Economics and Ethics

Let's Be More Productive

Mark D. White

In The New York Times over the weekend, Tim Jackson contributed a piece titled "Let's Be Less Productive." In it, he decries the modern obsession with productivity gains, while recognizing the role it has played in increasing standards of living. He cites necessarily stagnant productivity in the arts, services, and craft industries, which William Baumol noted years ago, terming it the "cost disease" (because wages would have to remain competitive while productivity stayed the same), but cautions against increasing productivity throughout the economy because of other detrimental effects--specifically on jobs, if higher productivity is not accompanied by growth.

I have no problem with tempering the push for higher productivity, especially in areas in which it can hardly be expected. Productivity is a means to an end and therefore it is only valuable insofar as it actually serves that end. But I think there is an end which can benefit from higher productivity that Jackson doesn't see: a less work-centered conception of meaningful life. Instead, he sees higher productivity as a threat to full employment:

Ever-increasing productivity means that if our economies don’t continue to expand, we risk putting people out of work. If more is possible each passing year with each working hour, then either output has to increase or else there is less work to go around. Like it or not, we find ourselves hooked on growth.

On a certain level he's right; if we produce the same amount of output more efficiently, that means less resources will be required, including labor. For people who want to work, who need to work, this is of great concern, which makes this an important matter to discuss during these dire economic times.

But more generally, we should consider if work is a means to an end or an end in itself. It's the former for most everybody, of course, but the latter for only some. It's a cultural stereotype that Americans live to work while Europeans work to live, but it is based on a kernel of truth. Some people find their life's meaning primarily in work, but others find it more in other aspects of life, such as service, art, family, or love. Higher productivity may result in fewer jobs, yes, but insomuch as some people find a job a burden--and have other means to support themselves, such as a spouse or a partner--they can enjoy other aspects of life if they have other means of support, due to higher productivity.

There are other benefits to this aspect of higher productivity. It would relieve the modern necessity of the two-earner family, either allowing a two-parent family to live on one earner's income, or a single-parent family to live more comfortably on one income. And higher productivity can also--if you're so inclined--finance a stronger welfare state, to support those who want to work but can't find a job, and have no partner or other financial support. Even without growth, higher productivity enables a state to fund social welfare programs. (Just look at Sweden, where a fairly unrestrictive regulatory environment for business has led to productivty gains and growth to support their extensive welfare state.)

There is plenty of room to bemoan the single-minded focus on productivity espoused by many in business and government, and at the same time to recognize that the loss of jobs it creates (in the absence of corresponding growth) has some broader societal benefits, including lessening our reliance on our jobs and careers to give meaning to our lives and relaxing the economic burden on families. Work to live, indeed!

Charles Murray's Coming Apart discussed by David Brooks and W. Bradford Wilcox

Mark D. White

Charles Murray's latest book, Coming Apart, gets reviewed this morning by both David Brooks in The New York Times and W. Bradford Wilcox in The Wall Street Journal. Murray's thesis is that the gaps in income and wealth in America are no more important than the gaps in culture and values between the more and less affluent. To make his point more forceful, he restricts his analysis to white people, in order to prevent critics from arguining that the decline in values he points out is an issue with racial and ethnic minorities only. These trends are certainly apparent across most if not racial and ethnic groups but it is less recognized in whites, the discussion of which may be Murray's greatest contribution to the discussion.

Of course, your opinion of Murray's thesis is going to depend on what values he chooses, and (according to Wilcox) he focuses on "four 'founding virtues'—industriousness, honesty (including abiding by the law), marriage and religion." I doubt many would have issues with the first two, but the last two will turn off a lot of people (including me, to some extent). Personally, I'd prefer that "marriage" be changed to "family" and "religion" be changed to "community" (since the ethical component of religion is already covered by "honesty," or the whole exercise, really). Perhaps Murray puts his virtues in these broader contexts--I have not yet read the book--but I would guess he chose "marriage" and "religion" because participation in them in measurable (social scientist that he is).

