Anemia of the Conscience

ORS § 659A.403:
Discrimination in place of public accommodation prohibited

(1) Except as provided in subsection (2) of this section, all persons within the jurisdiction of this state are entitled to the full and equal accommodations, advantages, facilities and privileges of any place of public accommodation, without any distinction, discrimination or restriction on account of race, color, religion, sex, sexual orientation, national origin, marital status or age if the individual is 18 years of age or older. 

(2) Subsection (1) of this section does not prohibit:
(a) The enforcement of laws governing the consumption of alcoholic beverages by minors and the frequenting by minors of places of public accommodation where alcoholic beverages are served; or (b) The offering of special rates or services to persons 50 years of age or older. 

(3) It is an unlawful practice for any person to deny full and equal accommodations, advantages, facilities and privileges of any place of public accommodation in violation of this section.

Emphasis added. I picked the Oregon public accommodation statute for its recent relevance, but pretty much any state would do. Furthermore, I highlighted "sexual orientation" for the purposes of illustration, but you might imagine that there are edge cases for the other protected classes.

Before I pose my question, a quick review of etymology for those who may have forgotten:

Pederasty is an act. It is the sexual congress of an adult and a minor. In Anglophone jurisdictions, it is malum in se crime, an act of violence against an innocent. Coercion is assumed, with the possible exception of Romeo and Juliet laws where applicable. Conviction of this offense is typically accompanied by registration with the state and subsequent housing location restrictions after prison release.

Pedophilia is an orientation. It is the sexual attraction of an adult towards minors. Without an accompanying act, such as the possession of child pornography or the sexual assault of a minor, it is not a crime.

Pederasts do not constitute a protected class. Felons may be turned down for work simply because they are felons, no other reason given. They do not enjoy non-discrimination protections for equal housing. Sex offender registrees have it even worse (in some jurisdictions): even if a landlord is willing to rent or sell, proximity to schools or churches may statutorily prohibit the transaction.

Pedophiles are part of a protected class, at least in 21 or so states, depending on the specific language of the state statutes. The same goes for—again, according to the black letter of the statute—bigamists, ISIS members, former Nazis, or flatulent televangelists (curiously, veteran status is not listed in the Oregon statute). Running a business statutorily obviates conscience of association in commerce, both for good and for bad.

Exchange is lovely, doubly so if it's euvoluntary. Both parties are better off (or at least no worse off) for conducting a transaction of their own free and clear will. Under public accommodation statutes like the one above, it is sufficient that merely one party to the exchange is better off. Sellers are permitted neither the luxury nor the exercise of their conscience. Usually, most people will happily approve of the proposal that vendors aren't granted the liberty of indulging a rotten conscience: denying same sex (or mixed-race, or Irish, &al) couples access to market goods is a barbarism the silent majority of us have moved beyond. But the price of forcing this conversion with the hammer of the state is that there may remain some conscience violations many of us are not prepared to accept yet.

And so when the local kiddie pervo saunters into the Circle K to pick up a tub of hand lotion and a box of tissues from you, you are legally obliged to complete the transaction. The alternative social institutions is to allow rhetoric and persuasion to change merchants' minds on the sort of clients they're willing to serve. Perhaps rhetoric and persuasion aren't as powerful or swift as we might like.

Is Inequality a Legitimate Concern? Did the Framers Think So?

Is inequality a legitimate concern in a democracy?

There might be a moral obligation for them what has to help them what has not.  Moral egalitarianism, in other words.  Still, if that is YOUR religion, how can you avoid imposing it on others without violating the "Establishment Clause" of the 1st Amendment?

Or is it just a consequentialist problem, steam control to prevent revolution or redistribution by force?  Jefferson really did seem to be concerned about the level of prosperity of the "smallest landholders."

Here is what Madison said that he said at the Convention:

The man who is possessed of wealth, who lolls on his sofa, or rolls in his carriage, cannot judge of the wants or feelings of the day laborer. The government we mean to erect is intended to last for ages. The landed interest, at present, is prevalent; but in process of time, when we approximate to the states and kingdoms of Europe; when the number of landholders shall be comparatively small, through the various means of trade and manufactures, will not the landed interest be overbalanced in future elections, and unless wisely provided against, what will become of your government? In England, at this day, if elections were open to all classes of people, the property of the landed proprietors would be insecure. An agrarian law would soon take place. If these observations be just, our government ought to secure the permanent interests of the country against innovation. Landholders ought to have a share in the government, to support these invaluable interests, and to balance and check the other. They ought to be so constituted as to protect the minority of the opulent against the majority. 

