Markets

I've gotten a bit drawn in to Left2Right recently. There's some clear writing there by smart, serious lefties. I pretty much doubt that it succeeds in its ambitions of trying to talk across the aisle to folks on the right, but it does a good job of creating some clarity about things that I find important.

Case in point, I have a bunch of quotes from a piece there about "market fundamentalism" that have me thinking ....

Don Herzog critiques the faith, common among libertarians and quasi-libertartians on the right, that as much as possible we must keep government's corrupting hands off of the magical workings of the market. First he debunks a sort of crude pro-market argument, which is really an anti-anti-market argument, that I encounter all of the time — “you lefties want the heavy hand of the state to run everything, but the catastrophe of Soviet Communism demonstrates that this is both oppressive and inefficient, proving that we must entrust everything to the wisdom of the market”; — calling these arguments ...

... decades-old and once-plausible right-wing indictments of The Leftist. This creepy character thinks the state a wonderful engine for designing society from scratch. He distrusts private initiative and longs for giant bureaucracies to run people's lives for them. I don't doubt that much of the Western left cozied up to the Soviet Union for much too long, or that you can still find people willing to say nice things about the Khmer Rouge or the glory days of Enver Hoxha's Albania. But please, people. We bloggers are not sketching evil cackling capitalists with top hats and watch fobs. Some of us lefties think markets are great. I sure do. 

As do I. Markets are dazzlingly good at doing the things they do well; the better you understand them, the more you realize what a powerful tool they are, in a way that lefties of 150 years ago, 50 years ago, or even 20 years ago could not have imagined. But though a powerful tool, they are not the right tool for every problem in the public sphere.

What are the proper boundaries to the market?  What do we want to buy and sell, and what do we want to allocate in other ways?

Once we bought and sold people.  Slavery is one way to have a market in labor, and we rejected it.  Now employers can purchase your labor, but not you.  Richard Posner has proposed buying and selling babies, or “;parental rights,”; to get rid of those noxious queues at adoption agencies:  most of us flinch, even though he's got to be basically right about the queues.  The state assigns each adult citizen the nontransferable right to cast one vote.  We could have a market in votes:  the state could assign initial property rights by mailing you a coupon that says, “;bearer has the right to cast one vote.”;  You could "consume" your property by casting the vote yourself; you could donate the coupon to the political charity of your choice; you could sell it to Ross Perot. But we reject any such market, and we don't budge when an economist observes that prohibiting free transfer generates deadweight loss. Citizenship itself isn't for sale.  The usual way to get it is by being born here, which has nothing to do with merit or accomplishment or hard work or consumer demand.  Fans of the Boston Red Sox had to wait for their team to win the right games at the right times to win the World Series; they couldn't pool together and raise enough money to buy the title from the Yankees.

The list of nonmarket goods is awfully long and wonderfully diverse.  A liberal society isn't just a free market underwritten by a night-watchman state.  It has lots of different institutions ...

... and it's a matter of choosing the right mechanism for the problem at hand. The right question to ask is which mechanisms suit which problems. And in the case of the market especially, the question for folks like me is how you acheive the right balance.

For example, speaking for myself, I believe in a mix of changes in the structure of our economy that are radically libertarian in places, and government interventionist in others.

• I believe in the decriminalization of all available medical and recreational drugs together with extremely vigorous goverment regulation of labeling of those drugs. The state shouldn't be trying to keep me from ingesting things that it deems immoral or ineffective; but it is better able to keep me informed about the risks I'm taking by doing so than I can be as a lone individual.
• I believe in government investment in public transit, and heavy taxation and regulation of private transit. Our transportation system is a collective choice about shared resources of space, infrastructure, energy, and social convention. New York City is one choice, Los Angeles another; I think something closer to the NYC model fosters economic dynamism, civic culture, and class equity.
• I believe in much more vigorous criminal liability for corporate officers and corporate entities. If a cold calculation kills people — Bhopal, the Ford Pinto, the Dalkon Shield — you don't just make a company pay a fine. You put people in jail. You disband corporations. Otherwise, you've populated the economy with amoral headless monsters that calculate the worth of human life on a balance sheet.
• I believe in using heavy taxation to push market incentives in the right directions. Americans are getting obese because, in part, sugar is cheap and readily available while fresh vegetables are harder to obtain. (Anyone who doubts the latter has been spending too much time in foodie places like my hometown; in much of America you can't find anything greener than iceberg lettuce for love or money.) We should tax sugar back into being a luxury, and subsidize the salad industry.
• While we're decriminalizing drugs, we should do the same for sex and ideas. Why should a pretty girl or boy be prohibited from renting out their embraces? Why should I have to pay a fee to sing Happy Birthday or draw Mickey Mouse — don't those belong to all of us?
• Medical insurance is a public good whose costs should be shared across society. People get sick and injured largely at random, and there's no moral argument that justifies why their access to care should depend upon their finances. Linking the provision of medical care to employment, and making corporate insurers the gatekeepers is bizarre.

And so on. What does that make me? Not a market fundamentalist, but not a market-hater either. I'm just looking for the right tool for each job.

And to that point, I cannot resist one last quote from that article:

There are other kinds of fundamentalists out there.  A certain kind of participatory democrat wants all of society to be run democratically: she'll demand, why don't workers get to make decisions at firms? and why should the Roman Catholic Church be so hierarchical?  Christians have occasionally suggested that all of society should run on an ethic of brotherly love.  And so on.

Ho ho. Though this quote secures my suspicion that Left2Right is not talking so much to the right as other folks on the left; I doubt that many folks on the right have had the same kinds of encounters with “participatory democracy fundamentalists” and “brotherly love” idealists that lefties like I have, and which Herzog obviously has.

Now in the name of intellectual honesty, I should point you at DeLong's cranky observation about a device in Herzog's essay that doesn't appear in bits I just sampled. Herzog has several quotes from a famous philosopher beloved of market fundamentalists, which he uses to underscore some points. DeLong argues that pulling those quotes out of context misrepresents that philosopher's ideas, and he makes a fair point. So if you check out Herzog, also see what DeLong has to say.

Which in turn compels me to pass on this quote. (The emphasis is mine.) I'll give you a hint — it isn't from Marx:

We know God hath not left one man so to the mercy of another, that he may starve him if he please: God the Lord and Father of all has given no one of his children such a property in his peculiar portion of the things of this world, but that he has given his needy brother a right to the surplusage of his goods; so that it cannot justly be denied him, when his pressing wants call for it: and therefore no man could ever have a just power over the life of another by right of property in land or possessions; since it would always be a sin, in any man of estate, to let his brother perish for want of affording him relief out of his plenty. As justice gives every man a title to the product of his honest industry, and the fair acquisitions of his ancestors descended to him; so charity gives every man a title to so much out of another’s plenty, as will keep him from extreme want, where he has no means to subsist otherwise: and a man can no more justly make use of another’s necessity, to force him to become his vassal, by with-holding that relief, God requires him to afford to the wants of his brother, than he that has more strength can seize upon a weaker, master him to his obedience, and with a dagger at his throat offer him death or slavery.

It's from John Locke, libertarians' personification of unlimited personal property rights! (Two Treatises on Government, Book I, Chapter IV, Paragraph 42) Who knew?