most important of them are as follows:
(1) People rationalize and make decisions in this direction (assumption of rationality, thought of homoeconomicus.)
(2) The full competition system is exemplified in describing the markets (assumption of competition prevalence).
(3) Decisions are based on margins (marginality assumption).
(4) The purpose of the consumer to obtain the maximum benefit, the producer’s goal is to maximize the profit (maximization assumption).

Discussing the assumptions of a theory comes at a time when questioning whether that theory is in accord with reality. The debate about the neoclassical economic theory, which is long-lasting, can not fully explain the real life. So the results that come out of assumptions are not exactly in line with real life. However, a theory is established to define real-life events by reducing, classifying, and generalizing them. No matter how well-simplified, how well-categorized, and generalized it is, the theory does not work if the results do not fit into the real world. The assumptions of the criticized neoclassical theory are in the forefront of these criticisms since they have not been fully compliant with real life for a long time.

When we look at the landscape today, we can see that the prevalence of irrational behaviors, competition is everywhere under the feet, that people often make their decisions by considering the averages rather than the margins, not the maximization principle in many decisions of the consumer or the manufacturer. At this stage, my mind is stuck with the question, “Does the theory of neoclassical economics remain inadequate while explaining capitalism?” We argue that this theory does not work at all; the theory must be re-applied, and none of us maintains the validity of the theory. But none of us question whether capitalism has changed the quality. Neoclassical theory is a theory for an environment in which capitalism rules are applied. So if a company is going to sink, it will not be saved by the state. On the other hand, the state becomes unable to process the rules of capitalism when it goes to save the companies that are going to sink. Then it comes to discuss the theory is a wrong practice.

I think that capitalism can no longer be like the ideal form, but that it will continue to operate half-timely. In doing so, we have to start by changing assumptions. It would be much better to set up a theory based on half-patronized rationality, a distorted competition order, a lot of coincidence, and assumptions of motion appropriate for averages instead of margins. By incorporating the behavioral economy and the theory of chaos, the ambiguous logic, and the irrational expectation approaches, a new theory of economics will have to be established in accordance with the dominant crony capitalism.

It is not as easy as it seems. Because we are talking about a significant economics theory based on the assumptions of rationality, competition, maximization, and movement in margins, an entire economic theory can be upside down when you remove these assumptions.