Mark D. White

In today's "The Upshot" in The New York Times, economist Aaron E. Carroll bemoans the fact that health policymakers, regulators, and spokespeople are reluctant, and sometimes even forbidden, to discuss and make use of information regarding the cost effectiveness of particular treatments. The fear is that they will invoke the spectres of rationing and "death panels," or more generally, medical decisions made on the basis of money alone and not the needs or interests of patients and their loved ones.

I agree with Carroll that cost effectiveness is an essential and necessary topic for discussion; after all, health care has to be paid for by someone, who is responsible for making sure that scarce resources are used in the most beneficial way possible. And I think most people understand this principle as well, even if they don't want to acknowledge it at times of tragedy and impending loss.

If people are afraid of calculations of cost effectiveness, it's because they don't want some distant, faceless, bureaucracy using cold data to make decisions that affect such an intensely personal aspect of their lives. But the problem isn't the numbers themselves—it's who is using them to make the critical decisions.

If health care decisions had not been centralized under the Affordable Care Act (or a similar plan), and health care decisions were left in the hands of doctors, patients, and insurance companies unbound by government mandates regarding coverage, these parties together could use cost effectiveness numbers in a way that worked with each patients based on his or her interests, coverage, and resources. Each patient, together with his or her doctor and loved ones, could balance these various factors in a way that furthered his or her overall interests within available resources and insurance coverage. They could use cost effectiveness information as one input into a specific decision in a way that furthers that patient's interests.

I wrote about this aspect of private health care in "Markets and Dignity: The Essential Link (With an Application to Health Care)," my chapter in my edited volume Accepting the Invisible Hand: Market-Based Approaches to Social-Economic Problems (Palgrave Macmillan), on pp. 13-14:

The possibility of making private decisions regarding the benefits and costs of various treatment options, whether for minor illness or chronic disease, puts the choice in the patient’s hands (as well as with her doctor and whomever else the patient wants to join the process, such as family or friends). In consultation with her doctor, the patient can assess the value of various treatments, considering the merits compared not only to their costs, and the benefits and costs of alternative options, but also other uses towards which those resources can be devoted, which are all subjective valuations. Perhaps she will choose not to undergo the premium treatment, even if she could afford it, because she wants to leave the money for her children, or take a cruise in the final months of her life; or perhaps she will sell her house to pay for a little more time on life support and with her grandchildren. In a market setting, this choice is hers, along with its benefits, costs, and other consequences.

I am not denying that the patient may not be able to afford the premium treatment because she does not have the resources for it; this is tragic, to be sure, but unavoidable in a world of scarcity. If she is not making these decisions, someone else is; an insurance company or HMO may also refuse her the premium treatment based on costs, and a government-run health plan may do the same. But in these cases, the decision would be made for her, according to someone else’s calculation of whether the treatment was “worthwhile” in terms of costs and benefits for the hospital, insurance company, or government health program, all of whom have scarce resources that must be allocated somehow. In a market context, the decision would be hers, even if it seemed she had no decision at all because she does not possess the resources, either due to bad luck or bad planning, or other choices made through her life.

All is not lost, necessarily; just because the premium treatment is out of reach does not mean there are not lesser, more inexpensive treatments that will also be of benefit. In a market system, this is the patient’s choice, just as she can choose what size house to buy, what model car to lease, what size TV to own. Every person prioritizes the various interests on her life; some forego the large house to take frequent vacations, some do the opposite. Some may opt for the cheaper treatment option to retain more resources for another goal in life, or to give more to others rather than spend it on premium care for herself. And certainly, past choices will constrain or expand her present options; one who spends her income on lavish toys throughout life should not expect sympathy when she cannot afford top-line treatment at the end of it. But these are her choices, while in any other system, this decision may be made for her, according to calculations based on the imputed value of her life and her well-being compared to other persons. Not every person can afford to have the premium treatment, but this fact is due to scarcity of resources, not the way in which they are allocated or distributed, and it will be true under a state-controlled system as well as a market system. A state system focused on efficiency cannot allow everyone to have the premium treatment either, and the choice of who (if anybody) undergoes it will be truly arbitrary, with no role for choice on the part of the patient or her family. Choices that so closely affect a person’s life should be made by that person alone (or other persons to whom she delegates—or sells—that authority); they should not be made by another party that either presumes to know her “true interests” or serves the collective weal in the name of efficiency.

