Thursday, September 17, 2015

Vouching for healthcare, Part 1

Author’s aside:

I have a number of things I want to say about public policy making.  Some of it seems a bit “academic” and some of it is right out of the pages of yesterday’s Times.  Apparently, the second type of posting is more popular than the first type, based upon the pageviews the postings get.  But I don’t want to give up on the slightly deeper ideas that have helped me, and the thousands of students I have taught over the years, to understand what might really be happening in public policy making.  However, I also don’t want to put lots of you to sleep.  So, I am going to try to publish at least two posts per month, one on “current events” and one on ideas that illuminate the import of those events.  I hope you all read both, but “to each his own.”  If you are new to the blog, you might want to go back and check out some of the earlier “ideas” stuff.

Tomorrow, I'll post on why we shouldn't give up on working for progressive change, no matter how badly some of the current participants stink.  Today, markets.

So, lets talk ideas. 

One of the ideas that the right wing is going to pursue in the next few years is replacing Medicare’s simple single-payer system, used successfully and cheaply throughout the developed world, with a voucher system.  (Yes, they balk at calling it a voucher system, but we know what they mean!)

If you live in Wisconsin or Cleveland or a handful of other jurisdictions in the US, you have seen something similar to this in vouchers for public education.  Here is how Medicare vouchers are supposed to work.

Everyone over the age of 64 will get a voucher from the government, and they will be told to go out and purchase their own health insurance with that voucher.  If they want to spend only the value of the voucher, they will get a bronze (or maybe tin?) insurance policy.  If they wish to spend more money on their healthcare insurance, they could get a gold or platinum policy, limited only by their desires and their resources available to meet those desires. 

Then, we will have set up a market place for health insurance for the elderly.  And (irony alert) we all know that markets are the best way to allocate any resource.  Markets, we know, are the most efficient allocation system, and the most supportive of individual freedom.  We also know that government programs, like Medicare and Medicaid (and all those programs in the 32 other developed countries with centrally-controlled payer systems), are inherently inefficient and will provide awful care, and make us take whatever care we are given, usually from a terrible doctor that we have to wait months to see.

How much of that last paragraph is true?  How well do markets work to allocate health care?  Are they inherently preferable to government-run systems?

I want to spend a few blog posts trying to talk about this policy debate: what to allocate through markets and what to allocate through government.  If you want to read more about what we will be talking about, check out Tragic Choices by Calabresi and Bobbitt, as the central themes of the following analysis is taken from that book.  Not the most interesting book you will ever read, but it made me think, when I first read it almost 40 years ago.  Or just keep reading here.

Our marketplace for hats

First, we have to understand how markets work.  Lets see if we can use a small barter-based market for hats to gain some insight.  We will see that markets are, indeed, efficient and promote liberty.  But at a cost, because they don’t allow us to achieve common goals, they overweight the prevailing distribution of resources (the rich get richer. . . ) and they can’t deal with things that are “intrinsically” valuable, and insist upon trying to turn them into things that are “instrumentally” valuable.

To pursue these ideas, we have to start by thinking small, because large markets are notoriously difficult to understand.  Lets start with this market for hats. 

Assume that you and I are part of a group of nine people who each have a hat.  They come in all sizes, shapes, designs and levels of utility.  We are about to start a market place for these hats, but before we do, we want to know how happy each person is with their hat.

So, all of us value our hat, maybe on a scale of -10 to +10.  I like my hat.  It is vaguely referential to Indiana Jones, and fits me perfectly.  I would value my hat at 7.

Wait.  Seven what?  We can’t say “seven dollars,” because we haven’t introduced money into our market place.  Economists talk about “utility,” the value that individuals gain from possessing some resource.  We could call it “seven utils,” but lets just say that I value my hat at 7 points.  Or, I have seven units of happiness.

You have a silly-looking hat, in my opinion.  But you seem to really like it.  It covers your head well, it seems to provide some protection against the elements.  I would trade that hat in a second, but I don’t think you are going to want to.  To each his own.  You value your hat at 7, too.

Nadiah has a solid gold hat.  She is very happy.  Very.  It doesn’t feel all that great to wear, but it is solid gold, and she knows she is set for life.  This hat, thinks Nadiah, is a solid 10.

Tracy has a hat made of lead.  She is very unhappy.  The hat has no use whatsoever.  Tracy values it as -9.  (She is saving minus ten for when she gets stuck with a radioactive hat.)

