In response to my previous post, commenter BC asked:
When you say that you don’t expect Bezos to give away almost all his wealth and that you’re “fine” with that, do you mean that you don’t expect Bezos to act morally and that you’re fine with some immorality?
I responded:
This is almost a textbook example of the connotation of words getting in the way of clear thinking. “Immorality” has a literal meaning, and also a (quite different) connotation.
Suppose I park somewhere and put a quarter in the parking meter. Then I overstay the hour I’ve purchased. I’ve broken the law, and should be punished by the meter maid if I’m caught. Is my action “wrong”? Yes, obviously. Am I behaving in an “immoral” way? It depends whether you use ‘immorality’ in a literal sense of doing something wrong, or with the everyday connotation of “a great evil”. Parking violations are not great evils.
I’m fine with people being guilty of a few parking violations, but I also think people who are caught should be fined. I’m fine with people being somewhat selfish with their vast wealth, but also think there should be a progressive consumption tax, a sort of “fine” or sanction on selfish wealthy people.
Economists tend to be cold-blooded rational utilitarians, whereas most people are more “moralistic” in their thinking. For an example, consider these two policies:
A. Keep marijuana illegal and have a fine that averages out to $5 per use. (Maybe a $50 fine imposed on one of each ten uses.)
B. Legalize marijuana and impose a $5 tax.
To most people, those are very different policies. Policy A is seen as treating marijuana use as being immoral, whereas in policy B society is “saying” it’s OK to use pot.
To an economist, the two policies are almost identical, and would be completely identical if people were risk neutral. Economists are all about costs and benefits, sanctions, incentives, externalities, etc. They don’t tend to use terms like evil, immoral, etc. Littering and murder lie along the same continuum, with murder imposing much more harm on others than littering. But fundamentally the questions are always the same; what public policies shape incentives in such a way as to minimize the harm done by externalities?
I cannot emphasize strongly enough that this approach does not provide any hard and fast policy answers. In my view, the optimal public policy regime is pretty close to complete laissez faire, partly for “rules utilitarian” reasons, but also because the distortionary impact of interventionist government policies is greater than most progressives suspect. But I also see very intelligent progressives using the same sort of reasoning that I use, and reaching much more interventionist policy conclusions because they perceive the world in a different way. To take a simple example, how a person reacts to the Great Recession will depend on whether they see it being caused by Fed policy or by a reckless unregulated financial system. I think you know where I stand.
I say this because I worry that deontological libertarians might respond to progressives advocating big government for utilitarian reasons by rejecting utilitarianism, whereas they should in fact be questioning whether progressives actually have a good grasp on economic theory, i.e. whether progressives are correctly interpreting the utilitarian consequences of their proposed policies.
I actually think that Bryan Caplan conceded too much to the socialists when citing Huemer with approval:
I say utilitarianism is utterly crazy. After all, as Huemer previously told us:
It’s worth taking a moment to appreciate how extreme the demands of utilitarianism really are. If you have a reasonably comfortable life, the utilitarian would say that you’re obligated to give away most of your money. Not so much that you would starve, of course (because if you literally starve, that’ll prevent you from giving away any more!). But you should give up any non-necessary goods that you’re buying, so you can donate the money to help people whose basic needs are not met. There are always plenty of such people. To a first approximation, you have to give until there is no one who needs your money more than you do.
If that’s not crazy, what is?
It’s the socialists who believe we could establish this moral norm without discouraging wealth creation. I don’t believe that, because I don’t believe that people are robots. I certainly don’t have that sort of self-control. If I could be convinced that I had a moral obligation to give away almost all of my wealth, it would badly damage my morale. Why get up in the morning to work hard to create a better Amazon? You might say that utilitarianism “demands” that Jeff Bezos work hard for others, even if he doesn’t benefit. But people aren’t robots! I take people as they are and form judgments about behavior based on actual people with actual brains that are wired in specific ways. Most people need motivation in the form of money to go out and create wealth.
A person is not a single “identity”; they are a hive of competing emotions and desires. One part of the brain says I want to lose weight, another says I want to eat ice cream. Most people find it hard to lose weight, even if “they” want to. But what does “they” mean? The “want to lose weight” component of the brain? Or the “want pistachio gelato” component?
My views may seem weird, but in some respects they are perfectly normal. Normal people don’t expect others to give away 95% of their fortune. But normal people do tend to have high opinions of selfless people who devote most of their wealth to helping the unfortunate. Both statements can be true!
Words like ‘immoral’ have connotations that get in the way of clear thinking.
READER COMMENTS
Kevin Dick
Jul 10 2021 at 5:12pm
I was unreasonably happy to see you use “rules utilitarian” in this post 🙂
BC
Jul 10 2021 at 5:25pm
Consider two parallel worlds. In World X, Bezos creates Amazon, earns 200B, keeps 160B, and donates 40B to the poor. In World Y, 1B poor people create Amazon, earn $200 each, and Bezos hacks into their bank accounts to steal $160 from each of them. A strictly utilitarian calculation might find that Worlds X and Y are equally happy as the final wealth distributions are the same. However, Bryan Caplan might consider Bezos’s actions in Y to be far more immoral than in X due to deontological rules regarding property rights and stealing.