Wilcox, the director of the National Marrriage Project, naturally uses Murray's analysis of marriage (which echoes Kay Hymowitz's Marriage and Caste in America) as an example:

The destructive family revolution of the late 1960s and 1970s has gradually eased—at least in the nation's most privileged precincts. In the past 20 years, divorce rates have come down, marital quality (self-reported happiness in marriage) has risen and nonmarital childbearing (out-of-wedlock births) is a rare occurrence among the white upper class. Marriage is not losing ground in America's best neighborhoods.

But it's a very different story in blue-collar America. Since the 1980s, divorce rates have risen, marital quality has fallen and nonmarital childbearing is skyrocketing among the white lower class. Less than 5% of white college-educated women have children outside of marriage, compared with approximately 40% of white women with just a high-school diploma. The bottom line is that a growing marriage divide now runs through the heart of white America.

Brooks also cites the marriage gap alongside other factors (using the word "tribes" rather than "class" to emphasize the "tenuous common culture linking them"), but links them to the gap in behavior that he feels is Murray's chief contribution:

Worse, there are vast behavioral gaps between the educated upper tribe (20 percent of the country) and the lower tribe (30 percent of the country). ...

Roughly 7 percent of the white kids in the upper tribe are born out of wedlock, compared with roughly 45 percent of the kids in the lower tribe. In the upper tribe, nearly every man aged 30 to 49 is in the labor force. In the lower tribe, men in their prime working ages have been steadily dropping out of the labor force, in good times and bad.

People in the lower tribe are much less likely to get married, less likely to go to church, less likely to be active in their communities, more likely to watch TV excessively, more likely to be obese.

Wilcox points where this disparity in values and behavior cashes out:

The economic and political success of the American experiment has depended in large part on the health of these founding virtues. Businesses cannot flourish if ordinary workers are not industrious. The scope and cost of government grows, and liberty withers, when the family breaks down. As James Madison wrote: "To suppose that any form of government will secure liberty or happiness without any virtue in the people is a chimerical idea."

This is certain to prompt some heated discussion in the coming months. The statement above is too vague to draw significant conclusions, which will come only from a careful reading of Murray's book. Of course, the role of virtue, or ethics in general, among all members of society and its importance to the economy in particular is of great interest to us at this blog. (Start reading, Jonathan!)

Brooks applies Murray's results to the rhetoric from both sides of the political aisle:

Murray’s story contradicts the ideologies of both parties. Republicans claim that America is threatened by a decadent cultural elite that corrupts regular Americans, who love God, country and traditional values. That story is false. The cultural elites live more conservative, traditionalist lives than the cultural masses.

Democrats claim America is threatened by the financial elite, who hog society’s resources. But that’s a distraction. The real social gap is between the top 20 percent and the lower 30 percent. The liberal members of the upper tribe latch onto this top 1 percent narrative because it excuses them from the central role they themselves are playing in driving inequality and unfairness.

At the risk of stating the obvious, I think the most fascinating part of this discussion is how income inequality and cultural inequality interact. In particular, I wonder how much of the decline in "virtuous" behavior that Murray observes among the poor is a result of choices driven by poverty (scarcity), and how much have those behaviors perpetuated that poverty. (This is not to excuse this behavior, necessary, but to understand it better.) And by the same token, the wealthy can certainly be applauded for their virtuous behavior, but to a certain extent it is easier to be good when you have the means, and the extent to which this plays a role should be acknowledged as well.

Whether Murray discusses this issue in these exact terms remains to be seen (after I read the book!), but he does make a political statement, summarized by Roger Lowenstein in his review of the book in Businessweek:

One question I wish he had taken up: Are the “new upper class” and the problems of the lower class related? Coming Apart treats them as separate. That gets to my frustration, which arises in the concluding section. Until then, Murray had merely diagnosed the cultural divide. Now he claims to know the causes. He blames the government and the “welfare state.” This section brims with political resentments; the carefully researched facts give way to bitter generalizations such as “only a government could spend so much money so inefficiently.” The author who tactfully, and wryly, demonstrated how little readers know about the lives of working-class whites, writes of “bureaucrats” with no appreciation, or even interest, in what they actually do. He does not explain why social cohesion should be less today when the Great Society experiment peaked in the 1960s. While blaming the debilitating effect on incentives of social programs, he fails to acknowledge the idea that most Americans probably feel less coddled, less protected today than in 1970.

