Art Carden wrote a recent article that is both simple and profound. It’s titled “You Are Making a Difference: You Just Have to Know How to Look at it,” American Institute for Economic Research,” January 16, 2024.
Here are three key paragraphs:
Look around you at the countless ways people are making important differences in the lives of the people around them, even if they don’t intend to. Someone who designs a better salad bar or who lays out a better floor plan for a grocery store might not think he’s feeding the poor, clothing the naked, or fighting food insecurity. But he is, and without transferring resources to other people but by creating new ways for people to cooperate.
Part of the beauty of the Christmas classic It’s a Wonderful Life and the tragedy of George Bailey is that he doesn’t seem to understand just how big a difference he is making by working to save three cents on a length of pipe. The seeming triviality of running the Bailey Bros. Building and Loan obscured a lot of the points that became evident at the very end of the movie when people took up a collection to help him make up for the shortfall in his accounts.
One of Charles Dickens’s characters, Mrs. Jellyby, is so consumed with saving the world and feeding Africa that she ignores her family. It’s easy to ignore the ordinary business of life in pursuit of some kind of noble extraordinary business; however, it’s the very ordinary business that makes the biggest difference. That’s how George Bailey changed the world by changing Bedford Falls.
The whole thing is worth reading.
It reminded me of a discussion on a panel I chaired at a Hoover Institution event some years ago. The conference was a one-day affair to celebrate George Shultz’s 95th birthday. One of the speakers on the panel was Condi Rice. An issue that came up in the Q&A was that of “public service.” Condi said that she encouraged young people to do some public service, whether in the military or the government more generally. I pointed out that people who work at McDonald’s are engaged in public service: they serve the public. I could have gone further and pointed out that when you’re in government, you might tell yourself that you’re serving the public but it’s hard to know because there’s no market test. What if you end up promulgating a regulation to prevent people from getting new inexpensive stoves that run on natural gas? Or what if you’re putting together a regulation that makes dish washers less effective? Are you serving the public? You might be serving a subset of the public that badly wants to interfere in other people’s lives. But is that “the public?”
READER COMMENTS
Thomas L Hutcheson
Jan 22 2024 at 9:59am
Exactly. In government there is no market test, so the effect of regulations can be either positive or negative. The cost of excluding a productive immigrant, or of blocking the investment in geothermal exploration, the benefit of a congestion tax or a tax on net CO2 emissions, or better crime deterrence, does not show up in the bottom line of the entity that comes up with the policy. We have to rely on cost benefit analysis and that’s not nearly as self enforcing as profit and loss.
Jose Pablo
Jan 23 2024 at 12:33pm
We have to rely on cost benefit analysis and that’s not nearly as self enforcing as profit and loss.
Cost benefit analysis is pure wishful thinking. Similar to a proforma P&L with the lines to be included, cherry picked. And everybody knows that proforma P&L are just a waste of time, useful only to provide some level of reassurance to gullible fools (like cost benefit analysis).
Running any endeavor (public or private) based on a proforma P&L / cost benefit analysis, and running the same endeavor base on the fact that “you want/preffer the whole thing done” (the immigrants admitted or rejected, the CO2 taxed or not taxed or crime more deterred or not) are exactly the same.
Why bother to waste the time?
steve
Jan 22 2024 at 10:17am
“Or what if you’re putting together a regulation that makes dish washers less effective?”
But that doesnt exist. New dishwashers clean better than old ones and just as fast, if you want. The testing agencies and the manufacturers have been pretty clear about that. In return, everyone now can save about $40/year if they want and have clean dishes. Or if they want they can forego the savings and use more water and more energy if that is their preference. (Only the default “normal” setting is actually regulated. Use the other settings and use as much energy as you want.) Innovation is pretty wonderful.
Steve
robc
Jan 22 2024 at 11:38am
I guarantee you there is SOME regulation that makes dishwashers less effective, even if the regulation doesn’t mention dishwashers and had no intent to effect dishwashers.
steve
Jan 22 2024 at 3:31pm
Find it. Alex posted on this at MR so I ended up doing lots fo reading. The DOE regs only affect the “normal” setting. Consumer Reports and the other testing agencies have found that the new machines clean just as well as older machines, that cleaning ability is mostly related to the quality of the dishwasher. Being old and not affluent when younger I can vouch for the fact that in the old days dishwashers were often pretty bad. You got what you paid for. Anyway, on any other setting the amount fo water or energy being used is not regulated. You can use as much as you want.
