Theory and a parable: opportunity cost

[The Johnny]

    Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation – "It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?"

    Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

    Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade – that it encourages that trade to the amount of six francs – I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

    But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."

    It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.[1][2]

"It is never an advantage to have one's plants destroyed by shells or bombs unless those plants have already become valueless or acquired a negative value by depreciation and obsolescence. ... Plants and equipment cannot be replaced by an individual (or a socialist government) unless he or it has acquired or can acquire the savings, the capital accumulation, to make the replacement. But war destroys accumulated capital. ... Complications should not divert us from recognizing the basic truth that the wanton destruction of anything of real value is always a net loss, a misfortune, or a disaster, and whatever the offsetting considerations in a particular instance, can never be, on net balance, a boon or a blessing."[7]

Cost of opportunity should be the sort of thing that government officials lose sleep over (or pretty much anyone, when it comes down to it), because any use of resources is in detriment of a use in another area, because, you know, there is scarcity of resources and all that.

And this frame of thought can be applied from the most menial to the most important of decisions:

*Do i eat junk food and live life being overweight? How will i have to compensate for it? Does eating junk food cost me too much to buy other things or actual healthy food?

*If i went to university instead of working, how long until i make a profit from the hypothetical money i could be making at work?

*If i spend overtime on a hobby that makes me have less hours of sleep, is it worth it for overall health?

*What are the costs of enforcing a law that punishes poor people instead of devoting it to social programs?

And ultimately:

*What are the human costs when only monetary efficiency are taken into account?

(Im out of steam here, see if someone else can connect the dots better that I)

[Mesozoic Mister Nigel]

America lives in stark denial of opportunity cost, at this point; as a nation we have turned our backs on even the capability of competing globally in the advancement of science, only we haven't yet recognized that, or the greater costs of creating a wider serf caste with no opportunities for advancement.

Unless something changes radically in the next two years, we have become radically, entirely economically dependent on the investor class, which is the death knell of a nation. We have murdered our producers, and are in the process of murdering our innovators.

[The Johnny]

America lives in stark denial of opportunity cost, at this point; as a nation we have turned our backs on even the capability of competing globally in the advancement of science, only we haven't yet recognized that, or the greater costs of creating a wider serf caste with no opportunities for advancement.

Unless something changes radically in the next two years, we have become radically, entirely economically dependent on the investor class, which is the death knell of a nation. We have murdered our producers, and are in the process of murdering our innovators.

But there is (or WAS, someone needs to chime in on this) a century old tradition of importing and/or receiving gifted inmigrants in the sciences, either thru asylum because of armed conflicts in their homeland, or asylum from genocide, or just because the pay-rates are better than their respective third-world countries of origins that dont pay them enough in comparison to the USA rates.

So as long as the USA keeps importing scientists thru its different means, it doesnt really need to produce them.

I dont mind the divergence from the OP because its mostly about subjective resonances, but i will ask you this: What is the USA using its money on rather than the sciences? Perhaps this can be infered thru the GDP distribution over a transition of years.

[Mesozoic Mister Nigel]

America lives in stark denial of opportunity cost, at this point; as a nation we have turned our backs on even the capability of competing globally in the advancement of science, only we haven't yet recognized that, or the greater costs of creating a wider serf caste with no opportunities for advancement.

Unless something changes radically in the next two years, we have become radically, entirely economically dependent on the investor class, which is the death knell of a nation. We have murdered our producers, and are in the process of murdering our innovators.

But there is (or WAS, someone needs to chime in on this) a century old tradition of importing and/or receiving gifted inmigrants in the sciences, either thru asylum because of armed conflicts in their homeland, or asylum from genocide, or just because the pay-rates are better than their respective third-world countries of origins that dont pay them enough in comparison to the USA rates.

So as long as the USA keeps importing scientists thru its different means, it doesnt really need to produce them.

I dont mind the divergence from the OP because its mostly about subjective resonances, but i will ask you this: What is the USA using its money on rather than the sciences? Perhaps this can be infered thru the GDP distribution over a transition of years.

It's gutting the infrastructure to support innovative scientists, at a rapid rate.

[Durivan]

I dont mind the divergence from the OP because its mostly about subjective resonances, but i will ask you this: What is the USA using its money on rather than the sciences? Perhaps this can be infered thru the GDP distribution over a transition of years.

The US and by this I mean the wealthy in the US are putting their money in finances with the hope of acquiring more money.  This of course causes economic bubbles which eventually have to burst.  What is more since this adds no real value to the economy like the production of goods or real services it is by itself nonproductive.  It is in fact counter productive since the only places it can derive value is by taking from other sectors of the economy including those actually producing value.

[The Johnny]

I dont mind the divergence from the OP because its mostly about subjective resonances, but i will ask you this: What is the USA using its money on rather than the sciences? Perhaps this can be infered thru the GDP distribution over a transition of years.

The US and by this I mean the wealthy in the US are putting their money in finances with the hope of acquiring more money.  This of course causes economic bubbles which eventually have to burst.  What is more since this adds no real value to the economy like the production of goods or real services it is by itself nonproductive.  It is in fact counter productive since the only places it can derive value is by taking from other sectors of the economy including those actually producing value.

Fair enough, but i would think it of more analytical value if private and public spending are differentiated.

For example, we all know how so many banks crash (private banks/money) due to wild speculation and its respective bubble crashes and then the Government bails out the banks (use of public funds/money); so in this particular case, the government is losing cost of opportunity because it has spent all that money on bailing out the bank, which could go to a number of things, the most benevolent would be any kind of social programme/service, or perhaps education.

One thing that comes to mind is how the NASA is being underfunded while all the military expeditions and R&D get a large part of the budget... or say, how much money goes to building prisons and prosecution rather than the money going to social reintegration/rehabilitation.

Talking about private use of money and its opportunity cost would have to be approached thru a very obnoxiously microscopic lense and it would necessarily have to be from a corporation-profit perspective, thats why i think its more useful to analyse public spending, because its not supposed to be based on a profit perspective, but functionality/efficiency of its use in regards to the populations well-being.

Another example would be this:

hxxp://www.m-x.com.mx/wp-content/uploads/2013/04/Estela-de-Luz.jpg

This was a memorial for the 200th year of Mexican Independence... its cost was of $86.5 million dollars... now consider this, the minimum wage PER DAY in Mexico is about $5.4 dollars...

Yes, thats about 16,018,518 WORKING DAYS WORTH OF MONUMENT.