Of the Subjectivity of Negative Externalities

@mungowitz Negative externalities are in the eye of the beholder, are they not?
— Reihan Salam (@reihan) July 15, 2014

 Twitter forces us all to be Straussians. Here, Reihan (euvoluntarily) encourages us to be petit linguists. What does the word "externality" mean?

A broad definition would include anything from a petty, expected nuisance like when my neighborhood maintenance service interrupts my early afternoon nap with their leaf blowers all the way to extremely serious offenses like an upstream tannery dumping waste chemicals straight into the river that empties into my favorite fishing hole. Under this definition, the "collateral damage" of war is an externality, and so is the jackass down the road who doesn't know how to turn his car stereo down on his way to work at 6am.

A narrower definition might snip off both of those tails. Hosting a 4th of July party, even when it bothers a curmudgeonly neighbor, is within the tacit bundle of property rights that typically attends conventional home ownership, so maybe that's not an economically relevant externality. And using the same term to describe kids murdered in drone raids is virulently offensive political euphemism—kayfabe run amok.

But even after you trim the distribution, I think you'll still find some reasonable disagreement over what properly counts as an externality. You see this in apartment complexes with explicit rules about noise. Loud music is okay, so long as it gets turned down after 10pm. You see it in the common law with what counts as criminal negligence or those actions that sort of straddle criminal and tort law.

So yes, negative externalities are in the eye of the beholder, but I urge you to refrain from taking full license with that. Eudaimonia includes the proper understanding of the many tacit rules of the game, and that includes neither being a jerk nor suffering one gladly. Subjectivity is not the same as chaos, it still respects convention, honor, and decency. Subjectivity can be consistent with virtuous thought and behavior.

Character

In Jacobellis v. Ohio (1964). Justice Potter Stewart famously uttered:

I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description ["hard-core pornography"]; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it, and the motion picture involved in this case is not that.

Character is another of these walk-like-a-duck, know-it-when-you-see-it  pieces of the human existence that, like "hard-core pornography" or "quality" is captivating enough to pen volumes on. A shoot-from-the-hip definition might say that character is comorbid with integrity, with Aristotelian virtue, with a pointed lack of boorishness. A person of character is pleasant and accommodating without being saccharine or obsequious. A person of character is kind and generous without being indulgent or profligate. A person of character is temperate but not so much to be boring. Recall Winston Wolfe: "just because you are a character doesn't mean you have character."

I know it when I see it. I also know griping about it when I hear it. And I hear griping pretty frequently from hard-nosed paternalists. Welfare destroys character, it breeds dependency, it saps the will and weakens the spirit. I also hear it from folks with more tender affectations: big box stores rob the community of its character, corporations are soulless husks.

I know it when I see it. The problem with common gripes about character-destroying activities is that most griping is speculative, biased, blinkered, or selective. Loud people make brash claims without carefully reviewing the evidence (or when they do review the evidence, they fail to note its often severe shortcomings). Transfer payments strip recipients of character? How do you know that? Immigration ruins the character of the adoptive nation? Prove it. Far-mode bald assertion is methodologically weak. For that matter, most observational econometric analysis is pretty weak too.

What isn't weak is clear opportunity cost. Organizing to forcibly prevent Wal-Mart from opening a store clearly strips potential customers the chance to vote against incumbent firms with their feet. Regulatory organizations employ inspectors who might be otherwise productively employed.

Law enforcement agencies lob grenades at toddlers. Because drugs sap character.

I know it when I see it. Maybe I'm being selective in my judgement too, but it's hard to imagine how justice is upheld when the many millions of tax dollars spent on narcotics interdiction end up with the harassment, imprisonment, and assault of otherwise unremarkable citizens to slake the tsking of moral scolds. Building character is a fine, euvoluntary, eudaimonic endeavor. Punishing hapless people for failure to ascend Maslow's pyramid scorches the earth we share. End the drug war now.

Was Aristotle a Euvoluntary Exchangeur? NE Bk 1

How do each of the classical virtues inform and support euvoluntary exchange? It's philosophy amateur hour here at EE as I review first Nicomachean Ethics and later Aquinas on the relationships between virtue and purposeful human action. I don't plan to reinvent the wheel, but perhaps it's wise to check the foundations of the canon from time to time to see if and where modern moral intuitions disagree. Let's start with Book 1.

In NE Bk 1, section 5, we find the following, a point perhaps insufficiently stressed by economists when speaking to the public:

The life of money-making is one undertaken under compulsion, and wealth is evidently not the good we are seeking; for it is merely useful and for the sake of something else. And so one might rather take the aforenamed objects to be ends; for they are loved for themselves.