Mark D. White

A new call for papers for a special journal issue, highly recommended:

Moral Philosophy & Politics, issue 2016/01 , symposium:

Ethical Limits to Markets

Claims about the dominance or “hegemony” of the market abound in contemporary discourse, yet there remain areas of social life in which goods are not produced and/or allocated via markets. There are also areas of social life in which the use of the market mechanism is contested. The editors of Moral Philosophy and Politics invite high quality submissions that examine questions such as:

- Are there goods that cannot, opposed to should not, be produced and/or allocated via the market?

- What are the characteristics of goods that cannot or should not be bought and sold on markets?

- Is there a “general theory” of limits to markets, or are their limits to be enumerated on a case-by-case basis but not by an all-encompassing theory?

- Are there examples of discourses about the limits to markets in history from which contemporary debates can learn?

- What are the processes through which a given good enters the market domain, having been previously produced or allocated by non-market means?

- What sorts of ethical arguments and sentiments are made or held by lay people who oppose “marketization”?

- What are the processes through which ethical opposition to “marketization” is reduced or broken down?

- To what extent can questions about ethical limits to markets be detached from wider questions about the ethics of “market society” or “capitalism”?

Commentaries and critiques of recent literature on the limits of markets are also welcomed.

Submissions are to be received via the journal’s manuscript submission site (http://mc.manuscriptcentral.com/mopp) by 1st January, 2015.

For more information, see the journal's homepage: http://www.degruyter.com/view/j/mopp

Mark D. White

Much has been written recently regarding Obamacare's predicted effect on employment and, even more recently, on the CBO's report on the effect of increasing the minimum wage on same—see, for instance, Ross Douthat's latest column, "When Work Disappears." 

As it happens, I was fortunate enough to see an advance copy of Mehmet Cangul's upcoming book Toward a Future Beyond Employment, in which he argues that there can be an upside to a gradual reduction in employment, but that society needs be re-evaluate its ideas about work, consumption, and leisure in order for that to happen. (I have an older piece at Psychology Today along the same lines, so I was drawn to Mehmet's arguments.)

I asked Mehmet if he would write a short piece for Economics and Ethics addressing the recent Obamacare controversy, and he graciously agreed. Below is what he wrote:

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The recent Congressional Budget Office Report, revealing Obamacare would cause more than 2 million job losses, has caused much stir. Republicans have been quick to point out that they were right all along about Obamacare’s cost on jobs and business. But the White House defended the result, arguing that much of the job loss will come from people choosing not to work and instead focus on their “dreams.” Their reasoning is that healthcare subsidies for the lower ladder of the income scale would enable workers to “escape” jobs that they would otherwise stay in only to keep their healthcare coverage. Some on the right have been quick to ridicule this argument about expanded choice, framing it as a last-ditch political effort to make the best of an embarrassing revelation.

However, we should take a pause from politics and ask this intuitive question: does it make sense that people would continue to work at jobs they would rather quit just so they can have affordable healthcare? This is in fact a severe distortion that prevents the full realization of what the American economy has already inherently achieved, more choice.

This is one of the core ideas of the book I wrote, Toward a Future Beyond Employment, that will be published by Palgrave this April. My main argument is that the Western economies that have been able to incorporate their technological progress structurally to their economic production should be able to afford more free time for their workers. Due to certain economic inefficiencies and cultural biases, however, the system is not able to fully internalize this opportunity. If Obamacare will give workers more choice, and ultimately more time, this should be welcomed, not attacked on the basis of a dogmatic cling to political correctness about job loss.

Some have argued that a declining work force would pose problems for economic production as jobs would increasingly be harder to fill. However, the trend of technology and automation points otherwise. The more sophisticated and nuanced automation becomes, the faster we will converge toward a paradigm where the demand for human labor will become either irrelevant or severely reduced (in terms of both laborers and hours) even in areas where we would never imagine robots could toil on our behalf. Just as the technological shift of manufacturing eliminated jobs in physical production, a parallel structural shift is taking place in non-tangible jobs such as administration. Increasingly more sophisticated software technology is rendering mental labor less relevant as well.