It's interesting that both Brooks and Wilcox left this part out of their reviews, while endorsing more activist policies on the part of the government to shore up the working class. As valuable as Murray's empirical observations are, it is crucial that we understand them, interpret them, and act on them in a way that doesn't make the situation worse--whatever that may mean.

I may suck, but not as much as you

Mark D. White

Please excuse the flippant title, and get ready for a bit of a rant. (Listen--it's almost Friday, and it's been a rough couple of weeks.)

I'll start with a old joke: Two campers are in the woods when they spot a bear heading toward them. One camper starts running while the other bends down to carefully tie his shoes. The first camper yells back to his friend, "do you really think that will help you outrun the bear?" The second camper yells back, "I don't need to outrun the bear--I just need to outrun you."

I was reminded of that joke when reading a Real Time Economics blog post at The Wall Street Journal's site a couple weeks ago about a recent study on "last-place aversion." In the paper (available here), the authors report on experiments in which the participants were found more likely to take gambles that might boost their social ranking (rather than certain payoffs of equivalent expected value), and to forego costless action to help those worse off than themselves, the lower in the ranking they were to begin with. The authors use these results to support individuals' aversion to being at the bottom of the social ranking, preferring to have at least one person or group to look down upon.

I don't doubt the findings or the interpretation, but they sadden me. In fact, the entire concept of relative preferences and well-being disturbs me and always has. The idea that many (perhaps most) people base their feelings of satisfaction and happiness on what the folks next door have rather than on their own needs and desires--assuming they even have their own needs and desires--is ironically and tragically counterproductive in the aggregate. (On this I agree with Robert Frank, though not on his policy recommendations based on it.)

Maybe this unconscious desire to one-up our peers has an evolutionary basis--it would certainly seem to inspire a striving for material (and thereby reproductive) success--but it also seems to vary widely on cultural grounds (being much more pronounced in the U.S. than in Europe, for instance). (I thank Dr. Maryanne Fisher for her insights on this point.) But just because it's natural doesn't make it good or right--thank you, G.E. Moore--and just as we strive to counter other hardwired inclinations toward prejudice and oppression toward others, I would hope we would reject those which represent an attitude of disrepect toward ourselves.

It strikes me as horribly inauthentic to subsume your own standards of well-being, happiness, and satisfaction for other people's, especially if it leads to a counterproductive "race to the top" in which no one's intrinsic preferences are satisfied. I said as much here about two years ago (focusing on status goods like Starbucks coffee, which I now drink regularly, thanks to the same Dr. Fisher), so I won't rehash those arguments. Nonetheless... argh.

Don't get me wrong, researchers in psychology and economics do us a great service in highlighting these unconscious dispositions. But where are the voices crying out to restrain them, to orient our decision-making more towards activities that will satisfy our desires rather than simply make us feel good compared to our neighbors? Dr. Frank decries what Thorstein Veblen termed conspicuous consumption, certainly, but he focuses policy changes such as steeply progressive tax rates to "solve" the problem. This is to treat the symptoms rather than the disease (as behavioral economists are wont to do). Once we recognize our flaws we don't have to take them as given--but we have to make the effort.

And we shouldn't want for the people next door to do it first.

On Literature and Liberty: Mario Vargas Llosa

Mark D. White

In today's Wall Street Journal, Mario Vargas Llosa, the winner of the 2010 Nobel Prize for Literature, writes very eloquently (of course!) on the connections between liberty, dignity, and human flourishing. He describes how these ideas, as those of any writer, are an essential and crucial part of his work:

It is the function of the novelist to tell timeless and universal truths through the device of a fashioned narrative. A story's significance as a piece of art cannot be divorced from its message, any more than a society's prospects for freedom and prosperity can be divorced from its underlying principles. The writer and the man are one and the same, as are the culture and its common beliefs. In my writing and in my life I have pursued a vision not only to inspire my readers but also to share my dream of what we can aspire to build here in our world.