In econo-speak, our lectures (and our equations) are full of what we call "derived utility." This is simply to say that with a few oddball exceptions, people don't collect wealth simply to have access to an idle vault full of gold bullion or stacks of paper bills. Even Walter White collected that storage locker full of Benjamins for his family (NO SPOILERS IN THE COMMENTS PLEASE). Measured wealth is an idle claim on something that we actually value like happiness, satisfaction, fun, pleasure, joy, or the abatement of discomfort. For economists, this is a wholly unremarkable point. For the pundit class and for the income inequality agitator, this point is often casually ignored. To Aristotle, as to your garden-variety economist, the value generated by a voluntary exchange is prima facie evidence that the fruits of the trade are to be "loved for themselves," and the money-making part of it is mere chaff.

nb: you can't bake bread without chaff.

An unexpected upshot of this is that analytical tools like the Gini coefficient misstate the underlying value generated by economic activity, relying on the imperfect proxies of wealth or income (and I urge you to pay close attention to which version of the Lorenz Curve is being peddled) to estimate how much better off some are than others.

As I'm a little strapped for leisure time today, I'll leave you with this passage:

Presumably, however, to say that happiness is the chief good seems a platitude, and a clearer account of what it is still desired. This might perhaps be given, if we could first ascertain the function of man. For just as for a flute-player, a sculptor, or an artist, and, in general, for all things that have a function or activity, the good and the 'well' is thought to reside in the function, so would it seem to be for man, if he has a function. Have the carpenter, then, and the tanner certain functions or activities, and has man none? Is he born without a function? Or as eye, hand, foot, and in general each of the parts evidently has a function, may one lay it down that man similarly has a function apart from all these? What then can this be? Life seems to be common even to plants, but we are seeking what is peculiar to man. Let us exclude, therefore, the life of nutrition and growth. Next there would be a life of perception, but it also seems to be common even to the horse, the ox, and every animal. There remains, then, an active life of the element that has a rational principle; of this, one part has such a principle in the sense of being obedient to one, the other in the sense of possessing one and exercising thought. And, as 'life of the rational element' also has two meanings, we must state that life in the sense of activity is what we mean; for this seems to be the more proper sense of the term. Now if the function of man is an activity of soul which follows or implies a rational principle, and if we say 'so-and-so-and 'a good so-and-so' have a function which is the same in kind, e.g. a lyre, and a good lyre-player, and so without qualification in all cases, eminence in respect of goodness being idded to the name of the function (for the function of a lyre-player is to play the lyre, and that of a good lyre-player is to do so well): if this is the case, and we state the function of man to be a certain kind of life, and this to be an activity or actions of the soul implying a rational principle, and the function of a good man to be the good and noble performance of these, and if any action is well performed when it is performed in accordance with the appropriate excellence: if this is the case, human good turns out to be activity of soul in accordance with virtue, and if there are more than one virtue, in accordance with the best and most complete.

This, my dear readers, is a sketch of the first mainstay of Aristotelian virtue: arete (ἀρετή), roughly translated as "excellence", though it's a particular flavor of excellence, devoted to ends that are consonant with the other limbs of a virtuous life. Of course, Andrea's Question again occurs to me: knowing that virtuous euvoluntary exchange is fine and dandy, but is there anything practical to do with this knowledge? The idea of mounting a soapbox to proclaim the superiority of a life lived in harmony with classical virtue is just absurd enough that people like me would find it appealing. I guess there's some hope to be found earlier on in Book1:

To judge from the lives that men lead, most men, and men of the most vulgar type, seem (not without some ground) to identify the good, or happiness, with pleasure; which is the reason why they love the life of enjoyment.

Even vulgar types can enjoy life. Remember this the next time you find yourself inclined to badmouth crap TV reality programming or ban sugar.

You got to know there's fun to be had.



I like this song, but I genuinely had no idea how silly the video is. This is the first time I've seen it.

Markets in Nothing: Is Virtue Inalienable?

"What kind of a woman do you take me for, sir?"
"We've already established that, now we're just haggling over the price."
- NOT Winston Churchill

Is virtue for sale? Should it be? Consider Aristotle's example of the man throwing down arms and fleeing the field of battle. If that's the end of the story, he's (presumably) guilty of cowardice: a lapse in the virtue of courage. But what if he were paid to throw down arms and flee the field of battle? I think almost everyone would agree that paid desertion is a far worse offense. It's no longer cowardice, it's betrayal. Judas Iscariot's woeful tale put him at the very nape of The Beast in Dante's Inferno because of his treachery. Thirty pieces of silver are the wages of the worst eternal torment.

