Monday, April 13, 2009


Brad Delong writes by way of Plato:

Agathon: "Under appropriate conditions of perfect competition, non-increasing returns, and the absence of externalities the market's decisions about the production and allocation of goods and services attain a point on the Pareto frontier. Every point on the Pareto frontier maximizes some social welfare function."

Glaukon: "Yes, of course."

Agathon: "Therefore the market, considered as a collective mechanism for making social decisions, chooses to maximize a particular social welfare function. It is instructive to consider what that social welfare function is."

Glaukon: "I resent the tone in which you are talking down to me."

Agathon: "You do not. This part of this conversation never took place in even approximate form in the real world. It is interpolated in order to bring readers of this weblog up to speed. Since I never said my last speech to you, you could not have resented it."

Glaukon: "And I want readers of this weblog to know that I am considerably smarter and more clued-in than he is letting me appear to be."

Agathon: "Are you quite finished?"

Glaukon: "Plato at least worked harder to make his information dumps fit more gracefully into the conversation. I want a better author.

Agathon: "Are you quite finished?"

Glaukon: "Yes."

Read the whole thing!

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