Bell Curve The Law Talking Guy Raised by Republicans U.S. West
Well, he's kind of had it in for me ever since I accidentally ran over his dog. Actually, replace "accidentally" with "repeatedly," and replace "dog" with "son."

Tuesday, July 11, 2006

Would You Like LIES With That?*

It turns out that Whole Foods is a supporter of the Cato Institute. Word elsewhere in the blogosphere is that this verbal support extends to money as well. I'm devastated. I actually shop there, although only for cheese and produce, because everything else is monstrously overpriced, and while cheese and produce is also overpriced, it is superior in quality to what you can buy at UnSafeway or the appropriatelynamed Ralph's.

As for the book that Whole Foods' CEO is endorsing, it is a con job. Government, they say, prevents businessmen from acting ethically. Leave the market alone, and good people will act ethically.

Are they high? (No, the technical term is "nuts"). The market is what causes people to act unethically. The phrase, "Sorry, it's just business" is emblematic of that problem. Many good people do not want to underpay their workers, hire illegal aliens, shave hours from timecards, pass off substandard merchandise, or skimp on health care, but they often find they cannot compete with the Walmarts and other nasty corporations that do, unless they also do so. Most of the unethical choices businessmen make are done under competitve pressure (including illegal dumping of toxic waste, etc.). When properly done, then, government regulation is boon because it permits good people to act ethically by forbidding those who act unethically from profiting. Minimum wage and hour laws are a good example. Failure to enforce those laws, however, negates their good effects. FYI, universal health care is the same sort of level-the-playing-field regulation.

Ah, Whole Foods, I weep for thee. Must I do ALL my shopping at Costco (a very large supporter of the Democrats).

*Note: Simpsoniana.

29 comments:

Anonymous said...

Ah, Whole Foods. I am disappointed too. Nice Simpsons reference by the way (and pretty damn obscure, too). 

// posted by Bell Curve

Anonymous said...

I'm not a big fan of the Cato Institute but LTG's assertion that "The market is what causes people to act unethically" suggests a fundamental misunderstanding of what the market and its relationship to ethics are. The market is not a cause of behavior per se but rather the sum total of it. People can behave in an ethical manner under a free market system. At the same time, people can behave unethically in a command economy. The two concepts are indepedent of each other.

I'll conclude by suggesting that anti-market, anti-capitalist remarks like LTG's above are a major reason why indepdentent centrists are willing to believe Republcians when they wrongly accuse the Demcoratic party of being "socialists" or "communists" (which Republicans wrongly argue are the same). 

// posted by Raised By Republicans

Anonymous said...

RBR - I think you misunderstand the point. The market is not just a description of behavior, but a set of economic imperatives. How often I have I heard you make the analogy to water running downhill? The basic rules of market economics reward certain kinds of behavior, plain and simple, and some of that is unethical. For example, a manufacturer can: (a) dump toxic waste for pennies or (b) pay thousands to dispose of it properly. Because a competitive market puts such a strong pressure on profits, and because some manufacturers will make selection A, those who make the ethical choice (B) will be at a competitive disadvantage. For some, this will force them to switch to A. It is commonplace for businessmen to complain that they would like to be socially responsible, but cannot because it costs too much and their competitors aren't. I don't see how you can deny this effect of market dynamics.

And of course, that is what history teaches. Before there were minimum wage and child labor laws, some children were horribly exploited. Others who might have preferred not to do so engaged in the same behavior. This same exact thing happens in present day third world countries as well. Indeed, the usual response of factories running on child labor is that, if they did not do so, they could not stay in business, because others will.

Before there were environmental regs (and enforcement) there was massive pollution. Not because businessmen are naturally bad, but because competitive pressures discourage the extra expense of acting ethically, if competitors do not.

In the late 19th and early 20th centuries, some businesses employed violence, even deadly violence, to prevent unions, and keep wages low. Those businessmen who did not mind paying fair wages with unions found themselves unable to compete. Harsh tactics spread.

Competitive pressures promote efficiency, but not ethical behavior. In the name of efficiency, ethical behavior is DIScouraged, where it is more expensive. And it usually is. Teddy Roosevelt, no socialist, referred to "malefactors of great wealth" not as a leftie, but with a patrician anger. Those who acted unethically and profited thereby spoiled it for the rest of them.