More substantively, he describes the different understandings of the word liberal around the world, as well as how the term, along with the associated belief in the efficacy of the free market, have been abused or obscured in various ways:

There are those who in the name of the free market have supported Latin American dictatorships whose iron hand of repression was said to be necessary to allow business to function, betraying the very principles of human rights that free economies rest upon. Then there are those who have coldly reduced all questions of humanity to a matter of economics and see the market as a panacea. In doing so they ignore the role of ideas and culture, the true foundation of civilization. Without customs and shared beliefs to breathe life into democracy and the market, we are reduced to the Darwinian struggle of atomistic and selfish actors that many on the left rightfully see as inhuman.

The market does not operate in an ethical, political, or cultural vacuum, which responsible proponents of it recognize (but for which few get credit).

I'll allow Mr. Llosa the final word (would that I could do that more often!):

The search for liberty is simply part of the greater search for a world where respect for the rule of law and human rights is universal—a world free of dictators, terrorists, warmongers and fanatics, where men and women of all nationalities, races, traditions and creeds can coexist in the culture of freedom, where borders give way to bridges that people cross to reach their goals limited only by free will and respect for one another's rights. It is a search to which I've dedicated my writing, and so many have taken notice. But is it not a search to which we should all devote our very lives? The answer is clear when we see what is at stake.

Culture Matters: The Real Obstacles to Latin American Development

Jonathan B. Wight

The argument that economic development is captive to culture is well-known, made famous by Max Weber in The Protestant Ethic and the Spirit of Capitalism (1904) and in modern times by Lawrence E. Harrison in Underdevelopment Is a State of Mind: The Latin American Case (1985) and also by Lawrence E. Harrison and Samuel P. Huntington in Culture Matters: How Values Shape Human Progress (2001).

These arguments have been debated and often ridiculed by other economists, who argue that people merely respond to incentives, and that institutions create incentives.  Can people choose some of their cultural institutions?  Native language, for example, is instinctively absorbed at such an early age that there is nothing conscious or chosen about it. 

Oscar Arias, the two-time former President of Costa Rica and winner of the Nobel Peace Prize in 1987, now enters the fray in the Jan/Feb issue of Foreign Affairs 90 (1)(2011) with an article, “Culture Matters: The Real Obstacles to Latin American Development.”

The fault, dear citizens, is ourselves according to Arias.  Using the first person, he addresses the key issues that he feels hold back Latin development: (a) a conservative mindset that protects the status quo of power and wealth; (b) a fundamental lack of trust in others; and (c) a fragile commitment to democracy.

For those who may not know, Arias’ Costa Rica has achieved an admirable record of democracy for reasons that may have more to do with culture than enlightenment musings (see Harrison’s first book above).  Arias argues:

No development project can prosper in a place where suspicion reigns, the success of others is viewed with misgiving, and creativity and drive are met with wariness. (p. 4)

Latins are primarily wary of their own governments that represent entrenched interests.  People flagrantly abuse the laws, with no repercussions.  Arias cites The World Values Survey, which finds that only 16 percent of those people surveyed in Latin America say that “most people can be trusted” – and this number is just three percent in Brazil.  The impact on entrepreneurship is predictable but tragic.  Consequently, Arias notes:

Latin Americans doubt the true intentions of all those who cross their paths, from politicians to friends.

For economic development to succeed, Latin Americans must be able to trust their states to act reasonably and predictably. They must be able to anticipate the legal consequences of their actions. And they must be able to trust that others, too, will act in accordance with the rules of the game. (p. 5)

Are We All the Same? WEIRD Science

Jonathan B. Wight

The January/February issue of Foreign Policy has an article by Joshua E. Keating summarizing the state of experiments in psychological sciences (“WEIRD Science”).  Over the period 2003 to 2007 a "whopping 96% [of studies came] from Western, industrialized countries.”   That is, psychological experiments were performed largely on students from Western, educated, industrialized, rich, and democratic (WEIRD) societies.

Keating points out that “WEIRDos tend to be more individualistic and more competitive than people from non-industrialized Asian and African societies…. Westerners -- and Americans in particular -- are far more likely to look out for themselves.”  Cultural differences apparently affect even studies of visual perception, with Westerners doing more poorly on some dimensions. 

