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August 2010 posts

James Otteson’s Actual Ethics

Jonathan B. Wight

Although James Otteson's Actual Ethics (Cambridge University Press) came out in 2006, I have not had the pleasure of reading it before now. Otteson provides a nuanced defense of the classical liberal society. There is much to enjoy and think about here, even if you don't find it entirely compelling.

One of my disagreements with Otteson’s analysis has to do with the mild paternalisms that I think may be desirable, even though they create a slippery slope. Previous blogs have touched on this so I won't belabor it here.

A larger issue struck me in the first half of Otteson’s book, however.  In justifying a limited government based on a conception of negative justice, Otteson relies on an argument about respecting personhood. In this conception (summarized around page 109 -- 110) taxes may be collected to carry out the limited functions of government required to bring enforce negative justice or ensure negative freedom. But if someone wishes to opt out of the system, Otteson says he or she should be allowed to, provided that the state withdraws from protecting their freedoms or enforcing their justice.

Otteson’s conception has the semblance of the old west.  If you don’t pay your taxes the state won’t defend your ranch.  So when your family is attacked and your steer rustled off, the state is under no obligation to round up a posse in your defense.  That’s well and good if we all lived out west and externalities were minimal and it were possible to distinguish who paid taxes and who didn’t. 

But are we going to walk the streets of New York with a “T” on our foreheads to indicate to police and medical workers that we’ve paid our taxes?  Hence, there is a huge hole in this particular argument.  Earlier, Otteson criticized the welfare state for creating an incentive structure in which people would reduce their own labor because they would find it advantageous to free-load. Why is that situation any different here?  Why wouldn’t any rational person not pay, confident that in the end that problems of non-divisibility in services would make up for most of it?

In terms of national defense, why wouldn’t people simply refuse to pay taxes and claim that they would “defend themselves” if the country is invaded?  Otteson says they would have to accept the consequences of not having government protections, but the truth is all of society would be less well defended because of it. There are huge externalities produced in national defense and defense spending has the characteristic of public goods. 

To defend the East Coast from terrorist attack we need a Coast Guard and the area to be defended is constant regardless of the number of people paying taxes to support it.  With fewer people paying taxes and going it alone, does anyone seriously think we would have the same desired amount of protection?  Otteson lamely says we should “do our best not to let them free-ride”.  How? By what means?  Given that coercion is off-limits, Otteson fails to address this point.

It is not clear why Otteson would insist that a respect for personhood means there can be no coercion when it comes to raising funds to carry out the legitimate minimal functions of government.

It may be that there is an ulterior motive here in Otteson’s approach – for which I have no evidence – that safely hidden behind our huge barriers of the Atlantic and Pacific Oceans, many Americans would withdraw their support for foreign wars and interventions, shrinking the national defense size of government.  America’s empire is not a project that many Americans would support, and probably not many classical liberals.  However, would classical liberalism even have survived in England if America hadn't intervened in World War II? 

Moreover, if Otteson’s arguments are to carry weight, shouldn't his advice be relevant to countries in Europe or in Asia or in Africa?  Many countries in these regions do not have natural defensive borders and protection from invasion is critical.  If the primary goal of government is to protect the citizens from external harm, it seems odd that citizens should be given a choice.  Defending a nation requires a spirit in which all are expected to contribute, and those contribute greatly are hailed as heroes; those who failed to do their minimum legal share (e.g., paying taxes) are punished.  Social cohesion is greatly diminished without that stick. 

The Practices of Happiness: Political Economy, Religion and Wellbeing

Mark D. White

I just received an email from Routledge about this book; I'm generally very skeptical about "happiness studies," given the enormous subjectivity and measurement problems, but the religious perspective of this volume piqued my interest:

The Practices of Happiness: Political Economy, Religion and Wellbeing

Edited by Ian Steedman, John R Atherton, Elaine Graham

There is growing evidence that rising levels of prosperity in Western economies since 1945 have not been matched by greater incidences of reported well-being and happiness. Indeed, material affluence is often accompanied instead by greater social and individual distress. A growing literature within the humanities and social sciences is increasingly concerned to chart not only the underlying trends in recorded levels of happiness, but to consider what factors, if any, contribute to positive and sustainable experiences of well-being and quality of life. Increasingly, such research is focusing on the importance of values and beliefs in human satisfaction or quality of life; but the specific contribution of religion to these trends is relatively under-examined. This unique collection of essays seeks to rectify that omission, by identifying the nature and role of the religious contribution to wellbeing.