Does this mean more people will be idle without a purpose? This is a caricature. In truth, it only means that society will have to translate the time savings from this labor elimination toward alternatives that give individuals more choice and creative satisfaction while certain industries and their potential for traditional job generation face a natural decline. The economy is no longer one of industrial and material production, but instead operates on the basis of the production of ideas and concepts. More time away from declining traditional work structures should naturally enable more people to contribute to the production of ideas on an individualized basis.

In my book I argue that this is the next stage of economic advancement that Western economies face, and will result in higher welfare based on people having more time to use as they wish. Public policy that accommodates this evolution by expanding choice should therefore be encouraged. While Obamacare will continue to be debated on multiple grounds, its impact on jobs has to be considered more thoughtfully beyond headline numbers and short-term political gain.

Mark D. White

Many people, including in the media and academia, have wondered about the lack of criminal prosecutions stemming from the 2007-08 financial meltdown, especially related to fraud in the banking sector. In the new issue of Crime, Law and Social Change (61/1, February 2014), Henry N. Pontell, William K. Black, and Gilbert Geis probe this question in a paper titled "Too big to fail, too powerful to jail? On the absence of criminal prosecutions after the 2008 financial meltdown":

Various explanations have been offered regarding the causes of the current global economic crisis that was spawned by the collapse of mortgage-based securities in the U.S. that were sold world-wide and that contained "toxic assets" comprised of subprime loans. There is ample evidence that such loans were originated through fraud. Firms recorded huge profits, and executives were awarded large bonuses even though some had led their companies into bankruptcy and plunged both the U.S. and global economies into the greatest recession since the Great Depression. This paper assesses the reasons why there have been no major prosecutions to date, and compares the U.S. government's response to that in the savings and loan crisis. It analyzes the influence of large financial institutions on lawmaking, regulation, and the allocation of enforcement resources, the continued general lack of understanding of financial fraud including control fraud, and problems related to the higher status and power of potential defendants.

This paper promises to contribute a much-needed criminological insight to this question (which seems to bring out a retributivist sentiment in people who would normally disavow such ideas!).

Mark D. White

I read with great interest Amia Srinivasan's contribution to the New York Times' philosophy column "The Stone" titled "Questions for Free-Market Moralists." After introducing the political philosophies of John Rawls and Robert Nozick, she states that "on the whole, Western societies are still more Rawlsian than Nozickian: they tend to have social welfare systems and redistribute wealth through taxation. But since the 1970s, they have become steadily more Nozickian." Then she presents four statements that she claims describe Nozick's minimal state -- and are representative of what she terms "free-market moralism" -- with which she assumes most people will not be comfortable. (Certainly not readers of The New York Times, by any rate.) But I'm not so sure, especially once we clarily what the four statements are talking about.

The four statements are:

1. Is any exchange between two people in the absence of direct physical compulsion by one party against the other (or the threat thereof) necessarily free?

2. Is any free (not physically compelled) exchange morally permissible?

3. Do people deserve all they are able, and only what they are able, to get through free exchange?

4. Are people under no obligation to do anything they don’t freely want to do or freely commit themselves to doing?

For each statement, Ms. Srinivasan provides an example of what such a world would look like: for instance, after statement #2, she suggests the following. (Note that this example also invokes statement #3 about inherited wealth.)

Suppose that I inherited from my rich parents a large plot of vacant land, and that you are my poor, landless neighbor. I offer you the following deal. You can work the land, doing all the hard labor of tilling, sowing, irrigating and harvesting. I’ll pay you $1 a day for a year. After that, I’ll sell the crop for $50,000. You decide this is your best available option, and so take the deal. Since you consent to this exchange, there’s nothing morally problematic about it.

This example points out my problem with Ms. Srinivasan's argument: she conflates political philosophy with moral philosophy. It is perfectly consistent to maintain, as in statement #2, that free exchanges are morally permissible while also believing that that is something morally problematic with the situation described above -- as long as you don't subscribe to a perfectionist system of morality that fails to distinguish between forbidden and merely "problematic" actions.

But there's more. Statement #2 really isn't speaking to morality -- instead, it's talking about legality that's simply based on a certain morality. How statement #2 should be read (based on my understanding of Nozick, at any rate) is as saying that the state has no moral basis to question free exchanges. Of course, the situation above is distasteful to most, but does this mean should it be forbidden by law? This is a different issue than the one Ms. Srinivasan addresses in her example -- and I suspect many would answer "no, it shouldn't be illegal" even if they regard the landowner's behavior as despicable. This doesn't imply a moral free-for-all, but simply a state that stops short of legislating all moral (or immoral) behavior.

