Cage Match: Hume vs Aristotle in the Arena of Justice

Much of what we write about here at EE is underpinned by a tacit appeal to an ordinary sense of justice. Justice is the virtue offended when exchange veers from the confines of the euvoluntary world, and justice is the grand dame who hangs her head in despair when men seek improper dominion over their fellows. Justice is also the chief among the so-called pagan virtues, which helps explain why several intellectual traditions yearn to lay claim to its definition. I assure you that if you have a tough time trying to reconcile notions of divine justice and social justice, you are not alone. There's justice in thought, justice in deed, justice in outcome, justice as fairness... it's all quite Procrustean. And as with such things, the confusion and general disorder found in the wider society has a pedigree in the academy.

Consider this case (h/t T. Gill). The short version is that a guy in Nevada is riled up because the NFL and Ticketmaster won't sell Hawks tickets in the Silver State. There's an injustice in public funds going towards stadium construction, when the public at large is restricted from enjoying the spoils of the project. Without arguing the specific merits of the "lawsuit", or even the economics of the complaint, let's instead visit a brief conversation I overheard while in a bar in earshot of Aristotle and David Hume.

Aritstotle: Not that I'm a fan of the Seahawks or anything, but you'd figure that if the NFL had a passing familiarity with justice, they'd make their tickets available to any customer, not just the ones in the Pacific Northwest.

Hume: "Passing" familiarity, eh Ari? Cute. I'm not sure I understand your objection though. It's not like Ticketmaster and the NFL are gaining at the expense (your words, my friend [N.E. V.2]) of this dude in Nevada.

Aristotle: Oh, so you've read me then? Great. Then you surely read the very next passage dealing with proportionality. Justice is just insofar as it is proportional. I don't argue that playground fairness has to rule, that in an exchange both parties must in all times, places, and circumstances distribute the gains from exchange even-steven 50-50 equal, but rather something more like the old barnyard aphorism that what's good for the goose is good for the gander. The just is a species of the proportionate. There's nothing inherent to Nevada residency that warrants exclusion here.

Hume: Well, I'll readily admit that you do avoid the traps of relying on vulgar, peripatetic philosophies of justice, but I still think you're missing something important.

Aristotle: Oh? What's that?

Hume: The artifice of it.

Aristotle: Go on.

Hume: Remember what I wrote in my Treatise? Property arises from sense and sentiment. It is a product of enterprise, and any sense of justice so enjoyed is found in the relations between human minds. This distraught guy in Nevada has entirely misapprehended the nature of the offer if he thinks these organizations owe him consideration.

Aristotle: I'm with you to some extent. We're discussing the nature of voluntary acts, and in that regard, we needn't split hairs about restoring to this guy something that was taken from him. I urge you to review my third question in Book V: "whether it is the man who has assigned to another more than his share that acts unjustly."

Hume: Well, it so happens that I have my copy handy, so while I'm dong that, why don't you review what I noted in Part II, Section VI about the shimmering, insensate border between justice and injustice?

At this point in the conversation, Where Is My Mind by The Pixies came on the jukebox, and their murmurs got drowned out. Which I think was okay since they were mostly reading anyway. Here, enjoy:



Hume: "It is plain too that the distributor acts unjustly, but not always the man who has the excessive share; for it is not he to whom what is unjust appertains that acts unjustly, but he to whom it appertains to do the unjust act voluntarily, i.e. the person in whom lies the origin of the action, and this lies in the distributor, not in the receiver... he who gets an excessive share does not act unjustly, though he 'does' what is unjust."

Aristotle: "If we consider the ordinary course of human actions, we shall find, that the mind restrains not itself by any general and universal rules; but acts on most occasions as it is determined by its present motives and inclination. As each action is a particular individual event, it must proceed from particular principles, and from our immediate situation within ourselves, and with respect to the rest of the universe. If on some occasions we extend our motives beyond those very circumstances, which gave rise to them, and form something like general rules for our conduct, it is easy to observe, that these rules are not perfectly inflexible, but allow of many exceptions."

Hume: So you're saying that we should judge the NFL and Ticketmaster by their willingness to transact, but not so much simply by their large stores of wealth. That Piketty guy might disagree with you.

Aristotle: And you're saying that we're not especially well suited to judge the merits of this case from afar, since Justice, like other artifice, is subject to deliberative change. I think that Piketty guy might disagree with you, too.