Ed has a head condition.  He is not well.  And the condition is getting worse.  It is the sort of thing that could be fixed if he had a protective hat, one that covered his whole head and would protect him from the elements.  But he has a feathery, froo froo thing.  -10.

Paul values his hat at +1.  Not great.  Could be worse.  A bit too small.

Sherry values her hat at +4.  Above average, she supposes.  But she really likes my hat, and hers suffers in comparison. 

Celia doesn’t particularly care for her hat.  It scratches a bit, because she has a small head, and it doesn’t fit well. -1.

Patrick has a hat that doesn’t suit his personality well, as far as he sees.  It is sporty, and he is a bit of a nerd.  But it keeps the rain off. +2.

So, where are we in our nine person marketplace? 

Values at Time 0


Person             IU

You                 +7
Me                  +7
Nadiah           +10
Tracy              -9
Ed                  -10
Paul               +1
Sherry           +4
Celia              -1
Patrick          +2

Total               9

Here comes the magic


In the table we have the utility that each individual assigns to their hat at the beginning, which we will call Time 0.  Lets call the value each person has “IU,” for “individual utility.”  If we want to know how much our marketplace values our hat resources, we just add up everyone’s individual utility.  The math expression of this is:

∑IUj

This is the “sum of the individual utility, starting from the first person in the group and going to the last person, or the 'jth' person.”  It is a way of describing, in a mathematical expression, the total value of what you get when you add the individual values of a group of things.

In our example, we have 9 points of utility in our market place.

Now lets see what happens when we let people start trading.  Because trading is what markets are all about.  The key to understanding markets is to follow the impact of “voluntary exchange.”  If you don’t have voluntary exchange, you don’t have a market.

The first person who wants to trade is Sherry.  She wants to trade with me, because she loves my hat, and only likes her hat.  I look at her hat and value it at -1.  Sorry, no trade.

Sherry then looks around some more, and she sees the solid gold hat.  Of course, she wants to trade, but Nadiah isn’t trading with anyone in our market. 

Finally, Sherry approaches Patrick.  She offers to trade.  Patrick accepts.  He thinks her hat is just his style, and she likes the way his hat looks on her head.  Patrick now values his new hat at +6, a step up.  And Sherry is happier, too, at +7.

Did you notice what just happened?  Nobody forced Sherry and Patrick to trade.  This was a voluntary exchange.  And Sherry could only trade with someone that wanted to trade with her.  Yet, after their trade, something magical happens.   ∑IUj goes up! 

Patrick gained 4 points of IU.  And Sherry gained 3 points.  At Time 0, our little marketplace had 9 units of value.  But now, at Time 1 after our first trade, we have 16.  We have the 9 that we started with and the extra seven that came about because of the trade.

So, at Time 1, after the first trade, something special happened to ∑IUj.  It got bigger.  We can express this change like this:

Δ∑IUj = 7

Delta is the math symbol for change.  So, at Time 1, the change in the sum of the individual utility in our marketplace, through all of the people, equals 7. 

The magic happens again


Let’s see that happen again.  Celia has a hat that is too big, and Paul has a hat that is too small.  At Time 2, they trade.  Notice that nobody made them do it.  Strictly voluntary.   Celia is 4 points happier, and Paul is 5 points happier.

Δ ∑IUj = 9

And the magic happens again.  From Time 1, after the first trade, where our total added up happiness was 16, our total now adds up to 25. 

It seems that every time two people engage in voluntary exchange, the change in the sum of individual utility goes up.  That is expressed as:

Δ∑IUj > 0

Every time a trade takes place in the market, the change in the sum of the individual utility is positive, greater than zero.  And that makes perfect sense, because, since this is all about voluntary exchange, only win/win trades are going to take place.  No one would trade unless they perceived a gain from it, so all parties are always happier after the trade.

This is, indeed, one of the marvels of the marketplace.  But of course, there is a darkness embedded in our little scenario.  How shall Ed live?  More on that in the next blog in this series.

Tuesday, September 8, 2015

Are Trump’s followers just stupid?

I found myself last week getting pretty depressed about the state of politics in the US.  Really?  More than half of the Republicans would prefer the next President to be either Trump or Carson?  Really? 

In one of my undergrad classes, I let slip that I was worried that the American public might just be getting more stupid.  Not a pedagogically sound statement, but I am worried about the possibility.  My apologies in advance for the harsh language, but I think it is important to use it to make the point.