The curious thing is that it's tough for even me to be objective about this. I'm trained to be very sensitive to act consequentialism (that is, it's the outcomes of human action that warrant analytical consideration), but I cannot for the life of me shake the moral intuition that the incentives behind an act are morally relevant.

Taking a bribe to look the other way is ignoble. Taking a bribe to look the other way to pay for your kid's cancer treatment is not quite so ignoble. Unfortunate? Yes. Risky? Sure. Ignoble? Maybe not.

Incentives matter, but so does context. Virtue is local. Arete is personal, eudaimonia sees to the end of the block, and if phronesis isn't kept on a leash, it'll poop in the neighbor's flower bed. Pretending otherwise saps and impurifies autonomy and community responsibility. If you're skeptical of national-scale politicians who promise you otherwise, rest assured that your skepticism is probably well-founded.

And if you must sell your virtue, make sure the terms of the trade are as euvoluntary as possible.

Is Euvoluntary Exchange Just?

I'm not quite finished abusing Aristotle just yet. (NE, Bk. V)

Of particular justice and that which is just in the corresponding sense, (A) one kind is that which is manifested in distributions of honour or money or the other things that fall to be divided among those who have a share in the constitution (for in these it is possible for one man to have a share either unequal or equal to that of another), and (B) one is that which plays a rectifying part in transactions between man and man. Of this there are two divisions; of transactions (1) some are voluntary and (2) others involuntary- voluntary such transactions as sale, purchase, loan for consumption, pledging, loan for use, depositing, letting (they are called voluntary because the origin of these transactions is voluntary), while of the involuntary (a) some are clandestine, such as theft, adultery, poisoning, procuring, enticement of slaves, assassination, false witness, and (b) others are violent, such as assault, imprisonment, murder, robbery with violence, mutilation, abuse, insult.

I reiterate, justice is near. When its pale, far-mode phantom ascends, we witness corruption like the Star Chamber, or the kangaroo courts of the French Revolution, or the hideous social engineering shoggoths of Mao's Great Leap Forward, Stalin's purges, and Hitler's bloody eugenics rampage. Trials by jury, the due process of law, constitutional protections against unwarranted search and seizure... these are all defensible using consequential reasoning, but all of the judicial review imposed by the US Constitution serves as a reminder that Aristotle was right: justice requires context.

So how can euvoluntary exchange be just? Modern market exchange lacks context. When I go to the store and buy footie pajamas and hot cocoa mix, I know nothing of the vendor beyond the goods she offers and the price she offers them at. I don't know if she's kind to children and animals. I don't know if she's pious or profane, humble or hubristic, sunny or sour. In short, I make a judgement-free decision whether or not our exchange benefits me, and rely on her logic of exchange to decide if the exchange benefits her. Is this not vulgar?

It is not. The rules governing exchange that constitute a market order meet the conditions of virtue-preserving federalism.

Consider that a playground version of the Lex Mercatoria is just such an institution. There are rigid rules governing all trade (no takesies-backsies, rules of adverse possession, etc.), and there are local governing institutions. Don't believe me? As an itinerant child, I can assure you that if you brought the specific terms of trade from one schoolyard to the next, you'd find yourself excluded from the Lunchables secondary market. But also, the constant of "snitches get stitches" varies (or it did when I was a kid) by the barest whisper o'er the land. There is indeed a hierarchy of rules. And that's just as true for the real Lex Mercatoria as it is for the ersatz childhood version.

And when it comes to the local customs having primary authority, there's a reason that "when in Rome, do as the Romans" remains a useful cliche: folks who refuse to hew to local customs find it impossible to strike contracts. Just try running an im/ex business in Korea without dealing with the chaebol system. Contracts require offer and acceptance. The meeting-of-the-minds aspect of agreements means that you play ball or you go home.

A common moral identity? Ask Avner Greif about "impersonal exchange" and how it is in a modern market order, it just doesn't matter if my vendor is pious or profane, humble or hubristic, sunny or sour. High-trust societies with thick, functioning markets insist on at least a modicum of dignity for all. In a market society, it's completely normal to expect someone to discharge the obligations of a contract with no quibbling. The common moral identity of modern market participants is to honor contracts at a minimum to the letter, and if you're lucky, then the spirit as well. This approach is quite novel in human history. Clannishness rules human behavior. Overcoming that, or at least re-channeling it, is a remarkable feat.