After that, they paid their tab and left, so I missed whatever else they mentioned. But I did have a few lingering questions. Once something exists, is it reasonable to treat it as an endowment? The Roman god Janus had two faces, one looking forward, one looking back. Did each of his faces understand Justice in the same regard? It is plainly unjust in both an Aristotelian and a Humean sense to throttle innovation in the cradle, but shouldn't our sense of justice feel offended at blatant disproportionality in exchange, even if the natural alternative is no exchange whatsoever? Asking in EE terms: if there is no desperation in BATNA, is there justice in barring (ex ante!) disproportional trade under conditions of BATNA disparity? And if so, would this NFL case fit the bill? And is there a Coasean solution that doesn't rely on an embarrassing lawsuit?

Mama always said monopoly rents are like a box of chocolates.

Offer and Acceptance

One of the things I miss about living in the Pacific Northwest is that most august publication, The Stranger. In its pulpy folds can be found some of the finest examples of what appears to seamlessly transition between performance art, human perversion, and Old Media trolling. And the locus for all this hilarity? The personals section. Specifically, the "Other" sub-section.

The best example I recall is from ca. 1994, and it ran a little something like this:

Tired of the same old B&D and S&M? I want you to feed me like a baby pelican. I provide the adult diaper and raw herring, you provide the strap-on beak. Serious inquiries only please. No weirdos.

Of course, anything that dead tree media can do, Craigslist can supercharge and strap on some booster rockets. Witness:

Assume this contract was legitimate and that it was struck. Could this be euvoluntary? And if not, who would be exploiting whom? Economics tells us de gustibus non est disputandum, so as long as $175 is worth more to the person accepting this offer, she'll be better off...

So many questions. Are we talking dollar-store ramen here, or some quality noodles? And is it proper ramen, which is actually a highly refined piece of Japanese cuisine? "Seasoning the sauce" isn't an accurate description of how ramen is traditionally made. And is the tub all the way full? How does one person dispose of a tub full of noodles? How does this guy cook all of them? By the kettleful?

The moral dimension engaged here is a way toned-down version of the same one we looked at in the Armin Meiwes case: disgust. This is kinda gross, but in a juvenile way rather than a horrifying way. Idle perversions may sort of shock the sensibilities of the puritanical among us, but I think the natural reaction here is to snicker rather than to outlaw. But I urge my readers to be sensitive about and take seriously Stigler and Becker. Second-guessing folks' peculiar tastes, no matter how alien or outre is besieged by Pareto-destructive risk. It is indeed hard to make folks better off by denying them alternatives.

Even if those alternatives are to whip up a fresh batch of human-flavored ramen.

Not The Onion: Bottled Water Edition

Via T-Gill, Western Washington University to ban bottled water on campus.

Bottled water and water privatization is detrimental to the environment, to human rights to water and simply doesn't make sense in a region where we have clean, amazing tap water,” said Carolyn Bowie, a member of Students for Sustainable Water at Western. “When WWU implements this change, we will proudly support our local water source, Lake Whatcom, and be a leader in standing up against water privatization in the United States and around the world.​ This change is important because it means upholding Western's values in sustainability and social justice.

Water in bottles is not euvoluntary because... sustainability?

I often wonder what people who have not studied economics imagine the role of price is. Surely they have something in mind. I can't for the life of me fathom what it might be.

The Limits of Epistemology: The Regret of a Life in the Now

"The lottery is a tax on stupidity"—an ever so glib canard gripped lightly between the dentures of anyone who's studied even a modicum of statistics. The expected value of a lottery ticket, once you run it through the probability calculator is a few fractions of a cent more than negative whatever you paid for it. Put this way, if Richard Pryor in Superman III tried getting rich off the other side of the lottery game, Lex Luthor would have laughed him off and teamed up with The Penguin, and I mean Danny DeVito Penguin, not Burgess Meredith Penguin.

So are people who buy lottery tickets just chronic, irredeemable buffoons? Think very carefully before you answer. Consider that you might not be able to adequately adopt a complete sympathetic perspective of the scratch ticket customer. Consider for a moment if you will that the great benefit axioms of rational behavior offer is to allow us to work through logical relationships between prices, institutions, and behavior rather than to yield synthetic propositions about how the world, she actually is.

What I beg of you is to apply something akin to the Lucas Critique to questions of individual behavior: "features which lead to success in short-term forecasting are unrelated to quantitative policy evaluation, that the major econometric models are (well) designed to perform the former task only, and that simulations using these models can, in principle, provide no useful information as to the actual consequences of alternative economic policies." In the case of private behavior, it's worse still, since the claims about individual "irrational" behavior is grounded in a synthetic version of an analytical construction of rationality!