A unique collection of nineteen leading scholars from the field of economics, psychology, public theology and social policy have been brought together in this volume to explore the religious contribution to the debate about happiness and well-being. These essays explore the religious dimensions to a number of key features of well-being, including marriage, crime and rehabilitation, work, inequality, mental health, environment, participation, institutional theory, business and trade. They engage particularly closely with current trends in economics in identifying alternative models of economic growth which focus on its qualitative as well as quantitative dimensions.

This distinctive volume brings to public notice the nature and role of religion’s contribution to wellbeing, including new ways of measurement and evaluation. As such, it represents a valuable and unprecedented resource for the development of a broad-based religious contribution to the field. It will be of particular relevance for those who are concerned about the continuing debate about personal and societal well-being, as well as those who are interested in the continuing significance of religion for the future of public policy.


Introductory essay: developing an overview as context and future John Atherton

Part 1: Political Economy

1. Economic theory and happiness Ian Steedman

2. Happiness, welfare and capabilities Carl-Henric Grenholm

3. Happiness through thrift: The contribution of business to human wellbeing Peter Heslam

4. Happiness, work and Christian theology Peter Sedgwick

5. Happiness isn't working, but it should be Malcolm Brown

6. Challenging inequality in a post-scarcity era: Christian contributions to egalitarian trends John Atherton

7. Fair trade and human wellbeing Michael Northcott

Part 2: Contributions to Other Social Sciences

8. Religion and happiness: perspectives from the psychology of religion, positive psychology and empirical theology Leslie Francis

9. Ethnographic insights into happiness Jonathan Miles-Watson

10. Institutions, organisations and wellbeing Tony Berry

11. Religion, family form and the question of happiness Adrian Thatcher

12. Mental health, spirituality and religion Peter Gilbert

13. The ‘one in the morning’ knock: exploring the connections between faith, participation and wellbeing Christopher Baker

14. Crime, wellbeing and society: Reflections on social, 'anti-social' and 'restorative' capital Christopher Jones

15. Supporting offenders: A faith based initiative Charlotte Lorimer

Part 3: Reflections on Foundations

16. Human happiness as a common good: clarifying the issues Patrick Riordan

17. Being well in creation John Rodwell

18.The ‘virtuous circle’: Religion and the practices of happiness Elaine Graham

19 Well being – or resilience? Blurred encounters between theory and practice John Reader

Accepting the Invisible Hand: Market-Based Approaches to Social-Economic Problems

Mark D. White

Accepting the Invisible Hand As you may have noticed, I added a link to the book list at the right for Accepting the Invisible Hand: Market-Based Approaches to Social-Economic Problems, the first book in the "Perspectives from Social Economics" series from Palgrave. As editor of this first book (as well as the series), I am truly humbled by the advance praise:

"Recent global economic turbulence has brought to the forefront discussions not only of competing systems of political economy but of their relative moral status as well. But many of these discussions are either weak on economics or weak on philosophy. Mark D. White's collection of essays is refreshingly strong on both. Its distinguished contributors have written essays that are insightful, engaging, and learned. And they could not be more timely. Together they present a compelling case for reconsidering, and taking seriously, the role that markets and Adam Smith's "invisible hand" play not only in generating material prosperity but in developing a proper moral community. This book should become a mainstay in the classroom, and everyone genuinely interested in human flourishing should read it."  —James R. Otteson, Joint Professor of Philosophy and Economics, Yeshiva University

"Gary Becker once noted that it's hard to appreciate markets. Accepting the Invisible Hand makes it easier. Mark White and his contributors have done an admirable job documenting the social benefits of free markets."  —Peter T. Leeson, BB&T Professor for the Study of Capitalism, George Mason University

"Our cognitive biases tend to make us suspicious of markets.  We often prefer the hidden hand explanation of the conspiracy buff to the invisible hand account of the economist. We think that if there is more for one person, there must be less for others and we are constantly told that only greedy people like markets. This wide-ranging and refreshing volume is a cure for these aliments and errors. Mark White and his excellent and diverse contributors justify, explain, and apply market processes and the bourgeois virtues to a wide range of phenomena, from philanthropy and the fight against poverty to rebuilding New Orleans. If you suffer from marketphobia this book is prescribed—if you don't, it's just a treat."  —Gerald Gaus, James E. Rogers Professor of Philosophy, University of Arizona

I'll be blogging more about the book in upcoming months, building to its release in November...