As for the last one, the inability of local markets to rewrite the moral order, this is the one ordinary people have to be truly vigilant against. Inhabitants of the first and second estates have an incentive to improve the relative status of their houses against the third. This is particularly worrying when the third estate is growing rapidly (to the clear benefit of everyone qua consumer). Beware especially Helen Lovejoy political kayfabe.

Markets act as an organization preserving justice, just as good political organizations act to preserve the integrity of markets. That is, unless mischief is afoot. Euvoluntary exchange is both just and available when markets are available and have integrity. When that's not the case, the upper bound on the ability for people to serve each other voluntarily shrinks. Fair warning.

Virtue-Preserving Federalism

A couple of my recent posts have left an important question unasked: whence virtue? It's great to say that there are natural limits on the exercise of justice, but how do individuals know what justice even is? Is it just out there in the air, something we breathe without noticing? Do we rinse off in justice after bathing in the milk of human kindness, maybe pat dry with the towel of humility and put on the night cream of generosity? Or is virtue transmitted like any other idea: passing from mind to mind, from clan to clan, from country to country, carried on the back of rhetoric, supported by the same natural propensity to truck, barter, and exchange that is self-evident in the marketplace for material goods and services.

I'm not exactly convinced that we're able to conclusively isolate the origin of morality, but I think morality's murky genesis is of much less practical interest than how it is supported and propagated. When I read rationalist constructions of morality (Kant especially, but especially Descartes), I'm struck by how tendentious they are. I am reminded of many of my friends who say, "I don't know if I'm a libertarian or not, but I'm not 'that' kind of libertarian." Well, I don't know if I'm a deontological moralist or not, but I don't quite believe that moral reasoning from a few context-free first principles gets you a virtuous life. Or a virtuous society, for that matter.

Pulpit-pounding aside, I invite you to consider for a moment that virtue is a learned heuristic. It neither descends like manna from heaven, surrounding us in vapor, nor does it spill forth fully armed from the foreheads of philosophers. Aristotle didn't invent virtue, he just described it. Ditto Anselm. Ditto Epicurus, ditto Aquinas. Virtue is an emergent order, created by human action, but not by human design. The Areatic Turn (think heel-face turn, but for moral philosophy) was just Hayek's analysis of emergent order in markets applied to moral theory. And just as market orders extend beyond the single bazaar, moral orders extend beyond the single congregation. How do I reconcile this with my recent claims?

Thankfully, Riker (1964) and Weingast (1995) have already given us some pretty good guidelines on an institutional form that supports euvoluntary exchange: market-preserving federalism.

Ordinary federalism is Riker's part, and it has two components:

1. A hierarchy of governments, where at least "two levels of government rule the same land and people."
2. "The autonomy of each government is institutionalized in a manner that makes federalism's restrictions self-enforcing." (emphasis in original) Sounds familiar, doesn't it?

Weingast added the following conditions to elevate federalism to the market-preserving type (all emphasis in original unless otherwise noted):

1. "Subnational governments have primary regulatory responsibility over the economy."
2. "a common market is ensured", meaning that jurisdictions can't raise trade barriers against each other.
3. Importantly, "the lower governments face a hard budget constraint," meaning that fiscal and monetary sovereignty is not available to subnational governments. 

That last point is an interesting one for cryptocurrency wonks. If the state of Virginia were to come up with its own version of Bitcoin, it would threaten the market-preserving attributes of American federalism. But that's a topic for another post.

If you buy Aristotle's claim that practical justice is naturally limited in scope, and if accept the proposition that a virtuous society is better than the alternatives, some form of virtue federalism should appeal to you. If it helps, imagine that one of the functions of a Church hierarchy is to a) define and b) administer virtue to congregants. 

What would virtue-preserving federalism resemble? Well, pretty much the same thing:

1. A hierarchy of organizations, where at least two levels of moral authority guide the same people.
2. The autonomy of each organization is institutionalized in a manner that makes the organizational restrictions self-enforcing.
3. Subordinate organizations have primary moral authority over their constituents.
4. A common moral identity is ensured, meaning that everyone, and I do mean everyone, is due the same default prior moral consideration.
5. And sub-organizations can't just up and rewrite moral foundations on a whim.

Jeepers. If those are the guidelines, then Mennonite communities seem to be pretty good examples of virtue-preserving federal organizations. 

Is virtue-preserving federalism euvoluntary? Why or why not?

