Markets make us better people

One of the most common objections to market-based societies is that they erode non-market motivations to doing good. Critics, with this objection, say that although markets can in some areas latch onto greed and turn it to society’s benefit in some areas (“It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest”) they can also pervert and corrupt existing motivations in domains where markets are inappropriate.

Consider blood donations: many argue that if you start paying for blood donations then people will stop seeing them as a good deed but as a market activity, and lose their ‘intrinsic motivation’ to give blood. Overall you might get less blood, or less good blood than before, even though you’re now spending money to get it.Back in 2012, Harvard communitarian political philosopher Michael Sandel (famous for his online lectures), wrote a hugely popular book What Money Can’t Buy: The Moral Limits of Markets making roughly these arguments (read a wonderful review here).

These questions are discussed widely, but what’s weird is they tend to be tackled mainly with a priori thought experiment arguments like mine about blood, above, and anecdotes, even though they are empirical questions. We can actually test whether you get less or worse blood when you pay for it! (You don’t) We can test whether people are less pro-social when you add extra market institutions!

A new paper by Björn Bartling, Roberto Weber and Lan Yao, “Do Markets Erode Social Responsibility?”, in the Quarterly Journal of Economics tries to do as much:

This paper studies whether concerns for social responsibility persist in repeated market interaction. We develop a laboratory product market, in which socially responsible behavior by firms and consumers involves incurring additional production costs to mitigate potential negative externalities imposed on individuals otherwise uninvolved with the market.

The data from Study 1, conducted in Switzerland, show, first, that there is a non-trivial share of socially responsible products supplied and demanded in all our market conditions, and that—importantly—the market share of the fair product is stable over time in all conditions.

Second, the socially responsible product, which costs more to produce, sells at a price premium that persists with market experience. In most cases, this price premium increases over time, suggesting that consumers’ willingness to pay for socially responsible products is not eliminated with repeated market interaction. Third, we show that individual-level market behavior is consistent with a preference for positive social impact, though such concerns are heterogeneous.

In other words: markets do not erode existing pro-social motivation; they complement it.

Objectivism and modern society

Ayn Rand’s Atlas Shrugged is polled to be the second most influential book in Americans’ lives, coming in second only to the Bible. Whether this statistic is skewed or not, there is no doubt that Rand’s longest work has had a lasting impact on the hearts and minds of its readers since its publication in 1957. It may be too soon to know if it stands the test of time, but it has certainly persevered with power and passion.

It’s hard to understand how Atlas Shrugged has remained so popular while the views of its author remain so controversial. Forget the left-wing masses—many self-proclaimed libertarians avoid being associated with her last name. In most circles (even sympathetic ones), the Randian badge is not worn openly.

Furthermore, she is consistently attacked by critics who paint her philosophy of objectivism as radical, rudely selfish and dangerous to modern society. When most people today—even on the right—recognise the need for some form of welfare or safety net, how can one include Rand’s voice in modern discourse?

At the ASI’s annual Ayn Rand Lecture on Monday night, guest speaker David Sokol addressed an audience of almost 300 attendees and reminded all of them why Atlas Shrugged transcends the criticisms and attacks on objectivism.

Unlike most philosophers and economists, Rand was able to connect philosophy and fiction in a way that inspired people to observe and revere the power of individualism. As Sokol pointed out, the right to have hope for yourself and whatever you choose to build is going to win against any promise a government can make.

Even in the 1950’s, Rand could see what direction governments was heading—that entrapments were disguised as promises, as governments increasingly encroached on individual’s rights and property:

(Bureaucrat) Floyd Ferris:”You honest men are such a problem and such a headache. But we knew you’d slip sooner or later . . . [and break one of our regulations] . . . this is just what we wanted.”

Rearden: “You seem to be pleased about it.”

Ferris: “Don’t I have good reason to be?”

Rearden: “But, after all, I did break one of your laws.”

Ferris: Well, what do you think they’re there for?”

Ferris: “Did you really think that we want those laws to be observed? We want them broken.”

Today, some of the world’s most important leaders are looking to snare businesses, paint them as the enemy, and project the idea that the state is responsible for the success of business, job growth, and any individual achievement. It’s an uncomfortable and deeply flawed narrative—and fortunately, not a particularly successful one. Regardless of bureaucratic narrative, Atlas Shrugged continues to inspire individuals in a way that collectivist approaches can’t come close to; as such, Rand and her philosophy have secured their place in modern society.

To see photos of the ASI’s Ayn Rand Lecture, click here.