Not polite to use this word

I know it isn’t polite, but let’s face it, some percentage of any population is not very smart.  Might this proportion be increasing?  I used to call this fear the “Dukes of Hazards” concern.  There was a time in TV history where the number one TV show was an inanity about two “country boys,” their ridiculous, gas guzzling car, and their scantily clad female cousin.  All of which had to be insulting to any self-respecting rural resident.  If that is what the American people most want to watch, something was seriously wrong.

Today, according to PPP, the polling company, 54% of Republicans think Obama is a Muslim, and another 32% said they weren’t sure.  Last year, Gallup found that more than 4 in every 10 Americans believe that God created the Earth in a week, in its present form and about 10,000 years ago.

The good news is that a majority of American’s believe in the necessity to act on climate change.  But according to HuffPo, more people believe Fox News’ views on climate change than believe President Obama’s.

We could go on.  I am guessing you all have your own data points that cause you incredulity.  There does seem to be evidence that the country is getting more and more stupid.

Maybe something else is going on

But today I retracted my statement in class.  I don’t think this is necessarily evidence of an increasing portion of Americans with limited critical thinking skills.  More likely, this is the result of 50 years of the right wing learning to reach out to, to incite and to activate whatever the portion of American’s that are stupid.

That is one of the main things they have been doing for the last many decades.  Opposing Medicare as the greatest threat to our freedom back in 1962.  Championing “state’s rights” (with all its racist overtones) in the mid-60's.  Promising peace with honor in Viet Nam, and then delivering neither.  Reagan promising to triple the defense budget, balance the federal budget and decrease taxes, all at the same time.  George H.W. Bush wanting us to address our pressing social needs with voluntarism.  George W. Bush and Cheney misleading us into the worst foreign policy blunder certainly in 100 years, maybe of all time.  Palin saying almost everything she has ever said.  Every rightist economist and politician telling us that the problem with our economy is taxes, “Taxes I tell you!”  Trump promising to round up 11 million people and send them “away.”

None of these are going to be attractive positions to people with critical thinking skills.  (OK, lots of really smart people bought W’s and Cheney’s malarkey.  The exception that proves the rule, I suppose.)  In a myriad ways, the right has been selling anger and frustration and hate to the not very smart, and it has worked well for them.

Trump might be their Frankenstein’s monster

But they are possibly going to rue that strategy.  Trump’s success is the peak of this decades-long campaign to activate the stupid.  He might end up being their Frankenstein’s monster.  His campaign is likely to dim the Republican brand, and if he were to win the nomination, he is very unlikely to win in the general election.  (Of course, I and many others said the same thing about Reagan in the summer of of 1980.  If Trump does become President, all bets are off, and I might go back to my original hypothesis.  Canada, maybe?)

So, my new hypothesis is that American’s aren’t getting any more stupid.  It is just that that group has been empowered by the right-wing in this country, been handed a platform and a megaphone, and we are just hearing from them more. 

Still, it is a dire set of events.  If right wing positions are based primarily on ignorance and lack of education, we can try to provide facts and instruction.  But if the leading edge is stupid, that is a much bigger problem. 

There is a tendency toward hopelessness faced with such a problem.  But we who are not stupid can’t give up, can’t allow ourselves to give in.  We still have to fight, and maintain hope that the large majority of the people who respond to facts and to rationality and to science can be organized to oppose a government that caters to the stupid. 

Stupidity is probably not growing, and is probably not insurmountable.  It is just another thing we have to overcome, along the way.

Sunday, August 16, 2015

What do Trump and Sanders have in common?

It certainly isn’t their policy positions.  But I think they do have something very compelling in common.  One way to explain it is to characterize what their opponents are doing.

Painting by number

Hillary and Jeb are engaged in “paint by number.”  Remember this activity?  You were given a drawing with spaces containing little numbers, and you would fill in the numbered areas with the paints that had the corresponding number.  Your only challenge was to stay within the lines.  The result is a simulacrum of a painting.  Here’s an example:

https://www.google.com/search?q=%22paint+by+number%22&tbm=isch&tbo=u&source=univ&sa=X&ved=0CGIQ7AlqFQoTCPi5kMqsrscCFQhJkgodkBMBNA&biw=1280&bih=689#imgrc=NIDdOR_tpkxRGM%3A

It’s not a horrible thing to look at, but it is a bit sad.  Actually, more than a bit.

And that is what Jeb and Hillary are doing, painting by number.  They find out, from polling and focus groups and campaign strategists, what people want to hear or how best to phrase their own views, and then offer us a sad portrait of themselves.