The waterfront bar version of my critique is this: who the hell do you think you are, Mr. High & Mighty thinking you can tell me my business? Furthermore, the dependent variables in your econometric specifications are proxies. And you cannot know how much more imperfect they'll be after you change the treatment. But you know as well as I *hiccup* do that if you yield to the coercive hand of the state the authority to modify my personal, private behavior, they won't stop until the oceans are drained. Pick your Doma Castle poison: drugs, alcohol, currency exchange—prohibition ends in blood. And flying on the back of political promises to reform the behavior of low-status, politically voiceless constituents, experience suggests that the creep from suggestion to mandate to leading the world in incarceration rates is not a logical fallacy.

Ex post regret is possibly a problem for some people. But only possibly. Even if genuine, it's hard to verify. Furthermore, the prior restraint imposed on Jones for Smith's expectation of regret violates both the non-worseness and precautionary principles. Context-rich decisions about private behavior, whether it's retirement planning, nutrition decisions, child rearing habits, or intravenous drug use are epistemologically null outside Dunbar's Number. Pretending otherwise is the pretense not just of knowledge, but the hubris of control.

But we here at EE don't like to merely squat astride coercive society and grunt "nein". We support constructive alternatives. In this case, "externalizing internalities" means clearing the cobwebs that obstruct strong social networks. It means that we stop jailing fathers for petty drug offenses. It means we put the police back to work detecting crime rather than playing at highway bandit or Marine. It means we ease off on the civil planning thumbscrews, returning content control back over to teachers and parents, allowing creative destruction in sclerotic institutions. It means prudently discarding failed coercive enterprises. It means accountability.

It means a wider breadth of euvoluntary institutions and a narrower breadth of coercive institutions. Limiting ex post regret is tough work. Pretending otherwise by petitioning the state is a sure path to exploitation, tyranny, and moral decay.

A Game of Institutions Book 4: Let Us Prey

This week, friend of EE Anthony Gill muscles in on the Roberts/Munger hit parade and talks Holy Turkey on Econtalk. It's one of the better episodes of all time, but that might be my biases talking, interested as I am in the public choice analysis of collusion between the estates and of using economics to talk about stuff not ordinarily associated with the miraculous world of simple commerce. And narrowly, Tony's chat with Russ is timely for your humble blogviator (@Spivonomist has as of this moment 74 followers and 1276 tweets for an index quotient of 0.05799373), since I've been sort of struggling with how to motivate the next chapter in the S&T saga.

Recall from last time, one institutional arrangement that's at least theoretically possible is characterized by a cooperative game with asymmetrical payoffs. That's a jargon-laden way of saying that everyone's better off under the arrangement, but some are better off than others. But it's not coercive. Imagine a Manor Farm where Snowball can actually leave without being turned into delicious rashers of crispy bacon. Well, where can we find examples of this out there in the real, wide world?

It strikes me having listened to Tony disserting at length that the rich history of orthodoxy and apostasy in Western religions has an awful lot to offer in this node. Consider that on its own, the Church can't be coercive. It takes collusion with the state to transform The Cross into a truncheon. Can you even imagine the horrors of the Spanish Inquisition happening without at least the tacit approval of the sovereign? It's worth noting that one of the few Continental refuges for the most unexpected of all inquisitions was Lithuania, the last European nation to be converted to Christianity (and even then only tepidly), a place where the Body of Christ walks with wooden legs and sits in pensive repose on waterlogged stumps. Seriously, you guys: Kryžių kalnas is something else, and the crosses there survived numerous attempts by Soviet authorities to remove them. It is one of the most bizarre oddities of Europe, if not the whole wide world. I have to avoid thinking about it too carefully or my head goes all swimmy.

But think about the rise of New World religions. Exit options provided just enough Tiebout competition to allow for some serious apostasy. That big "clunk" you heard in the early 16th century was a double-clutch gear shift as the First Estate flopped from predatory monopolistic coercion to something more closely approximating a modern corporate interest.

But here's the interesting thing about the kayfabe of religion: part of the aesthetic is asceticism. Men of the Cloth (and nuns in particular) were, but for the rarefied Vatican elite, generally of modest means. Of course, rent need not be material to be valuable. Risk pooling and reduction is mighty valuable under Mathusian conditions. As is positional station cachet. Respect of the community is tough to measure in bars of gold. At any rate, the appearance of the poor pastor suggests to me to be a nod to the apostasy threat when congregants observe the clergy accumulating treasure. "Why should I keep sending my silver to Italy when this Calvin guy is bidding lower?" The Mennonite sects here in the States seem to have this bit figured out exceptionally well. But it strikes me that the transition from total Catholic hegemony to perfect Quaker equality is the cooperative-asymmetric game rather than the coercive-symmetrical game. And the existence of the mega-church and the television evangelist suggests to me that it can be a durable game. If congregants believe they're getting something out of the deal (eternal salvation), they should be willing to put up with some wealth inequality. It's not all that different than buying tickets for a basketball game or a personal computer.