David Cameron vs feminism

Today there was a minor kerfuffle about the Prime Minister’s refusal to wear a t-shirt that says “This is what a feminist looks like” after Elle, a women’s magazine, asked him to do so for a marketing campaign. Elle had a go at Cameron, saying that “It should be simple. Do you believe that men and women are equal? Do you believe men and women should have the same rights? The same opportunities? Yes? Then you are a feminist.”

Well, that sounds pretty reasonable! I don’t see how anyone could object to that. But the plot thickens later on. All these unobjectionable, bland claims apparently relate to quite specific public policy issues, like unequal pay and political representation for women. According to Elle, we need feminism because “for every £1 a man earns in the UK, a woman earns 80p. Women make up only 35% of senior managers in the UK and an estimated 30,000 women a year lose their jobs as a result of pregnancy-related discrimination. In politics, fewer than one in four MPs is a woman, and there are only five women in the cabinet out of 22 ministers”.

In other words, we need feminism so we can do something about very specific issues (presumably in specific ways, since the Fawcett Society is involved which has specific policies to address all these things).

This sounds to me like a ‘motte and bailey’ argument. Scott Alexander explains in more detail in part two of this excellent essay here (if you have the time, read that, not this). The name come from medieval times, when a ‘motte’ was a defensible castle surrounded by a profitable village called the ‘bailey’. Everyone would work out in the bailey until they got attacked and had to retreat to the safety of the motte.

A motte and bailey argument starts off by defining itself in very defensible way. “Feminism means thinking that men and women should be treated equally.” That’s the safe, defensible motte.

It then extends that reasonable-seeming claim to all sorts of controversial claims – unequal political representation demands all-women shortlists; unequal pay demands more invasive laws to equalise pay between men and women. That’s the bailey where the actual (political or cultural) advancements can be made.

Let’s say you attack the bailey by saying that you’re not a feminist because you think the policies advocated by feminists are bad, or the problems they identify are not even problems at all. Maybe you find, as Ben recently has, that “if you control for background (i.e. skills and talent) and exit (i.e. women staying in the workforce) women earn more than men and get more aggressively promoted than men”, which implies that the claims made by feminists about unequal pay needing new laws are simply incorrect.

Feminism may also be wrong about many other things, such as claims about men and women’s brains being biologically the same or the pervasiveness of a ‘rape culture’. These are substantive elements of what feminists define as feminism, and they may be right or wrong. It’s legitimate (albeit quite possibly mistaken) to think these claims are wrong, and hence to decline to wear a ‘This is what a feminist looks like’ t-shirt.

But do that and many feminists will retreat into the defensible motte, as Elle have today. David Cameron doesn’t think men and women should be equal! David Cameron doesn’t think men and women should have the same rights! Feminism is very simple!

This is dishonest and manipulative. And an open society requires honesty in political discourse. David Cameron is often accused of pandering to fashion. He deserves credit for refusing to do so this time.

Unsurprising: Migrants give back to new communities (often more so than natives)

Migrants in high-income economies are more inclined to give to charity than native-born citizens, this Gallup poll finds.

Screen shot 2014-10-17 at 12.02.21

[High-income economies are referred to as "the North"/ middle- to low-income economies are referred to as "the South".]


From 2009-2011, 51% of migrants who moved to developed countries from other developed countries said they donated money to charity, whereas only 44% of native-born citizens claimed to donate. Even long-term immigrants (who had been in their country of residence for over five years) gave more money to charity than natives–an estimated 49%.

Even 34% of migrants moving from low-income countries to high-income countries said they gave money to charity in their new community – a lower percentage than long-term migrants and native-born citizens, but still a significant turn-out, given that most of these migrants will not have an immediate opportunity to earn large, disposable incomes. The poll also found that once migrants get settled, their giving only goes up.

Migrants seem to donate their time and money less when moving from one low-income country to another; though as Gallup points out, the traditional definitions of ‘charity’ cannot always be applied to developing countries, where aid and volunteerism often take place outside formal structures and appear as informal arrangements within communities instead.

It’s no surprise either that the Gallup concludes this:

Migrants’ proclivity toward giving back to their communities can benefit their adopted communities. Policymakers would be wise to find out ways to maintain this inclination to give as long as migrants remain in the country.

This is yet another piece of evidence that illustrates the benefits of immigration for society as a whole. (It also highlights the insanity of Cameron’s recent proposal to curb the number of Eurozone migrants coming to the UK). Not only does the UK need more immigrants “to avoid a massive debt crisis by 2050,” but apparently it needs them for a community morale boost as well.