Jonathan B. Wight

Kant is a strong defender of the viewpoint that people deserve to be treated with respect, as autonomous and dignified individuals.  I say “Bravo!” There is a dangerous and slippery slope from portraying others as incompetent to taking over their lives “for their own good.”

Yet... some staunch defenders of liberty have also walked that slippery slope.  Adam Smith, for example, chronicled the irrational foibles of humanity, and suggested policies for accommodating it.  Unlike Mark White, I am willing to consider the walk. 

People are gullible.  It’s an indelible feature of human experience.  People are gullible amount money, about war, and about love.

I’ve been listening to Rufus’ The Wisdom of History.  Time after time people have gone to war believing—dreaming or imagining—that the conflict will be over quickly and with minimal casualties.  Rufus takes us back to the Peloponnesian War between Athens and Sparta, with the same distressing and repetitive theme as the American Civil War, World War I, and to the “Mission Accomplished” speech on Iraq in 2003.  People always believe irrationally that this time it will be different.  It’s the gambler’s curse and the alcoholic’s refrain.

Is there anything we can or should do about gullibility?  The option to “let people learn from their mistakes” is a good one—and accords them dignity and freedom.  At the same time, some choices may be irreversible and catastrophic.  Some aspects of finance have become so specialized that the average consumer will never master its intricacies, no matter how many disasters befall them. 

It seems disingenuous to say, “Let’s let thousands of people fall off the financial cliff—eventually those that survive will learn.” 

A greater concern for people’s dignity and autonomy might lead us to ask:  “What common standards and terms for loans would allow people to successfully complete a contract without losing their financial independence?”  Accomplishing this might require that businesses report information—as in the Truth in Lending Act 1969—which required lenders to disclose the annual percentage rate of interest.  It might also restrict certain types of products.

Some paternalism would make it illegal for lenders to prey on our known gullibility.  Adam Smith directly addressed this issue when he argued for restricting bank note issues to larger than 5 pounds.  The reason is because he didn’t want to give the poor the “choice” to destroy themselves by speculating on bank notes.  Any loss for the poor would be catastrophic.  Smith was being pragmatic about what would ultimately allow the poor to live dignified lives. 

Is paternalism a dangerous, slippery slope?  Absolutely.  But that does not mean we walk on only flat and dry land.  We have good hiking boots and ice crampons and other tools for helping navigate.  It helps to have a good guide (e.g., Kant) who can warn us of excessive slopes.  But it seems excessive to banish society from visiting any slope at all. 

Elizabeth Warren, financial reform, and Nudge

Mark D. White

Since the nomination of Harvard law professor Elizabeth Warren to head the Consumer Financial Protection Bureau is currently making headlines (though not as much as if she were a disgruntled flight attendent), I thought it was a good time to share a recent paper of mine, "We've Been Nudged: The Effects of the Downturn on Dignity and Responsibility," which I wrote for Martha Starr's upcoming edited volume, Consequences of Economic Downturn: Beyond the Usual Economics, forthcoming next year from the Palgrave series "Perspectives from Social Economics." Here's the abstract/introduction:

The economic downtown that began in 2008 has had tremendous consequences in the United States (and abroad), including declines in traditional economic variables such as gross domestic product, the stock indices, and employment, as well as the broader measures of well-being detailed in other chapters in this book. Scholars will argue for years to come over the true causes of the downturn - how much was due to imprudent practices on the part of business (chiefly, financial concerns), irresponsible behavior on the part of consumers and borrowers, and ill-designed regulation and intervention by the government - as well as the effects of various aspects of the government response.