Are we victims of WEIRD science?

Beauty and Human Evolution

Jonathan B. Wight

Adam Smith wrote extensively about the role of the instincts in human survival and success.  A focus on instincts, I believe, is needed to comprehend Smith’s conception of the invisible hand (Wight 2007). 

Although Smith did not understand evolution, he did lay out a model of how humans seek order as an instinctual act; a love of order becomes the foundation for what we think is beautiful. Beauty is portrayed in the arts, and serves as a foundation for moral learning (Wight 2006).

I just discovered that the philosopher Denis Dutton has come to very nearly the same conclusions in The Art Instinct: Beauty, Pleasure, and Human Evolution (2010).  Human evolution created an innate desire for beauty that transcends cultural norms.  A lovely TED talk is available here. 

References (sorry, don’t have hard links):

Wight, Jonathan. B. 2006. “Adam Smith’s Ethics and the ‘Noble’ Arts,” Review of Social Economy, Vol. 64(2): 155-180. 

Wight, Jonathan. B. 2007. “The Treatment of Smith’s Invisible Hand,” The Journal of Economic Education 39(3): 341-358.

Wight, Jonathan B. 2009. “Adam Smith on Instincts, Ethics, and Informal Learning: Proximate Mechanisms in Multilevel Selection,” Review of Social Economy 67(1): 95-113.  Reprinted in Mark D. White and Irene van Staveren, eds., Ethics and Economics: New Perspectives (Routledge): pp. 166-184.

Discipline and Paternalism in Parenting – Are these Virtues?

Jonathan B. Wight

Amy Chua’s fascinating article in the Wall Street Journal last week has been causing shock waves of cultural angst.

 “Why Chinese Mothers are Superior” argues that American-style parents are failing to teach their children proper discipline that is needed for success and self esteem.  Instead, American-style parents mistakenly promote a self esteem of low expectations, which becomes a vicious cycle downwards.

In addition, Chua (who is a professor at Yale Law School) also argues that parents MUST be strictly paternalistic toward their children, and substitute their own preferences for those of the prevailing culture of self indulgence.

For a counter-story to this, see this follow-up in the New York Times yesterday, “Retreat of the ‘Tiger Mother’”.

The bottom line is:  Virtues are good.  But virtue taken to the extreme becomes a … vice!

Call for papers: Workshop on History of Economics as Culture

Mark D. White

From the indispensable Heterodox Economics Newsletter comes this fascinating call:

Workshop: History of Economics as Culture

April 8th, 2011 | the University of Cergy-Pontoise (near Paris, France)
Deadline for proposals is January 15, 2011

This is to remind you that we are organizing on behalf of the H2S (History of Social Science) group, Economix (CNRS FRE 2357) and THEMA (CNRS UMR 8184), the third workshop on "history of 'economics as culture' (Histoire culturelle des savoirs économiques)" to be held Friday, April 8th, 2011 at the University of Cergy-Pontoise (near Paris, France). Our intention is to bring together scholars from different disciplines to discuss from an historical vantage point, the place of economics in our culture. Below are some suggestions of topics that exemplify what will be at issue:

• To consider the interactions between art, literature and economics;
• To discuss the interactions between cultural or artistic objects such as magazines, books, maps, photographs, paintings, graphs and economic thinking and to consider economic texts as cultural items and to reflect upon the consequences their physical form had on their reception.
• To consider economics as part of cultures (political, commercial, scientific, etc.) of past (including very recent past) societies; in particular, to discuss the economic representations (or culture) of specific social groups such as merchants, workers, businessmen, etc.

The workshop will comprise of 5 or 6 papers containing genuine unpublished research. If you have an interest in these topics, please send us a proposal of no more than 1000 words or a draft paper of what you want to present before January, 15 at the following address: historyofeconomicsasculture@gmail.com

If you are interested in the subject but are unable to send a proposal, feel free to contact us at the same address for further discussion/information. Also, last year program is available here: http://economix.u-paris10.fr/fr/activites/colloques/?id=113