What’s at stake in the social justice debate

The most interesting cultural debate of modern times is about the free expression of ideas.

The main instigators of this debate are the social justice movement. It champions people who lack or are seen as lacking social power, like women, racial minorities and transgendered people. It does this by criticizing people who say and do things that hurt or reinforce the powerlessness of these groups. An example may be the ‘misgendering’ of a transgendered person – that is, referring to someone as a man when they identify as a woman.

Opponents of the social justice movement are numerous but intellectually disorganized. In this post I hope to draw the lines of battle as fairly as possible in order to make the fundamental argument clearer to both sides. I will try to make a case for the side I prefer in a future post.

The social justice movement sometimes tries to “show the door” to people who say what it sees as bad things. One example was the campaign against Brendan Eich after he was made CEO of the Mozilla Corporation, which makes the Firefox web browser. Eich, who invented the Javascript coding language, had donated $1,000 to the anti-gay marriage campaign in California six years previously. This led to a campaign for a boycott of Mozilla products and calls by Mozilla employees for Eich to resign. Ultimately, Eich resigned.

Another recent example is the (comparatively muted) reaction to TV presenter Judy Finnegan’s discussion of a rapist footballer on Loose Women earlier this week. Finnegan argued that because the rape was not violent and the victim was drunk at the time, the footballer should be able to return to playing football after he had served his time. This has prompted calls for apologies and so on.

The Eich case is significant, the Finnegan case is not. But both are essentially skirmishes in the debate over what we can say in public and what we can’t. Note that I disagree with both Eich and Finnegan – I support gay marriage and I don’t think ‘non-violent’ rape is any less bad than violent rape (except the obvious additional injuries and trauma associated with any violence).

But the crucial issue is not whether these beliefs are good or bad, it’s whether they’re acceptable to say in public. This is what distinguishes the social justice movement and makes it interesting: its aims are to discourage the expression of certain bad beliefs, not to correct or rebut them. It’s not about whether Eich or Finnegan’s beliefs are right or wrong, it’s about whether society should tolerate their expression at all.

This is very important. Much of the content of the social justice movement’s beliefs is either right or trivial – gay rights are good, acceptance of transgendered people is good, etc. The idea that makes the social justice movement special is the idea that some ‘words matter’ so much that we need to stop them from being said through social and consumer pressure.

For the most part, the debate is not about legislation on either side. Most social justice advocates want to boycott firms that employ people with bad beliefs and socially shun people with bad beliefs. Some have sudden conversions to ‘thin libertarianism’ when opponents say they are undermining free speech, claiming that the only kind of freedom of speech worth caring about is that affected by the state.

But this is silly. Private actions can impose costs on others to an enormous extent. If being a Muslim in Britain meant losing your job and losing your friends, it would be a significant and meaningful limit to your freedom to be a Muslim. To the extent that this happens, it is a meaningful limit on Muslims’ freedom. The consequences are what matter.

Members of the social justice movement might point out that words do indeed have consequences. Eich’s donation helped the platform of people who want to restrict gay rights; Finnegan’s beliefs may lead to greater tolerance for rapists and hence, at the margin, more rapes. And almost everyone thinks that some words should be restricted: harassment and threats can ruin people’s lives and it is for the best that certain kinds are illegal.

What’s more, lots of people who think it’s bad to boycott a firm for employing a transphobe think it’s right to boycott a firm for employing, say, a racist. And virtually everyone thinks it’s OK for a firm to fire an employee for being rude, obnoxious or dishonest.

But this may go too far. Even if words can have bad consequences, they can have good consequences too. A utilitarian justification for free speech is that we need it to discover what’s true. Many beliefs that once seemed untrue to almost everyone later became very convincing to almost everyone, like heliocentrism and equality for non-whites. We can never be sure of practically any of our beliefs, but we do seem to have the ability to gradually sort bad ones from good ones. A competitive ‘marketplace of ideas’ may be a good way of helping that to happen.

I suggest that opponents of the social justice movement should organize around this kind of principle. The onus may be on us to prove that losing the ‘marketplace of ideas’ is worse than the hurt and/or powerlessness that its existence exacerbates.

The question is about the costs of freely discussing ideas that may indirectly lead to bad things. In a future post I will try to argue for a very extensive form of free speech that would require us to tolerate the expression of virtually any concept or idea, if it’s done so politely and honestly. But to understand why we should value a ‘thick’ definition of free speech we must first understand why people want to curb it.