Consider also Ms. Srinivasan's example for statement #4 regarding forced obligation:

Suppose I’m walking to the library and see a man drowning in the river. I decide that the pleasure I would get from saving his life wouldn’t exceed the cost of getting wet and the delay. So I walk on by. Since I made no contract with the man, I am under no obligation to save him.

The problem of duties of beneficence is an old and well-worn one in moral philosophy: while most would say we do have a general obligation to help those in need when it would come at little cost to ourselves, not as many would be willing to make that a strict requirement, much less a legal one (though some jurisdictions have). Ms. Srinivasan seems to draw a extreme and false dichotomy between coerced beneficence and rapacious self-interest -- I would like to think that no matter what kind of state we live in, people would still extend a hand to those in need when they can. (Furthermore, I see no reason to believe this would be any more likely to occur in a Rawlsian system where the state, not the individual, is the party understood to do most of the helping.)

As I understand him, Nozick was describing a state that enables people to make choices when they don't wrongfully harm others, and the market was but one framework in which they could do that. (For that reason, I disagree with the term "free-market moralist," but that's of little concern.) He did not, as Ms. Srinivasan writes, maintain that "the market can take care of morality for us," nor did Rawls hold that morality was the sole responsibility of the state. Fundamentally, Rawls and Nozick differed on the degree to which the state should exercise individuals' collective responsibility to each other on their behalf. Neither Rawls nor Nozick denies a role for private morality outside of the state. But Nozick and the "free-market moralists" believe that individuals, as parts of families and communities, bear the bulk of the responsibility to take care of one another, a responsibility borne voluntarily and, yes, imperfectly (unlike how perfectly the state conducts it, of course).

Ms. Srinivasan also holds Nozick's system to an incredibly high standard, arguing that to concede any weakness in any of the four statements "is to concede that the entire Nozickian edifice is structurally unsound. The proponent of free market morality has lost his foundations." But she neglects to mention the problems with Rawls' system, especially the very particular psychological assumptions that ground the "results" of the veil-of-ignorance exercise -- a brilliant metaphor also found in the work of other philosophers and with various predictions regarding the terms of the social contract.

Ms. Srinivasan states clearly that she believes that Western societies should be tilting back towards Rawls (I would say "further" rather than "back," but that's a difference of interpretation) and away from Nozick. Fair enough -- we disagree on that. But she makes Nozick's system an all-or-nothing proposition while ignoring problems with Rawls, and further misinterprets Nozick's work as describing the whole of morality rather than the operation of the state alone. In the end, her article shows a troubling lack of faith in people to care for each other outside the confines of the state -- and an overly optimistic belief in the power of the state to do the same.

Mark D. White

The latest issue of Politics, Philosophy and Economics (12/4, November 2013) features a symposium on exploitation. In his introduction, editor Thomas Christiano explains that the recent focus on market liberalism and voluntary exchange has reduced the attention given to issues of exploitation, but

[t]here are, however, signs of renewed theoretical interest in exploitation and unfairness in exchange, and hopefully the papers in this symposium will become part of a resurgence of interest in these important issues. The items by Hillel Steiner, Jeremy Snyder, and A. J. Julius attempt to show how mutually advantageous and voluntary transactions can nevertheless be exploitative and for that reason morally problematic. They do this without the aid of a conception of equal exchange or a basic theory of value in exchange.

Hillel Steiner attempts to develop a general account of exploitation that can be fit into the classical liberal tradition which takes seriously the right of each person to enter into voluntary exchange with others. Jeremy Snyder develops a more complex conception of exploitation that employs the notion that exploitation is demeaning to the exploited persons, who themselves have reasons to resist it, and A. J. Julius attempts to develop a conception of exploitation by appealing to the claim that in morally unproblematic exchange, the participants must have prior reasons to promote each other’s concerns that an exchange enables them to satisfy. Each of these views is distinct and will provide the materials for distinct lines of inquiry into exploitation. Mathias Doepke attempts to develop a conception of the exploitation of child labor with the tools of modern economics. Richard Arneson’s more skeptical view is that while there are clear wrongs involved in much of what is called exploitation, the notion of exploitation itself does not capture anything morally fundamental. He challenges a number of recent accounts of the wrongs of exploitation.