Right?

Anyway, let's get back to Lithuania. Just a quick visit, I promise. Even before Soviet times, Catholicism was heavily flavored. These days, there's a short list of state-sanctioned churches, mostly as a reaction to some of the more aggressive proselytizing in the wake of 13 January, 1991. The quick and dirty story is that missionaries descended on the newly liberated republic, tracts in hands and sermons on lips with the goal of obtaining all those sweet, sweet new converts. Missionaries weren't banned in the sense that they couldn't set up shop, but neither were they afforded special tax and property rights status like the established religions. My personal brush with this was a spot of trouble with getting married. I wasn't baptized in an officially-recognized sect, so the officious local priest gave us some (easily overcome, thankfully) grief about it. At any rate, it's too easy to reason from an outcome and say that Lithuania is trying to protect incumbent sects, to provide rents for the Catholic Church. Not in this case. Even at the height of its influence (not necessarily counting the Livonian occupation), the Vatican didn't have the same grip on Vilnius that it did on Paris. Instead, consider the possibility that the median Lithuanian voter is looking to cut hysteresis loss, to quell a nuisance. Ordinary practical secularism has been their daily BATNA since they first set up shop in the Land of Rain (the Lithuanian word for "Lithuania" is Lietuva, and the word for "rain" is lietus. Also, it rains for like half the year, so even if it's not good etymology, it's good enough for me). So if our doughty pikesmen of the Baltic find the asymmetries of religious institutions offensive, it's never bothered them before to shrug it off. Why should now be any different?

The 15%

Anthony Gill mulls tipping: "To paraphrase a recent student comment on a class discussion board: I don't think tipping (leaving a gratuity) has anything to do with economics. It is a matter of psychology. People just like different things and try to do those things the best they can."

Is tipping euvoluntary? Recall what Mr. Pink said.



Remember Adam Smith's advice: use sympathy. From the customer's point of view, the restaurant transaction is a singular event in the course of the day. The interaction with the wait staff is judged on its relative merits, gratuity to be determined by a combination of perceived quality of service and a baseline norm. But from the point of view of the server, each table is one of a multitude of interactions.

The best servers I've worked with follow a sort of script, one designed to mimic the appearance of a personal encounter, with small elements of genuine personal touches thrown in. Still, when it comes time to tally up the day's take, numbers matter, specifically those numbers preceded by currency symbols. Customers care about their idiosyncratic dining experience, servers care about their aggregated earnings. And both do their parts embedded in a suite of institutions that generate expectations for behavior. Buscemi delivered the antisocial tirade, not Madsen. This was not an accident of casting.

The curious bit is the relationship of low-cost information to tipping institutions. Stiff-shaming is easier than ever, and we've seen several hoaxes cost people their jobs already, so I'd be curious to see what overall impact this might ultimately have on gratuities. Curious.

NYC Title 10 § 10-117

No person shall write, paint or draw any inscription, figure or mark of any type on any public or private building or other structure or any other real or personal property owned, operated or maintained by a public benefit corporation, the city of New York or any agency or instrumentality thereof or by any person, firm, or corporation, or any personal property maintained on a city street or other city-owned property pursuant to a franchise, concession or revocable consent granted by the city, unless the express permission of the owner or operator of the property has been obtained.

Via Anthony Gill, Mayor Bloomberg vows to uphold the city's statutes.

Tony asks:

1. Graffiti (defined as someone painting on property without permission) would not be euvoluntary.

2. But, as noted in the last paragraph, being Banksy-ized raises your property value.

3. Also, it may turn out that you actually like a Banksy on your property but never knew it until you were Banksy-ized ... and lo and behold ... your property values are raised. (The question might be where is the "exchange" part in the [potential] EE, but allowing the graffiti to stay and hence publicizing the art to increase the value of Banksy's art portfolio might be considered the exchange ... especially after our last discussion about how far the chain of exchange extends.)

4. General principle: If someone does something nice for you without your permission and it increases your utility in some fashion, and they receive positive spillover effects, is it EE?

5. Now take it to the public property arena wherein Banksy Banksy-ificates a publicly-owned overpass and everybody who drives by likes it except Mayor Bloomberg. (Annoying the good mayor is enough to make it EE for all.) Is that EE?

