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... the decisions made that determine whether or not a given ROI calculation comes up build or not build.

Markets, despite the assumptions of many mainstream economists, are not natural systems, they are social institutions, and the specific market rules and the decision of which decisions are left to private actors looking to market gain and which decisions are made under other instititutions can easily flip one decision from built to no-build, and another from no-build to build.

You cannot ask the question what institutions should we have based on any ROI figure, since ROI figures depend fundamentally on what institutions we have.

While EROI can only aid in addressing the question of what instititions we should have, since no complex system can be encapsulated in any single index number without discarding relevant information, that still makes it useful in a way that ROI can never be when talking about choice of institutions, since EROI is exogonous to the choice of institution and ROI is endogenous to the choice of institution.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Jul 25th, 2013 at 02:53:52 PM EST
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