Actual leaders

But Trump and Bernie are actual leaders.  They actually say what they think.  And that is why they are so popular at the moment, because the American public wants leaders, and wants them desperately. 

The last time we saw this phenomenon was in 1992, when George H.W. Bush, a “paint by number” politician and Bill Clinton, probably the best paint by number guy EVER, were opposed by Ross Perot.  Perot was a feisty rich guy who said what he thought, which was often a bit odd and always caustic, yet he got lots of support, because we want actual leaders who tell us what they really think, not what they think we want to hear.  At the time, I said that the American people were so thirty for leadership that they would drink battery acid!

Interestingly, sometime during the campaign, Perot’s “serious people” suggested to him that he might actually win!  And so he started hemming and hawing, giving the kind of “no answer answer” that sounds so familiar to us all.  And his popularity plummeted.  Yet, he still got almost 19% of the popular vote.

Far from paint by number mediocrity, Trump is like a Jackson Pollack manqué, throwing splotches of paint all over the place, leaving a mess.  But it is an original mess, a mess he appears to be authentic about, “his mess.” 

And Bernie is saying what he really thinks, with force and commitment.  He may not be painting a masterpiece, but the result is something that comes from his head AND his heart, and people can hear that. 

Trying to lead

So much of the beltway media, horribly removed from the average American, have been trying to make sense of Trump and Sanders by attempting to identify that portion of the Republican and Democratic coalitions to which they are appealing.  Whose numbers, they wonder, are they painting?

But I believe their appeal is much more basic.  They are painting their own pictures, not bothering to consult with “serious people” or pollsters.  They are trying to lead.

By the way, isn’t this also why such oddities as Ben Carson and Carly Fiorina are getting their 15 minutes now?  They, too, sound like they are offering an honest picture.

Could Hillary and Jeb learn this and actually become the leaders they say that they are?  I think not.  Both have spent too much time learning to exquisitely paint by numbers, and would have no idea of what to do with a blank canvas. 

If history repeats itself, Jeb and Hillary will become the candidates, and one of them will become President.  Of course, I hope that is Hillary.  But I would really prefer to support someone with a flair for painting, someone with an authentic picture to offer us, someone, like Bernie, who will lead by telling us what they really believe, and then let us decide to follow them. 

That is the lesson that the political class could learn from Trump’s and Sanders’ successes.  But, instead, they are too busy trying to figure out if we want a number 5 on the tree trunk or a number 6. 

Sigh.

Tuesday, July 28, 2015

Black lives matter.

Isn't it reasonable?

Recently, Martin O’Malley, candidate for the Democratic presidential nomination, was confronted by demonstrators while giving a speech.  They chanted, “Black lives matter.”  O’Malley agreed that black lives matter, but added that “white lives matter, all lives matter.”  He was criticized for this statement, and is planning an apology.

Some of you may be thinking, as Jeb Bush did, “Why are we apologizing for saying that all lives matter?”  Isn’t that an obvious and reasonable statement?

Not if you are Jewish

But if you are Jewish, you should understand how important it is to not fall into this easy trap.  More people die in any given month around the world than died in the Holocaust.  Of course, Jewish lives matter, but put in context, isn’t it only one set of deaths among many? 

If you are Armenian, more people around the world die in a week than perished in the Genocide of 1915.  Why should those Armenian lives matter more than the lives of others?

If you are Irish or Italian, why still give any special attention to the discrimination that your people were met with when they came to American?  Everybody has troubles.

Do lives in Darfur matter?  Of course, but there are an order of magnitude more people all over the world who died in poverty at the same time as the Darfurians were being massacred.  Let’s not pay inordinate attention to the part and lose sight of the whole.

You get the idea.  The argument that “all lives matter” misses the point.  It misses the special attention that needs to be paid to the systematic racism that has resulted in the many killings of unarmed black people and has caused the failure of our justice system to respond accordingly.  And it misses that this is merely a symptom of a much, much larger pathology in our country.

We shouldn't forget


As a Jew, I don’t ever want the rest of you to forget the monstrous impact of anti-Semitism, particularly as it continues to make itself heard loudly in Europe and elsewhere.  And in the crazed comments of America's recent homicidal maniacs.  The Holocaust was a special, unspeakably monumental moment in our history, and it must not be softened by questionable comparisons.  Beyond the tragedy of the deaths is the real, traumatic pain that the Holocaust caused on a generation of Jews, my parents’ generation.  If you try to “put it into perspective,” you will, inevitably, diminish the specialness of the evil and the loss.