This is not socialist rhetoric - quite the opposite, it shows that certain kinds of government regulation are good for business, by freeing businessmen to make ethical choices. Knee-jerk defense of the market as morally neutral is a conservative stance, with little intellectual or empirical support. 

// posted by LTG

Anonymous said...

If you mean to say that a regulated market is preferable to anarchy, say so plainly. But when you make knee jerk, blanket statements like "The market is what causes people to act unethically" you can be understood to be insisting on a command economy.
Your assertion that a market based economy is inherently unethical suggests a number of implied but unstated assumptions. 1) Ethical behavior is always (or mostly) unprofitable. 2) Individual interest is an inherently unethical. Neither assumption is valid.

Market based approaches can be socially preferable to the command approaches LTG seems to pefer. A comparison of socio-economic conditions in the "West" and in the USSR in the 1980s will suffice. Comparing market approaches to development used in South Korea (and the PRC!) to command based approaches used in Cuba or North Korea is also worth while.

Of course anarchy is bad. But don't confuse a functioning market with anarchy. Also, don't confuse my anaology of market forces being like water flowing downhill as advocacy of anarchy. Only a fool would ignore the bad effects of a rushing flood. And only a fool would assume he could hold it back forever simply by building a bigger dam. 

// posted by Raised By Republicans

Anonymous said...

Command approaches? Just because I acknowledge that the market encourages unethical behavior does not mean I would favor command policies. It's a straw man to claim that criticism of something means favoring its opposite.

As for the two assumptions you list: (1) ethical behavior usually is unprofitable. It certainly is in the areas I listed, such as child labor, environmental regulation, union busting, etc. Not assumption - fact. (2) I did not say that individual interest is inherently unethical. Rabbi Hillel once said that the root of all sin was viewing other people as objects, as means to an end. I think that puts it properly. Self-interest is fine, but not where it is abusing others for one's own gain.

Market forces are powerful, but without some state intervention, they will do as much harm as good, if not more. In this country, we tend to avoid state regulation, allowing the negative effects of markets too much expression. This leads, as I set when I started out, to good people having to make bad choices to survive economically.  

// posted by LTG

Anonymous said...

OK, so following the clarifying accusations and counter accusations, I think we don't really disagree in substance THAT much. But you should acknowledge that you don't have the final say on what ethical is. Declaring your assumptions to be facts doesn't help either.

Lots of ethical behavior is profitable. Selling your car for example. Another example could be that driving a small fuel efficient automobile is more profitable (actually, it's less expensive but in the grand scheme of things that's the same) than driving a gas guzzling SUV and yet many people who consider themselves ethical pay the extra money to drive the SUV DESPITE the price pressures to do otherwise.

Ag subsidies are an example of where having a freer rather than less free market would be more ethical.

What I really object to is the assumed causal relationship between profit and the markets and ethical behavior. That's the kind of statement that loses elections for Democrats. 

// posted by Raised By Republicans

Dr. Strangelove said...

It's obvious, but I'll say it anyway... asking the government not to interfere with the free market is like asking your wife not to interfere with your marriage. Without the government to provide the playing field and define the rules of the game, there would be none. The government issues currency, enforces contracts, upholds corporate law, provides police protection of private property rights, builds the common infrastructure (roads, internet) etc. It’s all part of the capitalist system.

I must agree with RbR that ethics is largely independent of the economic system. Under any system—capitalism, communism, socialism, so-called “anarchy”—unethical and exploitative behavior can be rewarding. In fact, it is arguably more rewarding under non-capitalist systems. The trick is to try to structure the game to provide as few incentives for unethical behavior as possible.

Conservatives wrongly believe that the structure that provides the fewest incentives for unethical behavior is one in which everything is done by contract; a system in which anyone can sign any kind of contract with anyone else for anything—and the government exists merely to neutrally enforce all such contracts. It’s a nice theory—one which the Cato Institute loves to expound—but it’s just plain wrong. Imbalances in wealth lead to imbalances in power, and the rewards for exercising that leverage are so great that they tempt even normally ethical people to exploit it. The result is Dickensian working conditions, “company” towns, sweatshops, and impoverishment on a massive scale.

Through incremental progressive legislation, we are approaching a structure that provides fewer incentives for unethical behavior. There’s lots of work left, though.

Anonymous said...

I think Dr. Strangelove has clarified my view nicely. Thanks.