Sam replies:

1. Conventional ownership says property owners retain the right to keep their premises free of vandalism. Most folks would agree that one of the legitimate functions of municipal police departments is to enforce this common-sense intuition about property rights. Nothing controversial there.
2. Ex post justifications about property value appreciation doesn't seem strong enough to counter expectations. Laws that protect upstanding citizens from having their exterior walls tagged necessarily impose restraint against fine artists like Banksy. Indeed, much of the value of his work is that it subverts convention.
3. Hm. The best analogy would be a gift, albeit one that's costly to refuse. If a stranger ran up to you on the street and shoved a Warhol original into your hands and to get rid of it, you'd have to schlep out to Home Depot and pick up a can of turpentine, would you be put off, even if it turned out that you liked Technicolor panel art of pop celebrities from the 60s? I'm inclined to count gifts as euvoluntary, but again, that's under conventional gift exchange protocols. This? Depends on the person, I suppose.
4. Value is subjective, art even more so. We can think of conventions using the same logic Buchanan and Tullock used to describe constitutional formation in The Calculus of Consent. A rule over the acceptability of rogue art has to be made behind a Rawlsian veil of uncertainty. It's not immediately clear to me that Banksy s anything but an anomaly, and that generalizing a rule based on the popularity of his work is necessarily prudent.
5. Take out the name "Banksy" and substitute in the dude who scribbles shithouse poetry on public toilet stalls. There's some expectation of ex post regret in that case.

I also have a sneaking suspicion that Banksy would get himself up to other sorts of trouble if he found that his work were suddenly sanctioned. Pirate TV maybe. I wonder what Matt Frewer is up to these days. Max Headroom was a great show, way ahead of its time.

The Choosening

Tuesday's post invited some commentary from The Cowboy Economist (ecownonmist? No, that's terrible). His challenge:

Is the use of earbuds really euvoluntary? While they lower negative externalities, my putting them in my ears is irrespective of whether you like them or not. Indeed, my action is even irrespective of you actually being in my vicinity. I just want to tune out the rest of the ambient noise, which may be caused by birds or hungry mountain lions. Doesn't it take two to do the EE dance?

 I didn't have a great off-the-cuff answer. I mentioned the initial exchange, where the customer buys the iPod or whatever, but that still doesn't really get at Tony's criticism. To be more accurate, I'd refer to Buchanan's timeless classic Cost and Choice. Here is its heart:

Cost is that which the decision-taker sacrifices or gives up when he makes a choice. It consists in his own evaluation of the enjoyment or utility that he anticipates having to forego as a result of selection among alternative courses of action. The following specific implications emerge from this choice-bound conception of cost:

1. Most importantly, cost must be borne exclusively by the decision-maker; it is not possible for cost to be shifted to or imposed on others.
2. Cost is subjective; it exists in the mind of the decision-maker and nowhere else.
3. Cost is based on anticipations; it is necessarily a forward-looking or ex ante concept.
4. Cost can never be realized because of the fact of choice itself: that which is given up cannot be enjoyed.
5. Cost cannot be measured by someone other than the decision-maker because there is no way that subjective experience can be directly observed.
6. Finally, cost can be dated at the moment of decision or choice.

When I first read this before I started grad school, it blew my mind. I had spent all this time fretting that value was subjective without even considering for a moment that cost was also subjective. And here was James Buchanan saying precisely that--all costs are opportunity costs. And that cost and choice were inextricably bound. If there's any idea that I'd want to impart to someone seriously considering studying economics, this would probably be it.

But what does that have to do with being a jerkface on the bus? I'm glad you asked. If you take Buchanan's reading of Robbins & Hayek seriously, you'll be able to model the iPod as a series of choices. There's the big ex ante initial purchase (and if you want to chase it down the rabbit hole, the web of production decisions that got it to the shelves in the first place) and then there are a series of unilateral choices along the way of "should I listen to Doctor P's Flying Spaghetti Monster on the way to the gym?" You might think of it as the buyer and the seller collapsing into the same person, so BATNA disparity considerations aren't part of the deal, though BATNA desperation certainly could be. Mind you, just because I've never seen a claim that a person could exploit herself doesn't mean that some enterprising academic might not make the effort.

Most of the time when we talk about euvoluntary exchange, it's a matter of a one-off bilateral trade, but there's no reason I can see not to use the six conditions to adjudge unilateral economic choice decisions.

And now for your bass-dropping pleasure.


Seriously you guys, running around Steelport like Neo in The Matrix while this is playing represents the pinnacle of gaming in the modern era. Saints Row y'all.