To say in response to “black lives matter” that all lives matter is to similarly diminish the lived experiences, in pain and fear and anger, of African-Americans, diluting it into a larger whole.  But the black experience in America, like the Holocaust, is special, too, and must be respected.  “Attention must be paid.”

My heart and soul ache at the knowledge that three of my great-uncles perished in the Holocaust, severing their limbs from my family tree.  And a fourth, with a number tattooed on his arm, barely survived the camps.  Every year I say a yahrzeit blessing to keep their memory, and, to some extent, that pain alive.

So, too, my heart and soul ache for the 400 years of injustice of the black experience in American, which has not ended.  I know I don’t do enough to address that injustice.  But, at the very least, I can acknowledge it and show solidarity to those who are doing something about it, by affirming that black lives matter.  To all of us.  And very much to me.

Friday, July 10, 2015

We have forgotten how transformational leadership works

In this morning’s paper, the editors of the New York Times did it again.  In an article about some of Hillary Clinton’s and Bernie Sanders’ left-leaning positions, the authors wonder whether the country is ready for such radical notions as taxing the rich in order to afford universal healthcare, infrastructure maintenance, affordable college and humane policies that support child-rearing.  They ponder whether these supposed leaders are out of step with the mood of the citizens.  Isn’t Bernie hopelessly out of touch with voters?  Won’t Clinton have to moderate her proposals in order to match the country’s centrist tendencies?  If you want to lead, they imply, you have to figure out first what the people want to hear.

A presidential wannabe

Well, how “out of step” is the rhetoric of the right-wing?  For instance, here is a presidential wannabe talking about an expansion of government support of healthcare:

    Let’s take a look at Social Security itself. Again, very few of us disagree with the original premise that there should be some form of savings that would keep destitution from following unemployment by reason of death, disability or old age. And to this end, Social Security was adopted, but it was never intended to supplant private savings, private insurance, pension programs of unions and industries.
   
    In our country, under our free-enterprise system, we have seen medicine reach the greatest heights that it has in any country in the world. Today, the relationship between patient and doctor in this country is something to be envied any place. The privacy, the care that is given to a person, the right to chose a doctor, the right to go from one doctor to the other.

    In this country of ours took place the greatest revolution that has ever taken place in the world’s history; the only true revolution.   Here, for the first time in all the thousands of years of man’s relations to man, a little group of men, the founding fathers, for the first time, established the idea that you and I had within ourselves the God given right and ability to determine our own destiny.

    Write those letters now, call your friends and tell them to write.  If you don’t, this program will pass just as surely as the sun will come up tomorrow and behind it will come other federal  programs that will invade every area of freedom as we have known it in this country until one day we will wake to find that we have socialism, and one of these days we are going to spend our sunset years telling our children and our children’s children, what it once was like in America when men were free.


A Southern governor

And here is another presidential wannabe, a Southern governor, telling us to beware of the government in Washington:

    To realize our ambitions and to bring to fruition our dreams, we must take cognizance of the world about us. We must re-define our heritage, re-school our thoughts in the lessons our forefathers knew so well, first hand, in order to function and to grow and to prosper. We can no longer hide our head in the sand and tell ourselves that the ideology of our free fathers is not being attacked and is not being threatened by another idea . . . for it is.

    We are faced with an idea that if a centralized government assume enough authority, enough power over its people, that it can provide a utopian life . . that if given the power to dictate, to forbid, to require, to demand, to distribute, to edict and to judge what is best and enforce that will produce only "good," it shall be our father . . . . and our God.

    It is an idea of government that encourages our fears and destroys our faith . . . for where there is faith, there is no fear, and where there is fear, there is no faith. In encouraging our fears of economic insecurity it demands we place that economic management and control with government; in encouraging our fear of educational development it demands we place that education and the minds of our children under management and control of government, and even in feeding our fears of physical infirmities and declining years, it offers and demands to father us through it all and even into the grave.

    It is a government that claims to us that it is bountiful as it buys its power from us with the fruits of its rapaciousness of the wealth that free men before it have produced and builds on crumbling credit without responsibilities to the debtors . . . our children. It is an ideology of government erected on the encouragement of fear and fails to recognize the basic law of our fathers that governments do not produce wealth . . . people produce wealth . . . free people; and those people become less free . . . as they learn there is little reward for ambition . . . that it requires faith to risk . . . and they have none . . as the government must restrict and penalize and tax incentive and endeavor and must increase its expenditures of bounties . . . then this government must assume more and more police powers and we find we are become government-fearing people . . . not God-fearing people.