Steve
robc
Jan 23 2024 at 9:01am
Steel tarrifs.
Done.
steve
Jan 24 2024 at 10:31am
They make steel cost more. How do they make dishwashers less effective? Besides which that would exist even if they DOE had no regulations affecting dishwashers.
Steve
robc
Jan 24 2024 at 11:55am
If the steel in the dishwasher is more costly, then the dishwasher is going to less effective at the same price. So at any budget point, you are going to be getting a less effective dishwasher than without the tariff.
Tylenol is an effective medicine. If it cost $1000 per pill, it would be far less effective, as I wouldnt be taking it.
Richard W Fulmer
Jan 22 2024 at 11:38am
When I was in college, I attended a lecture given by Ralph Nader who urged students to go into public service rather than into the private sector. Paraphrasing, Nader asked, “Do you really want to spend the next thirty-five years of your life making Exxon a little bit bigger in exchange for a pat on the back and a gold watch?”
That is one way to look at a career with a private company, I suppose. But there’s another way. Exxon employees help produce energy without which people can’t survive. Petroleum fuels the tractors that plow our fields and harvest our crops and fuels the trucks that carry those crops to our markets. Natural gas produces electricity that lights, heats, and air conditions those markets along with our homes, offices, and factories. Electricity powers our communications systems, enabling us to talk to loved ones or to call the fire department or an ambulance. Petroleum fuels the emergency vehicles that bring firefighters and EMTs to our rescue. Petroleum fuels the ships that carry raw materials, produce, and goods around the world. Without energy, the computers on which most of our infrastructure depends would become useless hunks of metal, plastic, and silicon.
Without the world’s energy producers, most people across the globe would quickly perish. Without the world’s Ralph Naders, NGOs, and non-profits, life and progress would continue apace.
David Henderson
Jan 22 2024 at 12:04pm
Good point.
I think I told this story on EconLog but I can’t find it using standard search terms. A few decades ago, I was on a flight out of Newark, sitting in the cheap seats at the back, and started taking to my seat mate. If people seem interested in talking, I almost always ask them what they do. He told me he was a representative of a pharmaceutical company. I asked him to tell me specific drugs the company had produced and what they were targeted at. He told me about two or three. I then thanked him for what he does. He was older than me and told me that in over 20 years working for the company, he had never been thanked by someone (presumably outside the company) for what he does.
Back to Nader. Notice how he minimizes it by talking about the pat on the back and the gold watch. Those are both rewards. The only activity leading to them that he can cite is making Exxon bigger. If he were to be symmetric, he would have to say that at the end of your time working for Public Citizen, you have made Public Citizen a little bigger and as a reward have received a pat on the back and a certificate to hang on your wall.
Richard W Fulmer
Jan 22 2024 at 4:40pm
Nader’s implication was that “Big Oil” exists only to make money and pollute the environment, while “Public Citizen” exists to ensure good and prevent bad. In practice, of course, Big Oil benefits humanity far more than does Public Citizen. As Adam Smith wrote, “By pursuing his own interest [the individual] frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.”
Several decades ago, I saw a 15-minute video at the Smithsonian Institute’s Museum of American History discussing the Industrial Revolution. The first 14 minutes were devoted to documenting the pollution and human degradation that early factories caused. Only in the last minute did the narrator mention, almost in passing, that the large quantity of goods the factories produced enabled the poor to buy necessities and even the occasional small luxury. The implication was that factories managed to accomplish an insignificant bit of good despite their primary goal of immiserating humanity.
David Seltzer
Jan 22 2024 at 5:00pm
Richard, excellent point(s). I am reminded of Leonard E Read’s essay, I, Pencil.
Jose Pablo
Jan 23 2024 at 1:23pm
You don’t need to think what is the most “socially effective” way of using your human capital. There is a clear market signal providing you with that information.
If that is what you want to do (using your human capital in the most “socially effective” way), go to wherever they pay you the most after tax.
If you want to be selfish and prefer to pursuit your own pleasure instead of maximizing “social welfare”, do whatever you want. In any case you will be maximizing “social welfare” once your own preferences are taken into account (as they should).