A socialist might point to World Y as unjust, argue that the injustice is due to unequal wealth distribution, and conclude that World X must also be unjust. Caplan provides a counter-argument by pointing out that the injustice of Y might be due to something other than wealth distribution.
Externalities are inherently symmetric. A oceanside resort might claim that offshore windmills create negative externalities to the resort’s ocean views. But, preserving the resort’s views also creates an externality for energy users. Ditto fossil fuels and coastal lands. Coasean bargaining can result in the same final, utilitarian-maximizing use of property, but initial property ownership affects final wealth distribution. Deontological moral considerations might be needed to resolve who starts with property ownership and, thus, who must pay whom to use (or not use) the property and/or to alleviate or not alleviate an externality.
Scott Sumner
Jul 10 2021 at 6:36pm
You said:
“Consider two parallel worlds. In World X, Bezos creates Amazon, earns 200B, keeps 160B, and donates 40B to the poor. In World Y, 1B poor people create Amazon, earn $200 each, and Bezos hacks into their bank accounts to steal $160 from each of them. A strictly utilitarian calculation might find that Worlds X and Y are equally happy as the final wealth distributions are the same.”
Yes, but I don’t find these thought experiments to be at all interesting, as they tell us nothing of value about public policy questions. We know that a dollar is worth more to a poor person than to Bezos (or at least that seems likely), but we don’t know what that fact implies about the optimal public policy.
As far as the two worlds being equally happy, that might or might not be true. If it’s not true then it doesn’t mean utilitarianism is wrong, it means the utilitarian making the claim left something relevant out of his calculations. In my view, happiness depends on more than just wealth distributions. I’m happier if I win $10,000 in the lottery tomorrow, than if my 401k goes up by $15,000 and a thief steals my wallet containing $5000 on the same day.
Utilitarianism doesn’t tell us which world is the happiest, it suggests we should aim for the happiest world.
BC
Jul 11 2021 at 12:11am
“I’m happier if I win $10,000 in the lottery tomorrow, than if my 401k goes up by $15,000 and a thief steals my wallet containing $5000 on the same day.”
Yes, but why? Could it be because in the latter case the thief violated deontological rules around theft and property? The outcomes/consequences in the two cases would seem to be the same (at least for you, maybe not the thief). Are you saying that your brand of utilitarianism has both deontological and consequentialist elements?
Scott Sumner
Jul 11 2021 at 11:43am
You said:
“The outcomes/consequences in the two cases would seem to be the same (at least for you, maybe not the thief). Are you saying that your brand of utilitarianism has both deontological and consequentialist elements?”
I think you are confusing materialism and utilitarianism. Utilitarianism is completely silent on the question of what “should” make people happy. It merely suggests that we should maximize happiness. If rule breaking makes people unhappy, then by all means discourage rule breaking.
robc
Jul 10 2021 at 6:52pm
Dont worry, at least for this deontological libertarian, I do both.
Reading the last thread reinforced my preference for deontology.
Airman Spry Shark
Jul 10 2021 at 9:03pm
The categorical imperative strikes me as functionally equivalent to rules utilitarianism, so there may be less distance with deontology than either side thinks.
robc
Jul 10 2021 at 10:35pm
You might be right. I consider CS Lewis my primary inspiration in becoming a libertarian, and I would put him in the deontology camp, but two great quotes of his have a kind of utilitarian tinge to them, especially rules utilitarian:
That is one of my two defining libertarian ideas (along with a Heinlein quote from Mistress).
The other Lewis quotation was:
I think a deontologist and a rules utilitarian could both lay claim to those quotes.
Sometimes I have claimed that deontology is just utilitarianism for the soul. The measure of utility is “improvement of my soul”. It isn’t a sum over everyone’s soul however. It is selfish soul improvement – which is a hilarious concept.
Michael Sandifer
Jul 10 2021 at 9:44pm
I’m with you on utlilitarianism, but not on the generalization about the ability to build weath as an incentive. I don’t doubt that wealth is an important motivator, but there clearly seems to be something else driving some wealthy entrepreneurs. Elon Musk, for example, had a net worth of a few hundred million dollars when he founded SpaceX and Tesla, which risked his fortune in its entirety.
And what keeps Warren Buffett going into the office everyday? Why didn’t Jeff Bezos step down much sooner than he did? Same question could apply to Bill Gates, the Google founders, etc. What drove Steve Jobs? Entrepreneurs have different personalities in important ways than non-entrepreneurs, and perhaps this is even more true of the above-mentioned super-entrepreneurs.
But, this doesn’t even only apply to entrepreneurs. What keeps Lebron James playing basketball at a high level? Why did Larry David make Curb Your Enthusiasm? What drives Tom Brady?
I think Warren Buffett and Bill Gates are probably correct that even considerably higher taxes on people like them won’t affect their productivity much. Anytime economists imagine what effects higher taxes, for example, would have on themselves and try to generalize that to others rather than focus on actual data, it’s telling. I’m not saying you’re doing that here, but I’ve read Mankiw doing that, for example.
