The Instigator
Andy3692
Pro (for)
The Contender
binkshimself
Con (against)

Gross Output vs Optimality In Economics

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Voting Style: Open Point System: 7 Point
Started: 11/20/2016 Category: Economics
Updated: 1 week ago Status: Debating Period
Viewed: 85 times Debate No: 97184
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Andy3692

Pro

Hello everyone,

This is more of an inquiry than a debate.

I am taking this college course, which emphasizes that we should focus on optimality as opposed to gross output in industrialized societies.

The professor defines optimality as a balance between economy, society, and the biosphere. For example, we cannot simply focus on society and its needs, as we would bankrupt ourselves. Similarly, if we focus solely on preventing global warming, nations would spend too much and also bankrupt itself.

So, as of now, society is concerned only about the economy, because on the surface it makes sense. We can gather wealth over time, and prioritize what we spend with that wealth through politics.

This is why the industry is focused only on gross output, and not net output. It has the sole intention of producing as much as possible, and mitigate the end-of-pipe effects later on, or pass it entirely to society altogether to avoid having to deal with them.

Or to summarize, net output is better than gross output because it takes into account the long-term consequences of all industries, and is more "optimal" in terms of the definition above. ie. less landfill costs, less harm to biosphere, society enjoys the progessive movement of businesses and mirrors the business's actions, etc.

So, my question is this: Are there exceptions to this that is evident in industrialized nations? When would gross output be more sustainable than net output? When would gross output benefit the world in the long run?

Provide specific examples.

Thank you
binkshimself

Con

Hey Andy3692,

You said that this was more of an inquiry than a debate, so I'll just proceed as if this was a friendly conversation.

So first off, I don't think that gross output is necessarily focused on in industrialized nations. It's a big part of it, but profitability is the main focus if we're talking about economic agents within an economy. The economy is simply individuals choosing what to do with the scarce resources and means presented to them. So, if people are focused on the economy, they're not necessarily focused on gross output, but on the allocation of scarce resources. Sure, one of the largest measures of the economy is GDP, but this is a very blunt tool that is only useful because of the other things that an increase in GDP implies, such as an increase in living standards.

I'm not quite sure what you mean by "industry is focused only on gross output, and not net output." If you mean that firms are not focused on the negative externalities associated with their operations, then that's one thing. Societies should be focused on the entire set of costs, some of which may be borne by third parties as negative externalities. Government regulation is one way to address this, establishing clearer lines between property rights is another. But I don't think that people are only focused on output, and that being concerned with the economy means you're only concerned with gross output. In fact, I would argue that it is the poorer nations that are more concerned with economic growth as opposed to sustainability.

What you"re calling "net output" might be more aptly labeled as "welfare", which is a fairly large piece of economic analysis. This sort of accounting method of weighing the goods of production with ALL the costs is already a massive component of economics and anyone "concerned with the economy."

"Are there exceptions to this that is evident in industrialized nations?"
Again, I"m not exactly sure what you"re talking about here. Are there exceptions to what? Perhaps you could clarify.

"When would gross output be more sustainable than net output?
Well... if you"re talking about measuring the full costs of production, then such operations are "profitable" to society when costs are smaller than benefits, with costs being ALL costs including pollution, or other negative externalities. As far as sustainability in a societal sense, then follow the same guidelines. If society is better off having produced than if they haven"t, I would say these things are sustainable. Again, we're running into some problems with the wording of your questions.

"When would gross output benefit the world in the long run?"
I think you should clarify your stance and what exactly you mean by gross output vs net output.

Ps. What course is it you're taking?
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