    We find we have replaced faith with fear . . . and though we may give lip service to the Almighty . . in reality, government has become our god. It is, therefore, a basically ungodly government and its appeal to the pseudo-intellectual and the politician is to change their status from servant of the people to master of the people . . . to play at being God . . . without faith in God . . . and without the wisdom of God. It is a system that is the very opposite of Christ for it feeds and encourages everything degenerate and base in our people as it assumes the responsibilities that we ourselves should assume.

    Its pseudo-liberal spokesmen and some Harvard advocates have never examined the logic of its substitution of what it calls "human rights" for individual rights, for its propaganda play on words has appeal for the unthinking. Its logic is totally material and irresponsible as it runs the full gamut of human desires . . . including the theory that everyone has voting rights without the spiritual responsibility of preserving freedom. Our founding fathers recognized those rights . . . but only within the framework of those spiritual responsibilities. But the strong, simple faith and sane reasoning of our founding fathers has long since been forgotten as the so-called "progressives" tell us that our Constitution was written for "horse and buggy" days . . . so were the Ten Commandments!


Who are these people?

It might test your knowledge of current right-wing ideologues to try to guess who these people are, who are offering such familiar, fear-mongering tropes.  Any ideas?

Well, don’t bother.  Because these words are more than 50 years old.  The first few paragraphs were from a 1961 recording of Ronald Reagan, on an LP produced and distributed by the AMA, to get garden club members to oppose Medicare.  The second screed is from George Wallace, in his 1963 inaugural address as governor of Alabama.

Those two statements were, in the Sixties, considered far, far outside of the mainstream.  Reagan and Wallace were considered crack-pots by the overwhelming majority of thoughtful commentators.   

Yet, the familiarity of these statements today is no fluke.  Fifty years ago, there were transformational leaders who believed deeply in their ideals and the threats that they saw of government hegemony.  They didn’t base their opinions on what the latest polls indicated would “sell” to the American public.  They said what they believed, and, over the years, taught the public to believe in the same thing.  They shifted the center of gravity of public opinion far, far to the right.  They (and their corporate supporters) transformed public debate.

They made it possible for Nixon to win and govern from the right.  They set the groundwork for the “Reagan Revolution” and Bill Clinton’s elegy for “big government,” and W’s public policy panacea of “tax cuts for the rich.”  Their ability to transform public debate was a heritage to which Obama paid homage, but never realized. 

We need transformational leadership

What is needed today is similarly transformational leadership, to lead Americans back to a more balanced view, that some things are best done by markets and some things are best done by government.  That when corporations are too big to fail, then they are too big.  That when our richest people are unimaginable rich, and when more than half of our families are not “getting by,” it is time to redistribute the wealth our system has produced.  That, while America has to be a leader for democracy around the world, it can not be democracy’s sole enforcer.  That infants have a right to be free of hunger, that children have a right to a good education, that teenagers have a right to a hope-filled future, that young adults have a right to rewarding jobs, that all of us have a right to healthcare.

The question to me is not “Do Bernie and Hillary have to move to the center?” but are they the transformational leaders that we need, to move the center of gravity of public debate back to a reasonable position?  

It is not the case, as the Times’ authors believe, that real leadership seeks out positions that are supported by public sentiment. 

Transformational leadership precedes public opinion. 

Sunday, July 5, 2015

Thinking carefully about free trade

We are told by serious people that boosting international trade is good for everyone.  We should, they say, all want to support trade agreements, like the currently touted Trans-Pacific Partnership.  The freer that international trade becomes, the better off we all are.

Then we find out that one of the “everyones” that are benefitting is the tobacco industry, whose shill, the U.S. Chamber of Commerce, uses trade agreements to bully other countries into backing off of tobacco control policies, lest that country find trade with U.S. commerce to be endangered.  (They really are doing that!  New York Times, June 30th.)

Is free trade good for us, as a country?  Or is it a threat to American jobs for working class folks?  Can the answer to both of these questions be “Yes?”  It depends on your definition of “what is Good for us.” 

Bear with me as we do a little math.

How economists think

Economists believe that we can capture this notion, of “what is good for us,” by adding up all of the happiness before and after an event.  If the total happiness increases, then the event must have been a good thing.  What they are talking about can be captured by this expression:

            △∑IUj > 0

Something is good to do if the change in the sum of all individual utility, from the first person through the last person (the “j’th” person) is positive.