For a fun exercise, compare and contrast other morality-supporting institutions using these guidelines. Is the Catholic Church of 2014 a virtue-preserving federal system? How about the Catholic Church of 1300? How about Confucianism? Islam? Judaism? Buddhism? Tao? 

Anyway, it's something to think about. I don't know if it perfectly reconciles my worries about Aristotelian justice, but I think it helps. And it gives me and Tony something to talk about on the ride to Fairfax today.

Riker, William H. Federalism: Origin, Operation, and Significance. (1964) Boston: Little Brown

Weingast, Barry R. "Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development, The." JL Econ. & Org. 11 (1995): 1. available here.

Social Justice vs. Public Choice

From Book V of Nicomachean Ethics:

Since the lawless man was seen to be unjust and the law-abiding man just, evidently all lawful acts are in a sense just acts; for the acts laid down by the legislative art are lawful, and each of these, we say, is just.

Students of Hayek will chafe at this claim. Vol 1 of Law, Legislation, and Liberty (ch. 4) makes a clear distinction between legislation, which is invented, and law "in the sense of enforced rules of conduct is undoubtedly coeval with society" (p.72). Aristotle seems to conflate the two. Let's continue with NE and see how deep the analytical rift continues.

Now the laws in their enactments on all subjects aim at the common advantage either of all or of the best or of those who hold power, or something of the sort; so that in one sense we call those acts just that tend to produce and preserve happiness and its components for the political society.

Yikes! This formulation presages Bentham by a good 2000 years. Could Aristotle have been a proto-utilitarian?

And the law bids us do both the acts of a brave man (e.g. not to desert our post nor take to flight nor throw away our arms), and those of a temperate man (e.g. not to commit adultery nor to gratify one's lust), and those of a good-tempered man (e.g. not to strike another nor to speak evil), and similarly with regard to the other virtues and forms of wickedness, commanding some acts and forbidding others; and the rightly-framed law does this rightly, and the hastily conceived one less well.

Oh, well, that's different. "Happiness" in this context means pursuing virtue. Happiness through justice as temperance, prudence, and courage (and a few hundred years later as faith, hope, and love) is a heck of a lot different than happiness as a warm cheeseburger.

But is this form of justice personal or is it public? The harm of a Soldier deserting his post, fleeing, and throwing down arms is of considerably larger scope than committing adultery or gratifying lust. And in politics, speaking evil is routinely rewarded. Did Aristotle possess too rosy a view of what the legislature was capable of actually producing?

This form of justice, then, is complete virtue, but not absolutely, but in relation to our neighbour. And therefore justice is often thought to be the greatest of virtues, and 'neither evening nor morning star' is so wonderful; and proverbially 'in justice is every virtue comprehended'. And it is complete virtue in its fullest sense, because it is the actual exercise of complete virtue. It is complete because he who possesses it can exercise his virtue not only in himself but towards his neighbour also; for many men can exercise virtue in their own affairs, but not in their relations to their neighbour.

I guess not. Aristotle's Justice dwells in the polis. The great error of the nation-state was to mistake stranger for neighbor and pretend that simply because a national sovereign laid claim to a tract of land that the reciprocal, euvoluntary nature of neighborly relations naturally extended to others with whom we might have no opportunity to truck, barter, or exchange. "Social justice" outside this scope departs from the realm of virtue, and becomes something else entirely. I suggest to you that using the same word to describe an altogether different concept is an abuse of language.

And in case you're still not sold on the limits of the reach of justice qua virtue:

This is why the saying of Bias is thought to be true, that 'rule will show the man'; for a ruler is necessarily in relation to other men and a member of a society. For this same reason justice, alone of the virtues, is thought to be 'another's good', because it is related to our neighbour; for it does what is advantageous to another, either a ruler or a copartner. Now the worst man is he who exercises his wickedness both towards himself and towards his friends, and the best man is not he who exercises his virtue towards himself but he who exercises it towards another; for this is a difficult task. Justice in this sense, then, is not part of virtue but virtue entire, nor is the contrary injustice a part of vice but vice entire. What the difference is between virtue and justice in this sense is plain from what we have said; they are the same but their essence is not the same; what, as a relation to one's neighbour, is justice is, as a certain kind of state without qualification, virtue.

"Reject the Siren Song of Telescopic Morality" is too weak an admonition. According to Aristotle, there is no justice beyond what you can see standing on your own rooftop. Rethink "love thy enemy" with this in mind. The vast bulk of humanity is neither your enemy nor your friend. The vast bulk of humanity are strangers. Think of how much more euvoluntary our relationships would be if we would be more willing to acknowledge this.

