Cicero Is not Dead

I like Adam Smith's distillation of Plato via Cicero not just because Smith is the father of modern economics, but because the triapartite relationship between Plato, Aristotle, and Cicero reminds me a bit of the three big names in Japan's warring states period: Oda Nobunaga, Toyotomi Hideyoshi, and Tokugawa Ieyasu.

An old Shogun-era Japanese fable says that Nobunaga, Hideyoshi, and Ieyasu were sharing tea in a courtyard one spring evening. A nightingale lit upon a nearby cherry bough. Wishing to hear birdsong, Nobunaga drew a blade and said, "little bird, if you do not sing, I will kill you." Hideyoshi, a trifle less bloodlust in his voice, clenched a fist and cried, "little bird, if you do not sing, I will make you sing." Ieyasu took a sip of his tea, looked up into the tree and said, "little bird, if you do not sing, I will wait for you to sing." The punchline is of course, that the Tokugawa shogunate lasted for 265 years.

Though they wrote on similar topics, Plato, Aristotle, and Cicero impress Western political economy the way the three daimyo impressed Japanese political economy: if you squint hard enough, you see one idealist, one moderate, and one practical realist. Of course, squinting hard enough to mix up samurai armor with a toga might require a bit of vinegar in the eyes.

When, centuries later, Smith finds that Cicero the hardbitten realist has taken from Plato the vaporous idealist a distillation important enough to call a "divine maxim", the alert student should take note. Cicero found a 300-year-old bit of political philosophy important enough to annex for use in the Roman senate. That's important enough on it own. More to the point, a Scot near to two thousand years later thought this expropriation important enough to include in one of the most important passages in his most cherished work. I assert that this heuristic of governance, to "never to use violence to his country no more than to his parents" has passed two critical filters: salience and longevity. This rule is important enough to Plato to have developed it, important enough to Cicero to have adopted it, and important enough to Smith to have used it in an admonition against the natural hubris of political elites. It has survived for more than 2000 years, and since the 1890s or so, it has been tacitly found wanting.

Consider many of the results of laboratory psychology, or of experimental economics. In laboratory settings, participants demonstrate time inconsistency, valuation asymmetries, maladapative heuristics, and a rather startling capacity to be fooled, tricked, swindled, and hoodwinked. Hucksters have their own divine maxim: "a fool and his money are soon parted." Does not the panoply of non-euvoluntary, irrational exchange vitiate Plato's Divine Maxim?

Well, judging from the few times I've crossed sabers with Richard Thaler on Twitter, I think he'd say "no." His idea of soft paternalism is consistent with Plato, with Cicero, with Smith, with the durable traditions of personal autonomy in Western Civilization. I think the only fatal error bound in the choice architecture project is to imagine that legislatures are populated with modern-day Solons and Ciceros, that the median politician will temper legislation with decent Aristotelian phronesis. If actual flesh-and-blood politicians were reliably keen to adhere to a heuristic of doing no violence to constituents than they would to their parents, I'd be happier than a clam to hand over the design of choice defaults.

But if instead, politicians prove intemperate in their reign, if they are fallible, corruptible, or prone to err, I might be a bit more leery about aiming their truncheons in the direction of constituents' personal affairs. Do you really want Chris Christie nudging you?

Simony

Receiving sacraments is morally permissible.

Donating money to the church is morally permissible.

Donating money to the church in exchange for receiving sacraments is morally impermissible.

Let this be your euvoluntary koan for the day. Understand this and you understand the atavistic bile against a wider swath of market transactions. Once you understand that, consider the consequences of failure to exchange. OM.

HiDine: Euvoluntary?

Gateway gold-digging?

Is it euvoluntary for a dinner guest to dine and dash on the gentleman's nickel? Is there more to the implied contract than just a delicious meal and some predictable conversation?

Or is this exploitation somehow? It seems patronizing to suggest that women who sign up for something like this are non compos mentis, even if it's something that a lot of folks would find icky.

WWSS?

Status vs. Status Goods

Relative status is a fixed-pie, zero-sum game. If there are ten people in my toy society, there will be no more than ten rank-order positions to fill. You can't create more relative status than exist agents.

Status goods have no such restriction. Like any other kind of goods, production and trade are positive-sum. Moreover, relative status using positional goods is multi-dimensional. I can be the flashiest trout fisherman on the lake in my decked-out gig bob with the flames and the lightning bolts airbrushed onto the gunwales, but the second I pilot that demonbane sucker up to the yacht club, I'm about as posh as grey dishwater. Diverse status goods allow folks to participate in more and varied status contests.