The papers in this symposium issue are:

Liberalism, neutrality and exploitation, Hillel Steiner

Exploitation and demeaning choices, Jeremy Snyder

The possibility of exchange, AJ Julius

Exploitation, altruism, and social welfare: An economic exploration, Matthias Doepke

Exploitation and outcome, Richard Arneson

Freedom and oppression, Claire Grant

Jonathan B. Wight

The New York Times reported on Saturday that big Wall Street banks are finally using their billions in excess reserves—but not in the way that we normally think financial intermediation ought to work (“A Shuffle of Aluminum, but to Banks, Pure Gold”).

Instead of using excess reserves to make company loans for investments that create jobs, Goldman Sachs and others are using funds to corner the market in commodities, such as aluminum and copper.  Commodity prices and bank profits rise while job creation falls. This is good old-fashioned mercantilism in its modern reincarnation of crony capitalism.  Many people who promoted financial market deregulation also benefited directly (see the movie Inside Job for details).

As Adam Smith noted, there are very good reasons for having “fire walls” in financial market even if that violates some amount of freedom.  Rather than a multitude of lawyers and a regulation book a foot thick, it is simpler to simply ban the co-mingling of certain financial activities as a way to avoid excessive risk and the creation of moral hazards.

[Thanks to David Warsh for this link.]

Mark D. White

My latest book, The Manipulation of Choice: Ethics and Libertarian Paternalism, was released earlier this month by Palgrave Macmillan in both paperback and hardcover. In the book, written for popular audiences, I discuss the ethical and practical problems with the idea of "nudges" as popularized by Richard Thaler and Cass Sunstein in their book of the same name.

Walter Olson of the CATO Institute writes that "the 'libertarian paternalism' theory promises to use the state to help correct citizens' wrong decisions without asking their consent, yet also without truly entering the realm of coercion. Too good to be true? Indeed it is, as this book helps to show. Mark White gives us the sort of analysis we need to nudge back." Our own Jonathan B. Wight also comments that: "The Manipulation of Choice states that paternalists impose their own values and goals onto hapless consumers and citizens. Hence, public policies designed to correct the imperfections of behavioral irrationality are coercive. This is an important point and one that needs to be debated."

If you're interested, Palgrave has made the first chapter available for free, and I have written several blog posts recently tied into the book, including one at this blog commenting on Cass Sunstein's recent review of another book on paternalism at The New York Review of Books, and a post at Psychology Today on the nudge concept in general. (See also past posts at this blog on paternalism.)

Mark D. White

The latest issue of The Journal of Law, Medicine & Ethics (40/3, Fall 2012) features a symposium titled "The Health Care Reform Law (PPACA): Controversies in Ethics and Policy," based on a conference held at the Medical University of South Carolina in October 2011 and organized as a group of point-counterpoint discussions focusing on "the responsibilities of individuals versus those of society to provide health care, the morality of market-based health care reforms, the effectiveness of consumer-driven health care reforms, and the role of the principle of justice in grounding health care reform" ("Introduction," p. 523).

Introduction (Robert M. Sade)

Physicians Have a Responsibility to Meet the Health Care Needs of Society (Allan S. Brett)

Medical Responsibility (Ronald Hamowy)

Market-Based Reforms in Health Care Are Both Practical and Morally Sound (James Stacey Taylor)

Government Intervention in Health Care Markets Is Practical, Necessary, and Morally Sound (Len M. Nichols)

Expanding Choice through Defined Contributions: Overcoming a Non-Participatory Health Care Economy (Robert E. Moffit)

Cost-Sharing under Consumer-Driven Health Care Will Not Reform U.S. Health Care (John P. Geyman)

Justice and Fairness: A Critical Element in U.S. Health System Reform (Paul T. Menzel)

No Theory of Justice Can Ground Health Care Reform (Griffin Trotter)

Mark D. White

I've read an enormous amount of what's been written on the Chick-fil-A controversy the last couple weeks, although I'm sure I haven't scratched the surface. But I was fascinated by Will Wilkinson's recent post at The Economist's Democracy in America blog, titled "Feathers Flying," in which he casts the fast food company's stance against same-sex marriage as an example of corporate social responsibility (CSR), though not the typical social justice concerns usually associated with CSR.