The Optimal Quantity of Unwarranted Media Harassment is not Zero

Today is the seventh of March, 2014. Yesterday, an elderly Japanese-American man was the subject of relentless media badgering. A Newsweek correspondent tracked this man down, suspecting him of being the fellow who wrote the Bitcoin protocol. The histrionics over the past day remind me less of Edward R. Murrow and more a fulvid Charles Foster Kane.

What would Coase say?

The Ouroborotic nature of journalism can be frustrating for those who have not yet learned to collapse the moral telescope. From the individual journalist's point of view, the public's interest is an ironclad straitjacket. Career incentives are centered on scoops, on eyeballs, on pageviews. But from the news consumer's point of view, the media exists to highlight what's interesting in the world. Each is in partial thrall to the other. It's an equilibrium. That does not imply that it's the only equilibrium.

The Schelling in this Point is man's natural propensity to truck, barter, and exchange in gossip. Individually, since each member of the public has as little to no ability to influence the content of the news, the costs of reckless quasi-paparazzi are easily swamped by the benefits of consuming salacious tabloid pablum. Curbing the hunger for frivolous human interest stories is costly: it requires the discipline of a well-informed temperance. Rigorous personal virtue is hard, therefore the analyst should expect it to be rare. Because it is rare, the rigorous analyst should also expect a vigorous market in sleazy journalism.

If you're so inclined, perhaps you might encourage the people in your circles to temper their propensity to gossip. For everyone else, journalism cannot ever be reasonably expected to be anything other than non-euvoluntary (particularly when the alternatives are too horrible to reasonably contemplate) and we'll just have to accept that the occasional harassment of people who just want to mind their own damn business and build play train sets in peace are simply part of the costs of having a free press.

Right?

Episode 1: Adam Gurri

This is something of an experiment. My idea with this is that since I was introduced to the EE idea by Mungo's original Econtalk episode, maybe there's something to the idea that the contours of euvoluntary exchange as an analytical tool can be more illuminating as a two-way discussion rather than whatever happens to catch my interest.

Anyway, here's me and my main man Adam chewing each other's skulls over a few topics of mutual interest.


download

Additional materials referenced in the discussion:
Neoreaction piece
Google metaphor I meandered around but never finished:
Telescopic morality
More virtue ethics-y stuff
NRX Map
Hanson-Moldbug debate

The Eudaimonia of Eusocial Euvoluntary Exchange

Ethics tend to crumble when you scrutinize them too closely. Kant's categorical imperatives are left wanting unless you're blithely willing to beg the question about the meta-origins of what counts as an imperative. Naked utilitarianism is monstrous when subjected to a few simple thought experiments (and in practice has been used to justify some pretty horrible public policies). Nihilism is fine and dandy for flushing corrupted, dysfunctional institutions down the crapper, but offers few useful tips on what it takes to live a fulfilling life, unless you happen to be fortunate enough to find the atmosphere of Twilight of the Idols more appealing than, say, an Ozu triptych.

But what tends to be buried behind philosophical veneers in other ethical approaches is splatched wide open on the dissection table in whatever flavor of Aristotelian eudaimonia tickles your taste buds. Namely, the pointed absence of unimpeachable exogenous moral guidance. And boy, oh boy, who doesn't like Augustine's "proof" of God's existence as an umbrella poked through the roof thatch on this point, amirite? Write your own Upworthy-style headline. Whether Epicurean or Stoic, Anselmite or good ol' Nicomachean, living well and doing well is a living, evolving, dynamic process of individuals embedded in a world not of their choosing.

Whee!

The fluffy-bunny pure euvoluntary exchanges that neither poke eye nor tread foot spin invisible strands that bind together the grand web of human cooperation. Consider your lunch. Consider the heady coordination needed just to put a slice of meat onto two pieces of bread. For you to cram a ham sandwich into your piehole, men with mechanized shovels had to bend the course of rivers in their beds onto the dusty plains where other men driving mighty threshers claim the seed of the earth from its chaff. These threshers in their turn were assembled in factories from refined rocks hauled from a dark slumber in the bones of the world. Each of these euvoluntary transactions and countless others, the result of human action but not human design, meet in something delicious wrapped in wax paper to be eagerly, perhaps dismissively devoured along with a miraculous bag of chips and a magically divine bottle of diet soda.

