Friday, August 3, 2012

Dubbers Asks (Season 1 Ep. 1): Shared Moral Culpability and the Euvoluntary Principle

Art Carden asks:
Inspired by an interesting discussion on a Steve Horwitz status and a comment by Steve Hallman: if you go down the supply chain for any good or service, it probably won't take you long before you find someone who does something or holds views you find repugnant (or who gives money to a group that espouses views you find repugnant). How many degrees of separation do you need before it's OK?
 This touches on something I've posted on before, tying contracts. In this case, instead of two separable consumer goods, a firm may elect to bundle goods with speech.

Recall that firms' mixing business with political action is neither rare nor unexpected. As long as the federal government is in the business of distributing favors to well-connected, powerful business interests, it's irrational for firms to stay west of the Potomac. Companies that refrain from ponying up campaign contributions might end up on a regulator's short list come the regime change.

I think people understand and mostly accept this institutionalized graft as part of the modern mixed economy the same way they understand and accept smog in Los Angeles: it's unpleasant but it's a part of life, and hey, what are you gonna do, you know?

But what happens when a firm slips the surly bonds of  commonly accepted political speech? Well, in the recent case of a particular fried chicken sandwich purveyor, the answer is "ado in the muchly tail of the nothing distribution." People began boycotting this restaurant strictly because of comments by the CEO, but not, as one might imagine, because the food is next to inedible. This example is striking by virtue of the direct speech on a controversial topic, but subsequent digging by hard-working journalists has discovered evidence that this firm funds and supports organizations that lobby against same-sex marriage.

There's an old, oft neglected virtue that was once a staple of pulpit-thumpers and a stone in the foundation of the Enlightenment: propriety. The Church was properly in charge of spiritual concerns, the government was properly in charge of guarding against banditry and merchants were properly in charge of delivering goods to market. We know darn tootin' well with even a perfunctory glance at history that this has almost always been a crass fiction, but I think it still bugs people a little bit when one camp plants a  flag on the hill of another. However, if the land is a DMZ or if it's been tilled long enough, then it's not quite so awful anymore. People accept that the Goldman Sachs is going to donate generously to the two major political parties every election cycle. That's how it's done. But God help you if you're an executive with a public opinion on a contentious social issue. You just don't do that, like, ever. It's foolishly risky.

I think people correctly sense that there's a big difference between shooting off your mouth and petitioning the government to create rules based on these beliefs, and I'm inclined to think that folks grasp this admittedly banal observation regardless of whether or not they share the particular belief. By proxy, when you support a firm that supports a government that denies equality of contracture or that imprisons peaceful adults from ingesting psychoactive substances or that enforces public and private racial segregation or what-have-you, then you also support those policies. Unfortunately, supply chains are massively convoluted things, and at some point, you're almost guaranteed to run up against human rights violations somewhere. Chinese steel is everywhere, and fertility regulations in China are abhorrent, right? Therefore, the rational consumer concerned with human rights violations should never purchase anything manufactured in a process that involves Chinese steel. Good luck with that. I hope you like eating mud pies and living in a ravine. Remember that scandal a few years back when people found out that Motorola was making parts for land mines? Same idea, except with consumer electronics.

From a euvoluntaryist's perspective, the Dub-MOE wants to know at what point uncompensated political externalities become either compensated or attenuated enough to return to EE. Does Tony Stark's crimefighting make up for his firm's weapons contracts? Even more interestingly, is it possible that I might offset my own guilty conscience for buying from a sketchy merchant by donating to an organization I find virtuous? Are ethics transferable? Do we all have our own moral balance sheet with assets, liabilities and owner's equity handily sketched out? If so, we don't even have to wonder how many turtles down we need to reach, just send a check off to Amnesty International every month in exchange for the guilt everyone undoubtedly feels for participating in the global economy.

Or is it the case that the euvoluntaryness of exchanges are simply an assessment of local conditions and constraints? Is it possible that rational agents don't much consider distant secondary, tertiary, quaternary effects of trade until they become harshly visible?

So to answer Carden's question, I think it's sort of a function of visibility and deviation from propriety. One degree of separation is usually enough, I think. Even in the really foamy cases where firms intentionally act rapaciously, folks don't even give much thought to punishing the rest of the proximate supply chain. If Kubota (to take a completely random example for the purposes of illustration; to the best of my knowledge, Kubota is a perfectly ethical company) poisoned the water supply of Doma Castle, causing oxidative decay in the basement machinery and killing Cyan's family, people would boycott Kubota and not Lowe's or Home Depot. Similarly, people may be bent out of shape at Dan Cathy, but they won't take it out on the National Chicken Council.

I also think there might be a BATNA disparity element in there that makes protest more or less likely. Huge B2B firms could probably get away with making extremely unpopular statements without fear of a boycott, since any effective boycott would mean that people would have to stop buying almost all consumer goods long enough for equipment to depreciate. To protest against a robot manufacture, for example, angry consumers would have to voluntarily induce a lingering depression. This seems unlikely. Interesting this doesn't happen more often. Perhaps B2B firms attract different personality types. Hm... another interesting research topic: the behavioral economics of labor economics over industry types. I bet someone's already done that though. Seems like low-hanging fruit.

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Do you have suggestions on where we could find more examples of this phenomenon?