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February 2019 posts

Comparing U.S. and Mexico Bribery

By Jonathan B. Wight

I’ve been thoroughly enjoying John Steinbeck’s account of his journey in the early 1940s to the waters of Baja, Mexico, where he was helping a biologist friend gather samples of the diverse ocean life.  The book is The Log from the Sea of Cortez (1941).

There is lots of philosophy here as well as some science, and lots of funny stories told with dry humor. Steinbeck reveals a wonderful distinction between U.S.-style corruption and Mexican-style corruption. Mexico has a cash bribe system and the U.S. a credit bribe system.  Steinbeck (tongue-in-cheek) prefers the Mexican cash system for its greater economic efficiency, and ultimately, its psychological effects: 

“We have thought of this in regard to the bribes one sometimes given to Mexican officials. This is universally condemned by Americans, and yet it is a simple, easy process. A bargain is struck, a price named, the money paid, a graceful complements change, a service performed, and it is over. He is not your man nor you his….

“We find we like this cash and carry bribery as contrasted with our own system of credits. With us, no bargain is struck, no price named, nothing is clear. We go to a friend who knows the judge. The friend goes to the judge. The judge knows a senator who has the ear of the awarder of contracts. And eventually we sell five carloads of lumber. But the process has only begun. Every member of the chain is tied to every other.  Ten years later the son of the order of contracts must be appointed to Annapolis. The Senator must have traffic tickets fixed formany years to come. The judge has a political lien on your friend, And your friend taxes you indefinitely with friends who need jobs. It would be simpler and cheaper to go to the order of contracts, give him one-quarter of the price of the lumber, and get it over with. But that is dishonest, that is a bribe. Everyone in the credit chain eventually hates and fears everyone else. What the bride-bargain, having no enforcing mechanism, promotes mutual respect and a genuine liking” (p. 82).

This is a clear demonstration of the double coincidence of wants problem in economics, when comparing barter to a cash economy.  

Despite the allure of Mexico's more efficient bribe system, I still prefer a just system that arises from people following fair laws, and civil servants who are virtuous enough to enforce them without prejudice.  Obviously, if laws are unfair, or civil servants are corrupt, then a cash bribe system would have a lot more going for it. 

Reality to Kids?

By Jonathan B. Wight

A friend reports an experience with a pre-K class in an inner city school.  The teacher asked kids to use crayons to draw their own faces.  Out of twelve kids, not one appeared interested in finding a brown crayon that came close to the shade of his or her own skin color. 

When given a choice, many kids wanted to draw themselves as purple or blue! Reality to them at this age is more complex than we acknowledge.   

Black Like Me

By Jonathan B. Wight

What is the role of fantasy in ethical affairs? 

Fantasy is defined as “the faculty or activity of imagining things, especially things that are impossible or improbable.”

As a youth, I spent quite a few years in Brazil.  One of the biggest traditions there is carnaval, the riotous days leading up to Ash Wednesday.  Everyone dresses in outrageous costume and mask:  the poor dress up as rich people and the rich dress as poor; men dress as curvaceous women.

The movie Black Orpheus (1959) is worth watching to capture some of the madness of that time of year.  The song A Felicidade (“The Happiness”) from the movie states that:

Tristeza nao tem fim, felicidade sim....
(Sadness has no end, happiness always does....)

The happiness of the poor appears
As the great illusion of carnival
The people work the entire year
For one moment of dreaming
To dress in costume like a king or a pirate...
And everything will be over on Ash Wednesday.

During one carnaval I purchased and used a popular Saci mask.  Saci is an impish devil who does irritating things around the house.  Saci originates in indigenous South American folklore, and was adapted by African slaves. Should a white person be wearing such a mask?  Brazil is a very racist country, but it never occurred to me or anyone I encountered that people during carnaval should not fantasize about being a black, or anything else, for that matter.  That was the very point of entering the mask-space—to take on a new persona. 

To Adam Smith, of course, sympathizing with another’s point of view is a starting point for developing an ethical perspective.  In my fifth grade class in São Paulo in 1964, my teacher was a black South African.  I had managed to get ahold of a copy of Black Like Me (1961) from my parents’ library.  In the (now famous) diary, journalist John Howard Griffin goes undercover in the 1950s by taking medication that darkens his skin, and makes him “black” in the Jim Crow south.  The point of his journal was to record his experiences of being perceived as being of a different race.  This was an inflammatory book to some, and Griffin moved to Mexico for a while to avoid the threats he received.  [Apparently an earlier journalist, Ray Springle, had done a similar “stunt,” recounted in In the Land of Jim Crow (1949).]

In any event, I had my copy of Black Like Me at my desk and suddenly my teacher came down the aisle toward my desk.  I panicked, worrying that the very subject of race might come between us. I clumsily tried to hide my book.  But why?  Isn’t the experience of a white going undercover as a black a worthy and defensible intellectual experience?  On the other hand, was it simply voyeurism, which should be condemned? As an 10 year old, my feelings were certainly confused.  My kind teacher appeared not to notice the book.

The Virginia’s governor’s current predicament is nothing like this.  The abhorrent photograph in his medical school yearbook shows someone in black face alongside another in KKK garb.  This was presumably thought to be amusing because of the paradox of these two people drinking together at a cocktail party. This is voyeurism because the episode “allows us to experience all the excitement of disaster, catastrophe, and pain, to witness the most horrible human events, without any danger of feeling real pain,” according to Gerald Mast.

Perhaps this is the crux of the matter: a voyeur is in no danger of feeling real emotion from the experience, and hence of engaging in meaningful sympathy. The person in black face in the photo knew that he would not be lynched by the KKK clansman; it mocked the subject.  But John Howard Griffin in Black Like Me had no such guarantee he would live to tell about it.

Dressing as another (or putting on a mask) can be either abominable or defensible depending on one’s intentions and motives.  If the goal is to understand and sympathize, as a prelude to perhaps changing wrongful laws and social norms, I think we might all agree it is defensible. But sometimes there is no clear dividing line between what is serious and what is frivolous. Fantasy that stokes the ethical imagination has a role in life, even if play is not for the loftiest goals.

The Virginia governor clings to his job, but probably not for much longer. As a friend texted me today, the photos in the yearbook went way over the edge, even for three decades ago:

“The issue here is gross insensitivity, mockery, dismissal of the pain of others and putting on ‘the mask’ not to enhance empathy, but to make fun of, to degrade, to even, maybe, elevate oneself in one's racist culture (even if one does not consciously see the racism therein... ).” 

Well said.

Market Power

By Jonathan B. Wight

It is a no-brainer that business people don’t really like competitive market capitalism, despite all their exhortations about the value of markets.  Just read any of The Wealth of Nations to find Adam Smith with the same view.  Business people much prefer rigged markets, as long as they are on the inside. 

So it is no surprise that new research finds that converting health care insurance from non-profit to for-profit leads to a rise in premiums (not the fall that would be anticipated because of greater market efficiencies). 

Leemore Dafney reports on this in “Does It Matter if Your Health Insurer Is For Profit? Effects of Ownership on Premiums, Insurance Coverage, and Medical Spending,” in the latest edition of the American Economic Journal: Economic Policy (2019, 11(1): 222–265): 

“I find both the BCBS affiliate and its rivals increased premiums following conversions in markets where the converting affiliate had substantial market share….The results suggest for-profit insurers are likelier than not for- profit insurers to exercise market power when they possess it.”

Next time someone says that markets are a solution that will bring down prices in privatized sectors, remember that context matters.  Context, context, context