But like the web of a spider, you can count on a wandering moose to sneeze on it once in a while, disrupting the natural flow of basic commodities, vital services, and end consumer goods. It is here where the flexibility of the euvoluntary web is tested that we discover to what extent our capacity for building a good private life and a good public society can weather duress. Under autarky-only conditions, exogenous shocks meant death. And in many parts of the world they still do. Contrast the magnitude 7.0 earthquake in Haiti in 2010 with the magnitude 9.0 Tōhoku earthquake and tsunami the following year. It's been 3 years since Port au Prince was devastated and it's still not rebuilt. Still. The Japanese earthquake was 100 times as powerful and though the Haitian casualty estimates are sketchy, probably somewhere around four times as many Haitians died as a result of the earthquake. The Japanese web is stronger. And it isn't just from a narrow self-interest that cleanup and rebuilding proceeded so adroitly. The eusocial urge to tidy up after a blustery day cannot be anything but part of eudaimonia. Living a good life means living in harmony with your surroundings. Building good surroundings happens quite naturally as a result of vigorous, widespread euvoluntary production and exchange.

It's a bit cliche to exhort folks to be the change they want to see in the world, but it's not bad advice. Trust, honesty, justice, peace, temperance, courage, all the virtues, both joint and several help us to navigate the social topography, to spin, weave, and reinforce these gossamer connections against the inevitable insults slung by nature and the wicked men of the world. Pursuing your own aretē at the very least won't torch our own little portion of the web and at best might help encourage others to do the same. And those yahoos who seem to thrive on attention by flaunting virtuous behavior? DFTT. Unsubscribe. Unfollow. Or at least disengage. And assume that those who seek dominion over others are knaves first and foremost. Never trust a [political] junkie.

Adam Smith and the Epistemological Problem

Adam Smith, Theory of Moral Sentiments III.I.46:

Let us suppose that the great empire of China, with all its myriads of inhabitants, was suddenly swallowed up by an earthquake, and let us consider how a man of humanity in Europe [...] would be affected upon receiving intelligence of this dreadful calamity. He would, I imagine, first of all, express very strongly his sorrow for the misfortune of that unhappy people [...] And when all this fine philosophy was over, when all these humane sentiments had been once fairly expressed, he would pursue his business or his pleasure [...] with the same ease and tranquillity, as if no such accident had happened. The most frivolous disaster which could befall himself would occasion a more real disturbance. If he was to lose his little finger to-morrow, he would not sleep to-night; but, provided he never saw them, he will snore with the most profound security over the ruin of a hundred millions of his brethren, and the destruction of that immense multitude seems plainly an object less interesting to him, than this paltry misfortune of his own. To prevent, therefore, this paltry misfortune to himself, would a man of humanity be willing to sacrifice the lives of a hundred millions of his brethren, provided he had never seen them? Human nature startles with horror at the thought, and the world, in its greatest depravity and corruption, never produced such a villain as could be capable of entertaining it. But what makes this difference?  [...] [W]hat is it which prompts the generous, upon all occasions, and the mean upon many, to sacrifice their own interests to the greater interests of others? It is not the soft power of humanity, it is not that feeble spark of benevolence which Nature has lighted up in the human heart, that is thus capable of counteracting the strongest impulses of self-love. It is a stronger power, a more forcible motive, which exerts itself upon such occasions. It is reason, principle, conscience, the inhabitant of the breast, the man within, the great judge and arbiter of our conduct.

I hesitate to parse this passage for the simple reason that it's oft-abused. Foes of market reasoning seize upon the first half, neatly ignoring the remainder as if to say, "see what a monster is this Adam Smith who cares more for his little finger than for the many millions of souls abroad!" I guess it's easy enough to counter this sophistry with the balance of the quote, but still, I am a mite leery.

And not entirely for only unjust cause. Even if you read it all in its entirety (and yes, the ellipses are mine, you can follow the link for the undamaged original) you might be forgiven for mistaking the argument for a piece of descriptive analysis rather than the parable that it actually is. All Smith was doing was predicting construal level theory (by a couple hundred years), an idea lately popularized by my pal Robin Hanson at Overcoming Bias. In the husk of a pecan, things and ideas that are close to us in space and time are clearer, more textured and more immediate. The farther something is, the more we abstract from it, find trends, identify patterns, and sketch impressions. Fingers are near, China is far. This helps resolve the paradox.

The more alarming problem is that public policy is aimed to influence the geology in China and the tools it wields tend to be pinky shears. "We've got to do something" often means lopping off an errant digit in the hopes that the Baikal Rift will stay put for the nonce. To put it another way, there's this monumental epistemological problem faced by policy prescription. "Someone should pass a law" retains the appeal of resembling virtuous, bold action, but it does nothing to answer fundamental questions like: "Have we correctly diagnosed the failure" or "how will actual humans implement this policy" or "how will people react to this policy" or "what are the likely unintended consequences" or a dozen others. These are inconvenient questions to ask, since they get in the way of the Very Serious Business of lopping off fingers.

