Bryan Caplan  

Reply to Yudkowsky

Yudkowsky on My Simplistic The... Verizon's Unaccountability...
Here's my reply to Eliezer Yudkowsky, point-by-point.  He's in blockquotes, I'm not.
Bryan Caplan's Simplistic Theory of Left and Right says "The Left is anti-market and the Right is anti-Left". This theory is half wrong, and will for this reason confuse the Left in particular. It ought to be a clue that if you ask the Left whether they're anti-market, most of the Left will answer, "Of course not," whereas if you ask the Right whether they're anti-Left, they'll answer "Hell yes we are."
I suspect there is some difference along these lines.  But just as people on the Left will tend to object, "We're not anti-market, we're pro-X, Y, and Z," people on the Right will tend to object, "We're not anti-Left, we're pro-X, Y, and Z."  In any case, my theory isn't intended to predict self-description, but to find enduring commonalities between these two global tribes - commonalities enduring enough to fit both tribes since they emerged about two centuries ago.
People may understand themselves poorly a lot of the time, but they often know what they hate.
I never said "hate."  "Resentment" is far more apt, though of course prominent subsets of these tribes let their resentment blossom into hate.

My "Human Theory of the Left" is as follows: The Left holds markets to the same standards as human beings.


And that's what the Left sees when they look at somebody being paid $8/hour... They see a judgment about how hard an employee works, and how much they need and deserve.

So of course they hate whatever looks at a poor starving mother and says "$8/hour". Who wouldn't?

Ask them and they'll *tell you*: They don't *hate* markets. They just think that the prices and outcomes aren't fair, and that tribal action is required for everyone to get together and decide that the prices and outcomes should be fairer.

Again, I never said "hate."  But this sounds like a clear case of resentment.  So Eliezer's story ends up being a special case of mine.

Is it the correct special case of mine?  I'm not convinced.  Some leftists' primary complaint is that "prices and outcomes aren't fair."  But few non-economists of any ideology talk about prices much (except, of course, to live their daily lives).  If you revise Eliezer's statement to, "Leftists just think that market outcomes are unfair, and that tribal action is required for everyone to get together and decide that the outcomes should be fairer," I'd still say you're oversimplifying.  While leftists do routinely object to the market's unfairness, their complaints about the market are legion.  Historically - and even today - plenty of leftists argue their policies are better for economic growth.  Others decry materialism, the effects on the environment, or national solidarity.  Left-leaning economists add in a laundry list of market inefficiencies: monopoly, externalities, asymmetric information, and so on.

If this post gets shared outside my own feed, some people will be reading this and wondering why I *wouldn't* want prices to be fair.

And they'll suspect that I must worship the Holy Market and believe *its* prices to be wise and fair; and that if I object to any regulation it's because I want the holy, wise and fair Market Price to be undisturbed.

While this is a complete misrepresentation of Eliezer's views, it's a pretty fair description of mine.  I don't think market prices are "holy."  But they are wise in the sense that they're signals wrapped up in incentives.  And they're fair because they're based on mutual consent, and consent is one of most important determinants of fairness.


People like Bryan Caplan see people in 6000BC wearing animal skins as the native state of affairs without the Market. People like Bryan keep trying to explain how the Market got us away from that, hoping to foster some good feelings about the Market that will lead people to maybe have some respect for its $8/hour figure.

If my Human Theory of the Left is true, then this is exactly the wrong thing to say, and eternally doomed to failure.

"Eternally doomed to failure"?  Hailing the market's long-run effect on people's standard of living is probably the most successful economic argument of the last fifty years.  It's clearly the main argument for pro-market reforms in China, and probably India as well.  And it's also likely the most successful argument for privatization in the Soviet Bloc and deregulation in the West.

Personally, it's not my favorite argument.  Like Mike Huemer , I'd rather argue from the moral presumption that individuals shouldn't threaten to attack other people for offering deals they don't like, and the moral truism that calling an organization a "government" doesn't lighten its moral obligations.  If Eliezer called this argument "eternally doomed to failure," I'd still demur, but I freely admit that it hasn't been influential in the world of economic policy.

But don't try to tell them that the Market is good, or wise, or kind. They can see with their own eyes that's false.

Believing is seeing.  There are solid reasons to think the Market is better, wiser, and kinder than alternatives.  (What's "kind" about calling the cops because someone offers you a deal you don't like?)  But if you have strong initial anti-market feelings, it's hard to give credit where credit is due.