Scott Sumner
Jul 11 2021 at 11:44am
You said:
“I’m with you on utlilitarianism, but not on the generalization about the ability to build wealth as an incentive. I don’t doubt that wealth is an important motivator, but there clearly seems to be something else driving some wealthy entrepreneurs.”
Since that’s also my view, I’m not sure why you think you disagree with me.
Phil H
Jul 10 2021 at 11:00pm
“You might say that utilitarianism “demands” that Jeff Bezos work hard for others, even if he doesn’t benefit. But people aren’t robots!”
This is a fairly common trope to use: I know what people are like, and people who respond to stimuli in the way that I believe are “human”; responding in other ways would be “robotic”.
(NB. I’m not at this point disagreeing with Scott; I just think this is a bit of overblown rhetoric that clogs up arguments just as much as “immoral” does)
I think that history suggests that people respond to stimuli in all sorts of extraordinary ways. The demands of public morality make people kill themselves, cut bits of their children off, restrict their diets, go to war, etc., etc. So I’m wary of any theory which says “people couldn’t possibly respond to X by doing Y.”
That said, the current social set up, in which self-interest is permitted as part of public morality at all levels, seems to be working very well, and I agree with Scott that it probably wouldn’t be a good idea to change that.
(I don’t think that’s because we need Jeff Bezos to be self-interested; I think it’s because a large organization can be most effectively aligned by a simple principle like self-interest; it helps to make motivations predictable and tractable. But whatever the reason, it works.)
Scott Sumner
Jul 11 2021 at 11:48am
You said:
“I think that history suggests that people respond to stimuli in all sorts of extraordinary ways.”
I agree, but keep in mind that my claims in the post only require that some people behave as I suggested, some of the time.
In general, however, I agree with your comment.
MarkLouis
Jul 11 2021 at 9:55am
Let’s take a more realistic example perhaps. 20 years from now US entitlement spending is truly massive and we constantly bump up against our inflation constraint. This leaves us with a choice between cuts in areas like healthcare benefits and raising revenue via taxation. Billionaires continues to lobby aggressively against tax increases. Is that moral?
Scott Sumner
Jul 11 2021 at 11:50am
You said:
“Billionaires continues to lobby aggressively against tax increases. Is that moral?”
It depends on whether the tax is good or bad, and it also depends on the motivation of the lobbyist–is it selfishness?
Michael Rulle
Jul 11 2021 at 10:25am
Why should we want Gates or Buffet to pay more taxes? Why should we want anyone to pay more taxes? I will assume there are some things the government can do better than the private sector, but does anyone believe 37% of GDP is what they need?
One problem is we are stuck with the results of historical policies——which need to be gradually unwound (50 years, 100 years?—-something like that). One could argue that Gates and Buffet pay to foundations in lieu of taxes—-and that would be correct.
But aren’t foundations similar to Governments? Yes, but nowhere near as inefficient. They can stop actions if they do not work——not as good as the profit seeking private sector——but far better than Governments.
Lets ignore Bezos estate taxes for a moment and assume he never gives anything to charity/foundations. Why is that bad? Because his yacht (which employs people) is too big? What percent of his wealth could possibly be given to frivolous pursuits—-.5%? A frivolous pursuit I define as an activity which limits the compounding of societal wealth——although I doubt I can define that—-not sure it exists—it’s more of an idea which might be a non-sequitur.
The rest is invested. Investment creates wealth and benefits for many—-Amazon being a prime example.
This is not to say things are even 40% (or any percent you choose) perfect with less government activity. It’s just that it’s worse when we give more to government to “fix things”.
Scott Sumner
Jul 11 2021 at 11:51am
I’m arguing that they pay more taxes than low income people, not that they pay more taxes than they are paying today. But if society refuses to cut spending (and both parties are opposed to cutting spending, so that seems likely) then we do need more tax revenue.
robc
Jul 11 2021 at 1:02pm
Government refuses to cut spending. I don’t think society is spending at all, so has nothing to cut.
Matthias
Jul 11 2021 at 7:22pm
Who is that ‘we’ stuck with old decisions?
Just vote with your feet.
I grew up in Germany, ‘stuck’ with high spending decisions. But those spending decisions are rather popular.
Eventually, I moved to Singapore, where fiscal policy is much more to my liking. I was not stuck.
Vera
Jul 11 2021 at 11:01pm
I could not agree more; thank you for this excellent post Scott!
I used to be comfortable calling myself a libertarian but in my opinion the people who call themselves that have made such fools of themselves over the last 1.5 years by ignoring the more fundamentally important value of utilitarianism that I can no longer risk association with that ideology.
Jens
Jul 12 2021 at 4:25am
Good article. Interesting comments. But I have a hard time with the paragraph in front of the “multiple identities”. I don’t think that people are robots (Or: I don’t think people are simple robots). But the wiring depends on the circumstances. Circumstances do not determine everything, but a lot. The paragraph has such a slightly essentialist smell.
Scott Sumner
Jul 12 2021 at 12:43pm
I encourage readers to focus less on the “smell” of a paragraph, and more on what the paragraph actually says. It does not deny that circumstances matter.
Comments are closed.