A very interesting discussion arose in class this past Thursday reagarding the problem with modern economics and our current models. Larry pointed out that the reason these models are not applicable to everday life is because the models are static. They don't take into account human error or differing government policies. Human error and the unpredictable nature of human behavior will never be able to be accounted for, and therefore, it becomes much more important to get accurate representations of the remaining identifiable variables. Based on the material presented in this class thus far, the variable most in need of being identified is the type of government utilizing the resources and the policies that government has adopted.
The easy answer is to say that a government that supports capitialism is most beneficial economically. However, it must be noted that there are communist governments, (namely China) that have comparable GDP to the U.S. That being said, I believe that from an economic stance, GDP is a better indicator of progress than standard of living. How wealth is distributed is not as indicative of growth as how much wealth is produced. I think we are wrong to base ideal governmental policy on what we believe to result in the highest standard of living. I think we should base our ideals on maximizing our resources, getting the highest marginal benefit possible and then direct our attention to distributing the resulting wealth. This would call for a willingness to explore other forms of government and policy outside of what we view as "just," and creating real-world applicable models that possibly utilize concepts that are outside of our traditional views. If the results of these hybrid models point toward higher levels of production, then matters of distribution within the constraints of thse models should then be discussed.