To understand this expression, we first need to understand what economists think of as “us.”  The basis of a good market, they say, is voluntary exchange.  When two parties trade with each other, freely, then both are happier after the trade.  That makes sense.  When you buy a new Le Creuset pot, you are happier than before you bought the item.  And the company is happier than before they sold it to you. 

And the rest of us, who are not involved in your purchase, feel pretty much the same as we did before.  Our individual happiness (economists refers to this as “utility”) stays constant, before and after the trade.  So, we are all as happy as before, and you and the company are both happier.  There has been an increase in the amount of individual happiness or individual utility as a result of the trade.

After every voluntary trade, we have an increase in the total happiness of all of the individuals in the society.  Let’s see if we can boil this down to the formula. 

Deriving the formula

Before the Le Creuset purchase, everyone had some level of individual utility.  Some people were very happy with their current situation, some people were very sad, and everything in between.  You could ask everyone to rate their current status of individual utility (IU), and then add that up:

            ∑IUj

This is the sum (represented by the Greek “sigma”) of all individual utility (IU), starting with the first person and then going all the way to the last person (presented by that little “j”).  This is where we started before the purchase.

After the purchase, you and Le Creuset are happier, and everyone else feels the same as they did before.  So, the sum of all of the individual utility in our society went up after the trade.  Hence, the expression:

            △∑IUj > 0

This is how economists think about “us.”  We are a bunch of individuals, who can be happy or not happy or something in between.  To gauge whether doing something was a Good thing or a Bad thing, you merely have to measure the state of individual utility before and after the action, and if the change in the sum of all individual utility goes up (is greater than 0), we did a Good thing.

So, free trade “makes us richer.”  It is Good for the society “as a whole.”  In other words, when we maximize the amount of voluntary exchange that takes place across borders, the change in the sum of all of the traders’ utility increases.  Consequently, free trade is better than restricted trade.

Too simplistic a yardstick


But notice that the yardstick we are using is somewhat limited.  For instance, △∑IUj > 0, because it is merely additive, does not need to keep track of whose utility went up and whose utility went down, as long as the total movement in utility was positive. 

So, might you lose your job as a result of more free trade?  Might lots of people?  That might happen, in fact probably will happen, and it would be a significant decrement in your individual utility.  But if some other people make lots and lots of money as a result of this trading, their high level increase in individual utility gets added to your lower decrement, and the net is positive.  Therefore, the action that lost you your job was a Good thing.  The sum of individual utility across the society went up, even if yours went down. 

What we are fighting for, in the current debate over trade policy, is whether and how these distributional impacts should be captured.  You, and those like you, have suffered enormously.  Your livelihood is gone, transferred oversees.  You don’t want free trade because you fear this happening.

To an economist, your loss of individual utility is overshadowed by the greater good that the U.S. Chamber of Commerce realizes, as it promotes American tobacco companies oversees.  If the rich get rich enough off of free trade, your loss is a necessary sacrifice.  Some employment dislocation is just a price we have to pay for a larger Good.

Notice that the loss and the benefits are not experienced by the same people.  But △∑IUj > 0 doesn’t have any term inside of it for “distributional effects.”  “Who gets what” is not the point, as long as somebody gets enough.

Obama, the Democrats and unions

When Obama is arguing for free trade, he is saying that open markets increase the total wealth of the American people.  And when the Congressional Democrats and union leaders are against free trade as currently practiced, it is because they know that that total growth, even if it does come, will be at the expenses of working people, and to the benefit of the already well-off.

So, maybe we need to consider international trade from a more wholistic viewpoint.  Not just that it increases the simplistic “sum of individual utility,” but that it might carry with it distributional impacts that ought to be considered and ameliorated.  But that would take some complex law-making, not consistent with the President’s desire for “up and down votes” under “fast track authority.” 

More trade is a Good thing.  But it looks like it is something that we have to do thoughtfully and carefully.  That doesn’t sound like a “fast track” kind of approach.

By the way, notice that △∑IUj > 0 only considers value that occurs at the level of the individual.  Public policy that produces benefits at the level of community have no place in that formula.  There is an “I” in the formula, but no “us.”

And anything that might be difficult or impossible to measure is not going to be considered either, since you can’t add up what doesn’t have a number attached to it.

Also, mightn’t you have strong feelings about the trading behavior of others, like my view that selling cigarettes is morally egregious?  The assumption that we are all morally neutral about trading in which we are not involved is invalid.