The first sentence is quite striking, and appears to contain a moral condemnation.  But the rest of the statement is pure consequentialist.  Here is the source; the statement above comes from June 26, 1787.

AirBnB: Cost and Choice.

AirBnB is an online service that matches travelers with property owners. The two can then negotiate for a night's stay. Yesterday, I scanned past a comment somewhere that warned of thinking that this idea is all that much of a boon. After all, the opportunity cost of peer-to-peer hosting is that established hotels lose out on business. The comment surprised me, coming as it did from an economist I respect quite a bit.

Consider the purpose of production in very broad terms. The means of production exist to serve the ends of human wants. Here, we've got a matching problem. Under the technology of its time, hotels were a way to match the itinerant with a soft pillow, a roof, and a mass-produced flea market painting. Before that, medieval codes of hospitality had to suffice. Before that, you slept in your caravan or more likely never traveled at all. And it's BATNA all the way back. I've slept under the stars before, and you probably have too. So one way of looking at it is that AirBnB is just another technology that fulfills human wants. And it's not like access to the impersonal market is barred, so folks are unlikely to find systematic exploitation in the business model.

It seems then that most of what the AirBnB service does is permit transfers from firms to property owners. It injects substitutes into the market, making overnight stay services more competitive, more elastic, and therefore closer to marginal cost. Hello people, that's economic efficiency. AirBnB is a high-volume, low-overhead mancgere.

From there, it's a matter of comparison. Compare the reliability of reputational capital between private homeowners and hotels. Compare arguments about economies of scale when it comes to housekeeping and laundry services, or about the lumpiness of opportunity cost. It's easy enough for modeling purposes to assume that people value their time equal to their wage rate, but that's just an assumption. There's no a priori reason to confidently assert there's a linear relationship there, at least much beyond the bounds of a normal workday.

The residual euvoluntarity is a curious question. City elites seem to be comfortable protecting the rents of hoteliers (no surprise there, PAA), and you might see how this service could grate against conventional capacities of trade and ownership and trip over the regret condition. Despite this, I have a hunch that the democratizing of overnight stays is a power-to-the-people sort of thing and I expect that if not this particular service necessarily, then some clone of it will end up the new normal with a bit of spit and polish.

Bet on it.

Roses Are Red

Violets are blue
Small businesses are the engine of the American economy
So let's subsidize them directly and through the tax code.

Mercatus Center scholar Veronique DeRugy writes on the misguided fetishism of small business favoritism. One reading of representatives' currying favor with small businesses is mere vote buying. Small businesses churn voters like spiked golf balls in a button flash tumbler (I used to work in a button factory, so at least I get this reference, even if no one else will). The idea is that by giving some sweetheart preference to small businesses, politicians can reap some political goodwill from employees and owners alike. I'm not convinced that's what's necessarily happening though.

I think people genuinely distrust large, anonymous organizations. Corporations routinely, as a matter of economies of scale, conduct non-euvoluntary trades. These trades are non-euvoluntary by dint of BATNA disparity: the individual customer is always worse off than the corporate seller if a trade isn't struck. One lost tire sale is piddling to Bridgestone, but it might mean an inability to get your wife to the maternity ward on time to the unfortunate dad-to-be. Corporations don't care any more than to set marginal revenue to marginal cost because it's not in their interest to do so.

Therefore, small businesses must be better, right? The customer has a chance to get to know the owner, maybe  explain his plight, maybe cut a good deal because the guy looks like a mensch you can trust. It's more euvoluntary when the business has a stake in making the sale go through.

I can actually buy that bit of reasoning, as far as it goes, but like anything else, ain't nothin' free. Small businesses suffer from scale economies. What you give up by scaling down from Home Depot back to the corner hardware store is selection, price, contingency inventory tracking (ever notice how snow shovel prices inexplicably don't skyrocket at Home Depot every time there's a giant surprise snowstorm and there's always stock on the floor?) and time economies? There are efficiencies to large-scale operations and there is indeed a happy baby splashing about in that non-euvoluntary bathwater.

Questions for discussion:

• Are all corporations (say, mid-cap and larger) necessarily non-euvoluntary?
• Are all small businesses necessarily euvoluntary (by BATNA)?
• Do regulations like Sarbanes-Oxley, Glass-Steagall and Dodd-Frank help move firms in the direction of euvoluntaryness?
• What are the costs and benefits to favoring a particular class of business based strictly on size? How do special favors influence firms' incentives to grow and produce more valuable products for customers?