Regardless of the relative validity of these factors, the common perception seems to be that private institutions - the market in general and the financial sector in particular - failed, and government intervention is necessary to serve the functions that private institutions used to provide. As a result of this perception, the American people may be more open to increased regulation of economic and financial activity, including state intervention in personal decisionmaking, as typified by the “libertarian paternalism” made popular by the book Nudge and incorporated into proposed federal legislation to enact broad reform of the financial sector. I argue below that we should not be too hasty to surrender choice over personal decisions to the state, based on criticism of libertarian paternalism and its academic basis in behavioral law and economics from the viewpoint of dignity and autonomy as described by 18th century philosopher Immanuel Kant. I discuss the specific work in the area that inspired the most recent attempt at financial regulatory overhaul, and show how its features are consistent with the broader literature from which it derives, and also how it suffers from the same flaws epistemic and ethical shortcomings. Ultimately, I argue that the perception of the failure of the market that has led us to question our own choices results from a misunderstanding of the role of the market in society, and an improved understanding of the market will serve to reassert the importance of individual choice and dignity over the supposed benefits of government decisionmaking on the behalf of consumers.

In this section on financial reform I discuss a bit of Professor Warren's work, mainly her 2008 paper "Making Credit Safer" with Oren Bar-Gill from the University of Pennsylvania Law Review. As I explain in my paper (with many quotes from Bar-Gill and Warren, plus others), these scholars share the same attitude toward consumers as Richard Thaler and Cass Sunstein do in their academic and popular work on libertarian paternalism, which is ultimately based on incredibly simplistic and reductive understandings of human motivations and behavior (which is ironic, coming from behavioral economists), and a refusal to consider the autonomy and dignity of the consumers they presume to be helping.

Proposition 8 (and the tyranny of the majority) overturned in California

Mark D. White

Yesterday, Judge Vaughn R. Walker overturned Proposition 8, the voter-enacted amendment to the California Constitution that declares marriage to be exclusively between a man and a woman. This case will undoubtedly move up through the court system, but for now this is undeniably a huge step.

I especially appreciated this passage in Judge Walker's decision (page 118 in the opinion linked above):

That the majority of California voters supported Proposition 8 is irrelevant, as “fundamental rights may not be submitted to [a] vote; they depend on the outcome of no elections.” West Virginia State Board of Education v Barnette, 319 US 624, 638 (1943).

This echoes what I wrote in  "Same-Sex Marriage: The Irrelevance of the Economic Approach to Law" (International Journal of Law in Context, 6/2, 2010; draft version available here), drawing from the jurisprudence of Ronald Dworkin:

If rights are in question, they should not be up for vote; a right either exists or it does not... And whether or not it does exist should be formally recognised by the part of the legal system responsible for deciding on issues of rights – the courts. To do otherwise is to invoke Mill’s "tyranny of the majority" by endorsing a system in which the majority can vote to rescind essential rights claimed by the minority. ... But just as judges should not legislate or make policy, the standard legislative process cannot do justice to the principled matter of same-sex marriage, nor does it serve democratic principles to try. (p. 147)

Aside from my approval of the substance of Judge Walker's decision, I especially appreciate the way in which he made it, confirming that some rights - especially ones so important as the right to marry the person of one's choosing - are beyond popular vote.

Noentheless, the optimal solution remains that the state should withdraw from marriage entirely, leaving it a purely private matter between individuals, their community, and their faith (when appropriate), stepping in only to enforce private agreements or other aspects of the law that apply to married and non-married persons, and with no privileged (positive or negative) status accorded to marriage. Only when the state takes its finger off the scales will marriage be truly equal for all.

Call for papers: 2011 Association for Social Economics/Eastern Economic Association meetings

Mark D. White

I invite you to submit abstracts and/or session proposals for the Association for Social Economics sessions at the 2011 Eastern Economic Association meetings, to be held at the Sheraton New York Hotel and Towers in New York City, February 25-27.
I welcome any proposals dealing with the concerns of social economics, whether theoretical or practical, methodological or policy-oriented, or anything in between. As always, I am particularly interested in papers exploring the intersection of economics and ethics (which fits under the social economics umbrella), as well as economics and philosophy in general. 

You do not have to be a member of ASE to participate in the EEA sessions, though if you are not a member, I do encourage you to visit the website and consider joining. (In fact, even if you choose not to participate in the meetings, it's a good idea to visit the website and consider joining!)
Please send me your abstracts or session ideas by Monday, October 4 at [email protected] - also, feel free to ask me about possible topics or themes, or about the meetings in general. The Eastern Economic Association meetings have always been very open to alternative approaches and viewpoints, as well as a wonderful forum for innovative ideas.