But they're the most important questions to ask. It is euvoluntary exchange and its growing scope that delivers poverty-remediating wealth to the world's miserable. Every act of coercion impinges on either the extant set of euvoluntary exchanges or on a stochastic potential set sometime out in the future. Toothy Teddy Rooseveltian action appeals to a mercurial temperament, but caution and judicious restraint forms the bulk of the arguments forwarded in the Federalist Papers, and for good reason. Thought, care, and reflection rather than fleeting mob passions inform the rule of law that cradles the robust institutions surrounding euvoluntary exchange. When I read Smith's passage above, I read of an ethics that is not incompatible with judicial prudence. I encourage anyone picking up a copy of TMS to do the same.

Is Deirdre McCloskey a Euvoluntary Exchanger?

Many apologies to longtime readers, but I have decided to scuttle the assonant "euvoluntaryist" for purely aesthetic reasons. Invoking McCloskey is therefore particularly apropos, as I struggle to develop a list of economists who are within even a standard deviation of writing as elegantly as her.

After all, part of the euvoluntary project is a quest for that beautiful common ground that suffuses much of McCloskey's recent work. The plea from bourgeois virtue and the plea from euvoluntary exchange is similar in that they both urge readers to consider, if even briefly, the possibility that it is peaceful exchange, undergirded by a gentility of spirit demanded by an open marketplace free from coercion that lifts people out of desperate misery. To the extent that we share a set of common ideals like mercy, love, temperance, justice, trustworthiness, humility & al., it is through the civilizing and pacifying forces brought by bourgeois euvoluntary commerce that the flower of humanity blossoms.

And perhaps more to the point, it is through these civilizing institutions that the atavistic vices are dulled, subordinated, attenuated. He who clings to malice, wrath, obduracy, to picayune churlishness, to insolent parochialism or arrogant nationalism suffers disproportionately under a system that disproportionately rewards compassion, rejects coercion, and resists the dominion of man over man.

And how much more beautiful can you hope for a collection of conclusions? Those institutions that broaden the scope of euvoluntary exchange just happen to be the very ones that rely on the bourgeois virtues. Is Deirdre McCloskey a Euvoluntary Exchanger? It would be churlish of me to deny it.

Tolerance

At the risk of accusations of callowness, let me share with you my fifth-grade-level thoughts on what "tolerance" means to me. Please bear with me, I assure you I'm going somewhere with this and I don't want to encumber the main point with correct but nuanced distinctions.

Tolerance is to refrain from objecting to or forbidding aesthetically unpleasant activity. The chief difference (as I see it) between tolerance and acceptance is a feeling of revulsion. I tolerate things that gross me out, I accept things that are orthogonal to my interests. 

What does this have to do with euvoluntary exchange? I tend to think of euvoluntary exchange as acceptable to pretty much everybody. We've written here before on organ sales and I've echoed Jim Andreoni's point that much of the objection to trade in body parts is atavistic revulsion. For people to come round to the arguments we here at EE find compelling, they'd need to overcome that dreadful icky feeling and judge the (dare I say it?) consequences of their beliefs. They'd have to tolerate organ sales as beneficial to the greater good in spite of their deontological mores. 

I know this is just one example, but I have a hunch that acceptance and tolerance can help us shed light on the euvoluntary spectrum. I'm willing to claim that a good candidate for a demarcation line between euvoluntary and voluntary is the boundary between acceptable and tolerable. I'll put up with political advertising as tolerable despite my belief that it poisons minds because I find the alternative of state control of speech intolerable. I find TLC reality programming acceptable because I consume exactly zero of it and I don't see that it really does any meaningful damage to any of the culture that I care about.

With that in mind, if you buy my description, do you think it's reasonable to consider tolerance as a latter-day virtue on either deontological grounds (which is how it's often sold) or consequentialist grounds (since more tolerance increases the universe of available transactions)? If not, what are the reasonable bounds on tolerance? If it's a matter of aesthetics, what moral arguments would you cite towards efforts to restrict tolerance or to limit the scope of commerce? Is this even an important consideration? Should tolerance remain a platitude we preach to children? Indeed, is it even being taught correctly?

Curious stuff.

Competition and Virtue

Michael Walzer in a very interesting short essay.

Does competition corrupt us? Do markets thwart virtue?