It's my view that this sort of skirmish in the culture wars is an inevitable consequence of trends in "ethical consumption" and "corporate social responsibility". Conservatives sceptical of the corporate social responsibility (CSR) movement have often charged that CSR is a stalking horse for liberal causes that have failed to get traction through ordinary political channels. This charge finds some support, I think, in the fact that few in the media seem to see Chick-fil-A's Christian-influenced culture and business practices as an example of CSR, though obviously it is. Doesn't the demand that corporations act responsibly in the interests of society, in ways other than profit-seeking, directly imply that corporate leaders who find same-sex marriage socially irresponsible should do something or other to discourage it?

Rather than comment on Chick-fil-A's position itself, I want to point out Mr. Wilkinson's perceptive comments regarding the politicization of the marketplace itself:

Matters of moral truth aside, what's the difference between buying a little social justice with your coffee and buying a little Christian traditionalism with your chicken? There is no difference. Which speaks to my proposition that CSR, when married to norms of ethical consumption, will inevitably incite bouts of culture-war strife. CSR with honest moral content, as opposed to anodyne public-relations campaigns about "values", is a recipe for the politicisation of production and sales. But if we also promote politicised consumption, we're asking consumers to punish companies whose ideas about social responsibility clash with our own.

Those opposed to a particular company's moral or political position may consider their actions to exemplify corporate social irresponsibility (or worse) rather than just a different type of CSR. The issue for ethical consumption then becomes not just a matter of choosing companies who actively support the "right" causes rather than those who don't, but more important, staying away or boycotting companies that support the "wrong" ones. (This is not new: for examples, labor union members have long refused to patronize nonunion businesses, whether out of solidariry or some other principle.)

Wilkinson's proposed remedy is elegant, and on first blush seems to make perfect sense:

I'd suggest the best arena for moral disagreement is not the marketplace, but our intellectual and democratic institutions. We hash out our disagreements, as best we can, in public deliberation. The outcome of this deliberation becomes input to official policymaking, which in turn determines the rules of the game for business. Businesses then seek profits within the scope of those rules (and the consensus rules of common decency), and consumers buy the products that best satisfy their preferences.

That would be the ideal, I agree. In unpublished work on CSR, I draw a distinction between internal and external actions: internal CSR would cover the operations of the business itself, such as treatment of employees and environmental production methods, while external CSR involves actions not directly related to the business, such as charitable giving--or political positions. My conclusion based on this distinction can be considered a restatement of Milton Friedman's oft-caricatured position that business should focus on maximizing returns to owners within the legal and ethical standards of their industry. The italicized phrase refers to the importance of internal CSR--which still leaves room for controversy, such as whether benefits can be extended to same-sex partners or the extent of environmental safeguards--and cautions against external CSR, either because profits can be devoted to social or political causes by the owners just as well as by the company, or because the business wants to avoid endorsing a controversial position and politicizing its product.

I think that corresponds fairly well to what Wilkinson recommends, but I fear the horse has left the barn on that one. CSR and ethical consumption together comprise a vicious cycle that we will find it very difficult to extricate ourselves from at this point. Consumers have adopted the mindset of making a moral statement with their purchases--with good intentions--and they expect businesses or business leaders to reveal their positions. Businesses are more than happy to comply, sincerely or otherwise, even at the risk of alienating a segment of their customer base. Even companies that remain neutral on heated social issues may be accused of "if you're not with us you're against us"--and certainly with some issues, there is no neutral position. A company can refuse to take a public stand on same-sex marriage, but they either provide same-sex benefits or they don't.

I'll finish--as I often do--with Kant. Often caricatured himself as a rigid demanding moralist, he ridiculed as "fantastically virtuous" any person "who allows nothing to be morally indifferent and strews all his steps with duties, as with mantraps... Fantastic virtue is a concern with petty details which... would turn the government of virtue into tyranny” (Metaphysics of Morals, 409). We can take his comments one step farther and argue that, given our limited attention, the more attention we pay to "petty details," the less we pay to more serious issues or more effective ways to deal with them. Equality for gays and lesbians is no petty detail, of course, but no matter which side you're on, there must be a better way of supporting your position than choosing whether to eat a chicken sandwich.