Tag: Markets

Was Sex Better Under Socialism?

A comparative sociological study of East and West Germans conducted after reunification in 1990 found that Eastern women had twice as many orgasms as Western women. Researchers marveled at this disparity in reported sexual satisfaction, especially since East German women suffered from the notorious double burden of formal employment and housework. In contrast, postwar West German women had stayed home and enjoyed all the labor-saving devices produced by the roaring capitalist economy. But they had less sex, and less satisfying sex, than women who had to line up for toilet paper.

Source: NYT 8/12/17.

The full article, worth reading, makes the point that Eastern European communism was a stultifying economic system where even toilet paper was hard to come by, citizens didn’t have to work to the point of exhaustion each day, as they do in the post-1989 capitalist economies, thereby leaving them time for recreation.

See for example, my earlier post of rising overtime hours of US manufacturing workers.

Quoting a former citizen of East Germany who compared her life to her daughter living under capitalism.

Ms. Durcheva was a single mother for many years, but she insisted that her life before 1989 was more gratifying than the stressful existence of her daughter, who was born in the late 1970s.

“All she does is work and work,” Ms. Durcheva told me in 2013, “and when she comes home at night she is too tired to be with her husband. But it doesn’t matter, because he is tired, too. They sit together in front of the television like zombies. When I was her age, we had much more fun.”

Exit, Voice and Loyalty – Albert O. Hirschman

Albert O. Hirschman – Exit, Voice, and Loyalty.

 

hirschman

Albert Hirschman defined three modes of responding to unresponsive governments that apply to our times too, in his monograph, Exit, Voice, and Loyalty.

I’m choosing “voice.”

Read about Hirschman’s intellectual legacy in Cass Sunstein’s New York Review of Books tribute.

Economic Externalities

Economic externalities explain how society works when the market fails.

Externalities, quoting Wikipedia, are:

In economics, an externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit.[1] Economists often urge governments to adopt policies that “internalize” an externality, so that costs and benefits will affect mainly parties who choose to incur them.[2]

For example, manufacturing activities that cause air pollution impose health and clean-up costs on the whole society, whereas the neighbors of an individual who chooses to fire-proof his home may benefit from a reduced risk of a fire spreading to their own houses. If external costs exist, such as pollution, the producer may choose to produce more of the product than would be produced if the producer were required to pay all associated environmental costs. Because responsibility or consequence for self-directed action lies partly outside the self, an element of externalization is involved. If there are external benefits, such as in public safety, less of the good may be produced than would be the case if the producer were to receive payment for the external benefits to others. For the purpose of these statements, overall cost and benefit to society is defined as the sum of the imputed monetary value of benefits and costs to all parties involved.  Thus, unregulated markets in goods or services with significant externalities generate prices that do not reflect the full social cost or benefit of their transactions; such markets are therefore inefficient.

Externalities are pricing mechanism (market) failures. When the market fails, another entity must step in to correct the pricing distortions.  Typically, this other entity is government.