Or to refrain from participating whatsoever.

That's one of the great things about a thick economy. We're free to select the subculture in which we are most comfortable participating. Tyler Cowen notes in Create Your Own Economy that it's easier than ever to fashion the tapestry of your consumption. Some of that will be purely utilitarian, some will be for signaling, and some will be experimentation. Some will be an admixture of all three.

The alternative, the BATNA if you will, is rank ordering based on something else. You can't simply wish away the desire to obtain relative status. If not on personal possessions, then on what shall rank-ordering be based? My research on PNG cultures suggests violence as a likely candidate.

No thanks. I think it's more euvoluntary to have many leather-bound books and my apartment smells of rich mahogany.

The Virgin Auctions

What would Sandel say? A 20 year old Brazilian woman auctions her virginity for a princely sum of US$780,000.

Moderately NSFW pictures in the link suggest she should have no trouble finding adequate suitors. Similarly, the Japanese gentleman who is willing to cough up more than a quarter million bucks for the experience is probably wealthy enough that his BATNA is not especially unattractive.

If there is exploitation here, who is exploiting whom?

The story suggests that the payment will be converted into a charitable payment. Is this dirty money? Is it akin to Planned Parenthood turning down a donation from infamous Internet bad boy Tucker Max or the Susan G. Komen Foundation distancing itself from support from online pornographers? Do the transactions that generate charitable donations contaminate the cash transfer? If so, how distant do the transactions have to be to become morally acceptable again?

Is there a villain here? More than one? Which is greatest? Is this auction non-euvoluntary? If so, why?

Reverse Carloan

KPC blogger and U of OK Professor of Economics Kevin "Angus" Grier is in my neck of the woods for the nonce and he was kind enough to join me for lunch, during which he directed my attention to something I've not heard of before: reverse car loans. These work sort of like reverse home mortgages, except they use the equity you have in your car rather than the equity you have in your home. From what I've gathered in a quick Internet search, they seem to be aimed at people who don't qualify for payday lending.

There's a lot going on here. The first immediate comparison is with the payday loans: a reverse auto loan is secured, meaning that if the borrower defaults, the lender can obtain a lien on the automobile. This suggests that interest rates can be (comparatively) lower. However, you can easily see how folks might make claims of exploitation: it's bad enough that poor folks have a hard time making ends meet and now these predatory lenders will take your car if you don't make payments.

How do they stack up against reverse home mortgages? From time to time, I've heard grumbling about reverse mortgages, about how they get retirees to "destroy" all the value they've put into their homes over the years and how these lending practices exploit the elderly. I'm not sure I understand the arguments fully, perhaps the elderly are somehow considered feeble by default, therefore prone to coercion by trickery? I think folks would have a hard time making a BATNA disparity argument, since if someone outright owns their home, it's fair to say they're reasonably wealthy. The same isn't necessarily true for these reverse auto loans. For these, we've got people so credit constrained that they can't even get a payday loan. That sounds to me like fertile grounds for claims of BATNA disparity.  Aggravating the problem is the nature of the collateral: to get a job, most folks need a car. If you're out of work and you just put your Civic in hock to pay this month's phone bill, you're up the creek if the repo man comes to collect.

And does it matter what the borrower spends the money on? Carlos is diligently applying for a job as a taco truck driver and he puts the equity in his Acura towards a legitimate job search, whereas Becky uses her loan to buy a new puppy and a bag of kibble. If things go poorly for either one, Carlos has the moral advantage of thrift. Becky might be what economists call a "hyperbolic discounter", which is a fancy way of saying that she's not quite so good at planning and foresight. Paternalistic instincts might have us look at Becky and say, "she ought to know better, so let's just not let her have the option of taking this loan." Unfortunately, even assuming it's the role of the state to protect people against the consequences of their own decisions, distinguishing between the Carloses and the Beckys of the world is likely to be prohibitively expensive (note that a low-cost way of self-identification is to just have a guaranteed basic minimum income).

So, are reverse auto loans euvoluntary? If not, is it so by regret aversion or BATNA disparity (or both)? Something else? As lenders continue to find ways to extend credit to poor folks, does the increased scope of the low end of the loanable funds market present a problem for a destination euvoluntaryist? How about for a directional euvoluntaryist? What actually is the likely alternative for not having access to this sort of credit? Does its relative novelty have bearing on the attractiveness of alternatives? If so, is novelty an important part of the BATNA calculus?

I think I'll post a little more on this latter question in a future post. I suspect it might be important.