December 23, 2004

Letter to my Son

Dhr Euc A Haralambides
Prinses Julianalaan 26
3062 DJ Rotterdam - NL

Dearest Euc,
As one grows up, one tends to volunteer some, often boring and unsolicited, advice to the young. So, here is a piece, for what it is worth, after having spent so much time studying the 'Singapore Model'.

I would be the last person on earth to question the importance of making independent choices and setting personal priorities. Economists are not allowed to make interpersonal comparisons; or so we are told. These are often called 'value judgments' and they are not 'comparable' among individuals neither can they be aggregated. This is known as the problem of 'aggregate social welfare functions'. As a result, Vilfredo Pareto became famous because he said that the best you can do is to try to make someone better off without making someone else worse off.

In the opposite, and pending a definition for 'terrorism', no revolutionary has ever been able to accept this principle. Many believe that Pareto optimality is just the crutch that supports the lame leg of capitalism, a lowering of the temperature of the simmering kettle of social unrest in western-type consensus democracies, and that maximization of social welfare may require less democracy, more sacrifices, and less individual choice. I respect both views, not for any other reason but because they themselves are value judgments that bring us to the realm of economic philosophy (read the little book by Dame Joan Robinson on this; I left it on your desk). After all, economics is nothing more than just a way of thinking.

What choices we make is not important; mostly they are made on the basis of 'incomplete information'. I know you wouldn't agree to this and neither would any other young person (thus the use of the words 'boring' and 'unsolicited' above). What is important however, at a point in time when the years weigh heavily on one's shoulders, is to be able to give an answer to the famous question of The Manhattans: "...and if we had the chance to do it all again, tell me would we?..."

With a lot of affection I wish you and every young person, when that time comes, to be able to answer in the affirmative.

A better wish I do not have.

Your (patronizing) dad,

H. Χαραλαμπίδης