And he raises an interesting point, that Cato et al want all relationships and behavior to be governed by contracts. Dr. Strangelove says this is wrong headed and he is right. The details about how wrong they are involve the incompleteness of contracts. Because neither participant in any contract can accurately predict 100% of the consequences of their future circumstances this causes problems for how the contract gets written. In the absence of government regulation, every contract would have to find a way to account for all that uncertainty on a case by case basis. Such an environment would make it nearly impossible for people to trust in the enforcability of contracts.

 

// posted by Raised By Republicans

Anonymous said...

To be fair to the Cato institute, an enormous and ancient body of law exists to resolve the "incompleteness" of contracts. Doctrines of interpretation and construction, some dating back before the middle ages, provide a lot more certainty than you might think. One such doctrine is that a contract is generally construed contra proferentem: against the party who drafted it. The question of future unforeseen circumstances is also well dealt with in contract doctrines, such as mistake, force majeure, and issues of foreseeability, as famously set forth in Hadley v. Baxendale (Exch. 1854) [I ask new law students to call me when they understand this case, because it is such a chestnut that it is overlooked as an unsung cornerstone of modern law]. I respectfully suggest that the difficulties with contracting cannot be the derived just by reasoning and thought experiment alone, without understanding the background of the rich legal context surrounding each contract. The "game" of contracting is very complex, involving initiates (lawyers) who understand the multidimensional significance of provisions and try to communicate to their clients that even the simplest bargains take place in a thick context of legal obligation.

The real problem with contracts is that one can view every contract as the result of duress. Rarely is a contract a win-win situation, but the result of power relationships. Because the Cato institute is uninterested in acknowledging, let alone policing, the power relationships that create contracts, it does not comprehend that some contracts can be most unfair.

The law does comprehend this, at least empirically, if not philosophically. There is, for example, an ancient doctrine that courts will not enforce contracts that "shock the conscience," even in the absence of duress. It is a subjective standard that, nonetheless, is somewhat predictable given societal norms. It is an interesting proposition to consider how any contract could "shock the conscience" if it is freely entered into. As is typical of the law, it offers a practical solution (voiding the worst of the worst) without becoming bogged down in the philosophical problem posed by supposedly "free contracting" resulting in agreements that "shock the conscience" of the Court.  

// posted by LTG

Anonymous said...

LTG, have you read Hernando De Soto's book, The Mystery of Capitalism ? In it he argues that the foundation of positive economic development must begin with an appropriately established legal system. You'd love it!  

// posted by Raised By Republicans

Anonymous said...

The explorer? 

// posted by LTG

Anonymous said...

No, the economist, silly. I wonder if he's a relative. 

// posted by Raised By Republicans

Anonymous said...

Of course, because if it were the explorer, it would have been ghostwritten by Cervantes. 

// posted by LTG

Anonymous said...

Interesting discussion, and I think I agree with both sides-that the current market is the sum of its unethical (mostly) behavior, and that market strutures themselves encourage unethical behavior in the absense of regulation by the government. If I understood you two correctly.

As for Whole Foods, I blogged about it myself, and I am no longer shopping there. I also wrote an email and submitted it to their customer service comments section online. They said they'd respond within a week. It's been almost two and nary a peep. Go figure. But I've been thinking that if they get more than one email complain about their CEO's behavior... things might change. Who knows, but it's something to actually do, if anyones interested. Cheers!! 

// posted by Olive

Anonymous said...

Just to add my wee insight - markets were initially conceived of and built in a strongly religious (i.e. moral and ethical) context. Adam Smith, generally credited with the birth of classical economic theory, conceived of markets in a vastly different environment and sense than they have been interpreted today. In Smith's prose, self-interested is almost assumed to be bounded by ethical and moral decisonmaking. In looking up some details about this, I just found this interesting tidbit on the "Adam Smith-Problem" in the Wikipedia [comments added by me]:

"Adam Smith himself cannot have seen any contradiction [between the necessity of moral sentiments to promote the good of the community versus rational self-interest], since he produced a slightly revised edition of Moral Sentiments after the publication of The Wealth of Nations. Both sets of ideas are to be found in his Lectures on Jurisprudence. He may have believed that moral sentiments and self-interest would always add up to the same thing." 

// posted by Chris

Dr. Strangelove said...

Chris: interesting note re Adam Smith. It's easy to forget (as I did) that the first economists were not secular. It is also interesting that Smith may not have discussed how the purely free market could provide incentives to act unethically.

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