Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all.

Adam Smith, Wealth of Nations, Chapter I, Part II, 775.

For my money, this quotation is particularly telling about Adam Smith and economic systems in general.  I first came across this quotation from Mark Blyth ( http://watson.brown.edu/people/faculty/blyth ).  Blyth has some excellent lectures regarding the Eurozone/EU crisis that he’s given at the University of Glasgow and Google.  Blyth also expresses similar sentiments to what Robert Reich expresses in this (http://podbay.fm/show/1081584611/e/1462288663?autostart=0) interview with Ezra Klein on ‘The Ezra Klein Show’ (excellent in-depth podcast by the way).  The sentiments that I pull out of both of these economists is in regards to the social aspects of economics.

For Blyth it’s about the narrative that politicians and others have attempted to weave about economics through history which oftentimes comes at the expense of those without power.  For Reich it’s a focus on a much more ‘present day’ context in which he also focuses on the disadvantaged, but also how the middle class is disappearing and the implications that such a phenomenon would have.  Reich later on in the interview also expresses more explicitly that Economics as a disciple has largely moved away from social analysis and is much more quantitatively focused much to his dismay.

This is interesting to me because some parts of the discussion of the current election are in regards to ‘how the economy feels’.  I know that 538 in their election model, analyzes economic trends including the CPI, GDP, etc… but there is no good measure of ‘feeling’, and while yes it can be hard to quantify ‘feeling’, it would seem to be a good point of investigation to try and analyze responses to the economy within a social framework/classification system in order to figure out standard responses/ideas.

Part of why this is also interesting to me is because of the continued issue of information asymmetry.  If there is asymmetry between firms and workers, even if it’s a ‘feeling’ or ‘general sense’ of things it can have effects.  This was discussed on a recent Ruby Rouges Episode (270: #Talkpay) in regards to how firms can be at an advantage over workers since they have access to more resources and historical data on average.

There is also the potential asymmetry problem of providing value to society.  This is one of those issues that can potentially be analyzed with supply and demand but even so it seems odd that some (software developers included) are paid at a much higher rate than the those who provide the basic needs of society, say teachers.  Is it simple value generation/creation? Because an argument could be made that the value proposition a good teacher provides is potentially limitless.  Even from a political aspect, things don’t quite add up.  Teachers unions are an effective force in multiple states, and nationwide, but management, CEOs, advertisers, etc… still end up with more.  This is a social puzzle that I’ve been trying to work through for a while but it’s curious to me, how we (as a social collective) try and establish value to society and express it (however imperfectly) with economics.

The best way to sum up discrepancies that I’ve found comes from a friend of mine at school who put it as such:

“Economics teaches that people are rational actors, marketing teaches that people are anything but rational.”