These problems, with the limits of economics as currently practiced, will be addressed in subsequent blogs.

For now, let's have more trade, but on terms that benefit working people, not just the rich.

Sunday, June 7, 2015

Transitive Morality

Can someone be a secular idealist and still be a Good person?  Of course they can.  But that is not the point.

New York Times editorials

Some aggressive atheists and many not-so-aggressive advocates of secularism have sought to defend their position against the criticism that “people who don’t believe in God can’t have a moral compass.”  This defense was discussed again in an article by Molly Worthen in the NY Times last week.  (“Wanted: A Theology of Atheism,” by Molly Worthen, The New York Times, May 30, 2015.)  And it was supported by a series of letters, published this morning (June 7th) on the Op Ed page.

I know lots of secular idealists.  (I defined this back in my blog post “Why Secular Idealism is Insufficient,” http://danswartzman.blogspot.com/2015/04/why-secular-idealism-is-insufficient.html.)  These are people who don’t believe in any kind of transcendent reality; this materialism makes them secular.  But they do believe in moral priorities, which makes them idealists.  And all of my friends and colleagues who fit this bill are kind, caring, trustworthy and moral people.  There is nothing in my worldview that makes this problematic.  So, I don’t believe that being a secular person means that you can’t be a Good person. 

(I do believe that thinking that there are moral priorities is difficult to reconcile with a thoroughly materialistic view, but that is not what I want to address here.) 

My problem with secular idealism is that it allows us to make only extremely limited prescriptive statements about how others should behave.  It is not a “transitive morality.”

The importance of transitive morality

Why is that important?  Well, somewhere around a third of the women and girls on our planet are treated not much better than animals or property.  Their dignity and their natural rights are denied by the societies and communities in which they live. 

And American corporations have exhibited morally reprehensible conduct in support of selling tobacco products and arguing against environmental controls.  Some former manufacturers of asbestos containing products knew that the manufacture and installation of their products was dangerous, but bribed scientists to keep the data hidden.

And awful people around the world prey on the innocent and powerless around them, for their own power, profit and glory.

And politicians like Hastert, Livingston, Hyde and Gingrich led cynical campaigns to impeach a President for sexual peccadillos that were no worse than their own behaviors.

And a ghastly number of children in the US, not to mention around the world, are hungry, as you read this, because we haven’t summoned the moral courage to demand justice from ourselves and others.

These are hideously immoral actions.  Do we have a responsibility to act?  Are you willing to accept the world’s monumental mistreatment of women and girls as something we can’t do anything about?  After all, a secular idealist might say, that is their custom, their culture, and who are we to judge them?  At most, we might hope to educate them, but we certainly can’t intervene.  On what moral basis would we support such intervention?

Exactly.  If there is no transcendent ground for morality, you might very well develop your own moral principles and live by them, but you are not able to act upon situations in which other people’s moral priorities are palpably offensive.  Your moral priorities may govern your own behavior, but they form no basis for prescriptive views of the behavior of others.

The ability to be prescriptive

This is what I mean by a “transitive morality.”  Does my moral philosophy allow me to prescribe and proscribe behavior by others?  If so, then there is a transitive quality to my morality.  The reason our moral priorities need a transcendent ground is so that we can offer moral condemnation of the behavior of others and demand correction.  Only moral priorities that transcend time, place, culture, can legitimately form the basis of corrective actions.

The final letter this morning in the Times suggests that everything will be fine as long as we all live by some version of the Golden Rule.  Yes, that would be fine, if we all did.  But what if others don’t agree with you that this is a good moral position?  What if some people wish to force others to conform to a specific moral code, and are willing to punish misbehavior by death?

What empowers the notion that we should not do what we would find hateful in our neighbors is that that notion is grounded in a tradition that respects the transcendental nature of moral values.  As long as there are immoral people in the world doing horrible things, and as long as we choose to act together in response to that immorality, we will need a transitive morality to call their immoral conduct into question and to unite us as a community in opposition to it.

Righteousness without self-righteousness

And, yes, I understand that believing in a transitive morality opens the door for my moral views to oppress others.  That is a responsibility that I, that we, have to live with.  We can not be so scared of self-righteousness that we walk away from the responsibility to be righteous.

Of course people who don’t believe in God can be moral people.  But can we, as a community, unite to act against immorality at home and abroad without a transcendent ground for our common moral priorities?  Of course not.