Disagree with your view of the essay, but your anecdote is interesting. I learned something from analyzing the anecdote with inappropriate sincerity.
Why- of their own free will- would each economist offer $20,000 to eat the turd? There can essentially only be one answer. They value the schadenfreude or sense of power derived from watching their fellow economist eat the turn at greater than $20,000.
Why would each economist eat the turd? They value an extra $20,000 more than they value avoiding the disgust associated with eating the turd.
Long story short, that $40,000 of seemingly destructive trade appears to have improved both their lives according to their own value functions.
No, it isn't. It introduces a non-standard situation where the actors' motivations are hard to model, and results in a non-standard outcome. That doesn't help build the firmer X-free worldmodel that I would count as a refutation of X.
It requires us to posit someone who's money-hungry enough to do something disgusting for a large amount of money and yet who still would spend all of that gain to get some (for-most-people) trivial kick out of seeing someone else do the same.
Well, yes, if two people both had that bizarre preference set, and you fully intuited the implications of that situation, it wouldn't be strange to view it as creation of that much value, because both of them satisfied each other's values.
I don't see how this parable carries more kick than if you cut off the parable halfway through and said, "hah! Someone ate feces for money! That's silly, isn't it?" Yes, bizarre values lead to bizarre outcomes. But then, if that's all you want to prove, then just "go Rule 34" and link some fetish sites.
To the extent that the parable has a valuable lesson, it's "back-and-forth exchange of money for services, if officially canceled out, is a kind of gain in utility that doesn't show up in formal accounting". (E.g. Alice provides romantic satisfaction to Bob, who simultaneously provides romantic satisfaction to Alice. They do not transfer money on net. "We're right where we were before, and didn't create any value." Um, yeah you did.)
Or, if the point is that decisions can be regretted (which you could tweak the Alice/Bob example to include) , sure, but that doesn't shed a lot of light on the Subjective Theory of Value.
It seems abundantly clear to me that humans routinely take actions that are far more irrational than eating a turd for $20,000. There are literally TV shows dedicated to that type of thing.
The whole point is to draw absurdity to the Subjective Theory of Value -- the claim that, if a trade occurs, the trade must be Good, because both participants (with full information!) made a rational (!) calculation that this trade was in their best (!) long-term (!) interests. I find this proposition -- one that rests at the heart of economics -- to be incredibly dangerous and outrageously wrong, but since our entire economy / political system sort of depends on this being true, I don't know what to do about it.
The weird step in the example isn't eating a turd for $20000. It's paying 20000 to see someone eat a turd.
That the thought experiment is badly constructed is clear once you take the money and indirection out of the picture. Does two - clearly somewhat weird - people agreeing to eat a turd if the other person eats a turd, somehow disprove economics?
Clearly for each of the two people it's the case that they get more from watching the other person eat a turd than it costs them to eat one. Maybe they're perverts. Whatever. Value was actually clearly produced.
I was replying to the idea that the parable demonstrates those points for someone who doesn't already agree. (And that's not the SVT you're describing, but the SVT plus some ancillary claims that I agree are flawed -- see the last paragraphs of my other reply.)
I'm curious to pick your brain about this. What is a better concept to describe the idea that "if a trade occurs, it is Good?" I agree STV does contain real insights about the nature of trading, but there's some ideological extrapolation that transforms obviously correct things like marginal diminishing utility to "justifying every trade as it occurs as inexorably good"
You're actually right, I think -- I don't know of a specific (standard) term to describe that fallacy, and every time I've criticized its appearance, I've had to make up a neologism or spell it out expliclity [1]. ("Vulgar Keynesianism" is one term for it, but it's not the only school that does it so it's a fair term for the precice concept.)
In any case, I was just trying to make the point that
a) The turd-trade example does not help the debate about the underlying concepts -- regardless of label -- because it's uses an intuition breaking situation to build intuitions, which is no more insightful than pointing and laughing at people with bizarre preferences.
b) STV is not the same as the thing the parable is criticizing.
Man. Thank you so much. "Vulgar Keynesianism" is indeed a very good summary of my central complaint. although it arrives at it from a totally opposite direction. Sidenote: I miss when Paul Krugman was actually good :(.
You would do well to check if your beliefs are falsifiable. If you believe that GDP objectively, universally, and precisely maps to real-world value, no thought experiment will disabuse you of that notion.
Are you claiming that "GDP objectively, universally, and precisely maps to real-world value" is non-falsifiable? Unless you reason is that nobody can even tell you what real-world value is, that proposition can easily be falsified.
If you ever observe a trade that changes GDP in a way that does not correspond to the change in real-world value, the belief is shown to be false. Of course that isn't just a thought experiment, you have to actually do the observations.
I said something slightly different; I claimed the commentor's beliefs were potentially unfalsifiable, and then I characterized those beliefs as "GDP mapping objectively etc to real world value"
You would have to compare the GDP to some measure that better maps to real world value. And the choice of measure to use would be controversial. HDI? GNH? HPI? GNW?
I agree that GNP is a terrible measure of real world value (a lot of things increase GNP that decrease human well-being on a global or long-term scale). But if you want to falsify it, you need some other measure. Is the other measure falsifiable?
Why- of their own free will- would each economist offer $20,000 to eat the turd? There can essentially only be one answer. They value the schadenfreude or sense of power derived from watching their fellow economist eat the turn at greater than $20,000.
Why would each economist eat the turd? They value an extra $20,000 more than they value avoiding the disgust associated with eating the turd.
Long story short, that $40,000 of seemingly destructive trade appears to have improved both their lives according to their own value functions.