Ahmed Fares
Jan 22 2024 at 4:32pm
This from Arnold Kling’s substack as regards incentives is insightful:
BC
Jan 22 2024 at 11:05pm
To be fair, people using the term “public service” often claim that people working for government are serving the “public interest”. In contrast, people working in the private sector serve the customers that pay them. That’s why they talk about “customer service” instead of public service. We know from *public* choice that government can deliver benefits to, i.e., “serve”, groups that are different from the one’s paying for those benefits, e.g., taxpayers. So, government doesn’t necessarily serve taxpayers in the way that for-profits serve customers. From this perspective, the “public interest” probably refers to the special interests receiving the benefits rather than the taxpayers paying for the benefits. So, if one doesn’t like the term “public service”, I guess one could replace it with the more specific term “special interest service”. One can either serve customers in the private sector or special interests in the special interest sector.
Dylan
Jan 23 2024 at 6:51am
I agree wholeheartedly with the sentiment and when I taught a class on social impact entrepreneurship I went to great lengths to try and show my students the positive impact private enterprises had on the world and how that almost certainly dwarfed the impact that non-profits have had.
When I was applying to business school in one of my interviews this topic came up and I tried to say how I wanted to make a positive difference, but I didn’t mean it in a feed the world kind of way, but in helping create a product that someone found valuable and made their lives maybe a little easier or more enjoyable.
However, and I don’t want to sound like a broken record here because I know I’ve commented similarly in the past, but the vast majority of work I’ve done and the people I’ve worked with have done does not fall in that bucket. I connected last week with an ex-colleague I hadn’t spoken with in a year who had just been laid off. Turns out her boss had been laid off almost a year ago, but she was essentially the stapler guy from Office Space. She kept “working” but had no one to report to or show her work to or really any idea of what she should be doing at all. Nothing she did over the last year (or really, probably a year or two before that) matters at all to anyone. It isn’t even available, it just got flushed down the memory hole.
There is a similar story for almost everyone I worked with at that organization. And I’ve heard almost exactly the same story from people at GE, Philips, LG, Shell and others. There is an entire generation of “knowledge workers” where their experience mostly comes from making PowerPoint decks that no one will ever look at, and it turns out that AI can crank those out way faster than they can.
The last time I was paid to do a job that felt useful I was working for $7.50 an hour at a video store. These days I work for free with people that are starting their own companies. Many of them come from a corporate background and the most common reason I hear for why they are doing this isn’t to make a lot of money or be their own boss, it is just to work on something that feels like it matters, even though that means working at least twice as hard and likely for zero money for at least a couple of years.
Max Molden
Jan 24 2024 at 5:22am
Thanks for your interesting perspective on this, Dylan. You wrote that the people you work with tell you what they are on about is “to work on something that feels like it matters.”
I myself often had this come up in convos with friends, who, most often, were looking for jobs in the public sector or at NGOs. Because here it was easier for them to see the good they do.
My general point was and is two-fold.
First, value is subjective and individual. So, just because you think that X is good does not imply that others think so as well. But this suggests that we should be much more wary about claims to be doing good. After all, we may not want to do good for ourselves but for others.
Second, the name Bastiat creeps into my mind. So many people overlook the good they do in the long term, as described in the original post and by several commenters. Meanwhile, they also overlook the bad they do in the long term.
All of this seems to me to be a variation of “what is seen, and what is not seen.” Lacking economic education, people mistake the visible short-term effects of goodness for implying they, unequivocally, did good. But there is more to all their deeds. And for this, we must ensure more people know and understand Bastiat.
Dylan
Jan 24 2024 at 5:37pm
Thanks for the reply, Max. I agree with what you say and agree that it can be hard to say with any kind of certainty that one has “done good.” Lots of unseen and unintended consequences for everything we do.
However, I’m trying to get at something a bit different. Imagine that you were hired by a company to go out and dig holes. You’ve got a manager and they are constantly pushing you to dig harder and faster, stay late so you can get even more holes dug. And then the same company has hired another guy to go around right behind you and fill those holes up so that you can’t even tell that they were there. At the end of every day you’re exhausted but without any sense of accomplishment.
That’s the kind of feeling I get from at least some of my colleagues and others I’ve known in the corporate world. Not everyone, to be sure, there are plenty of people that are doing real and fulfilling work that matters. Other people might not be, but seem either oblivious to that fact or just don’t care all that much. And maybe I’m just projecting here a bit, but the folks I talk to going down the startup path, I get the sense that they just want to be able to finish the day and look back and say, “today I accomplished X, Y, and Z and this is why that matters to my business and my customers.”
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