Bottom line: Even if Eliezer's story is the whole truth, he accepts my Simplistic Theory of Left and Right.  He's just filling in the details.  But his story explains no more than a small sub-set of leftists.  And they don't have a good point.

COMMENTS (54 to date)
Paul Zrimsek writes:

Being pro-market is a lot like being pro-democracy: you don't necessarily have to like the results of the process, but you do need to accept their legitimacy. "Anti-democracy" would be a fair description of someone who says "I'm not anti-democracy, I just think the wrong people keep getting elected and the Army needs to intervene to put the right people in office."

Edan Maor writes:

"Bottom line: Even if Eliezer's story is the whole truth, he accepts my Simplistic Theory of Left and Right. He's just filling in the details. But his story explains no more than a small sub-set of leftists. And they don't have a good point."

To be fair, I don't think Eliezer was saying that they have a point. He is filling in the details, but doing more than that - he's explaining why the theory as constructed doesn't really help in addressing anti-market leftists, and trying to explain their thought process.

Matt C writes:

Many on the Left are explicitly anti-capitalism. How accurately they represent the median (or mean) of the Left is arguable.

Hazel Meade writes:

@Matt C,
Yes, I think ultimately the "governing philosophy" of the left keeps going back to Marx, even if they don't really know it or think about it much. When someone isn't sure about the answer to some question is, they will refer back to governing paradigms about the world - and for the left, that is this basic idea of how the capitalist system works - that capitalists exploit the surplus labor value of the working class and this is where profits come from.

So while some leftists might think of the market as a necessary evil in some cases, they fundamentally think of it as an evil. If you ask them to consider whether market outcomes are fair - of course they are unfair, the whole system is set up to be unfair, because it's based on capitalists unfairly extracting profit from the labor of others. Duh! If market outcomes were fair, that would be a miracle!

So naturally, following this logic, the government ought to intervene on behalf of workers so they can capture more of the value of their labor. They're correcting for the basic unfairness of the capitalist system.

We spend a lot of time trying to be fair to our intellectual opponents. But at some point it would be really silly not to notice that there is a core ideology and it still holds sway over a lot of people's thinking.

Jerry Brown writes:

When Yudkowski says "Ask them and they'll *tell you*: They don't *hate* markets. They just think that the prices and outcomes aren't fair, and that tribal action is required for everyone to get together and decide that the prices and outcomes should be fairer" He is describing me, although using somewhat different terms than I would.

I realize I am on the left and that people like me are a subset of the entire group that you call "left". People like me look at semi-capitalist societies and see many, many market imperfections in the first place and figure correcting them can lead to better outcomes. And that usually the way to correct them requires interference in the market by something- often the government. Which we at least hope is democratically elected to consider the needs of all its people. This isn't "anti-market" it is anti those market outcomes that occur because the market is skewed and is leading to results that are not optimal as decided by the citizens in their collective decisions about how they want their economy to perform in accordance with their moral and ethical standards.

Jerry Brown writes:

We look at the 'market economy' as a system of rules and norms that people have created to work for them, as one method of enabling society to prosper. It is not something that is just 'out there' that everyone has to adapt to at all times no matter what. The rules and norms obviously can and have been changed over time, both for good and bad reasons. If suggesting that markets do not Always ensure the best outcomes is "anti-market", I guess I fit the description of "anti-market".

But then so does 99.9% of all other people in the world.

Hazel Meade writes:

Libertarians are totally in favor of having fair rules and norms governing the market. What we're not in favor of is tweaking the rules and norms until the market delivers a specific outcome.

We have rules like "people should be allowed to buy and sell property they own at any mutually agreed price with any consenting partner", and "bobody should be force to buy or sell anything they don't want to", and "people should be allowed to own the product of their labor", and "nobody should be forced to work or hire someone for free or at a price they didn't agree to", and "the government should adjudicate disputes and enforce contracts in civil courts". Things like that. What is unfair about those rules? Here we have a set of rules and norms that are universally applicable to everyone without judgement of their race, or religion, or socioeconomic class. So how is it that the outcomes of a system in which every transaction is voluntary suddenly becomes unfair because you don't like the result?

Chris writes:


Because we don't all start as equals, in total or in each transaction, which creates a power imbalance within markets and in general. Power imbalances skew markets and rather quickly divide a population into the "haves" and "have-nots". This is before you get into issues of human irrationality such as racism, tribalism, etc. that further skew market outcomes and push people out of markets in ways that your rules would not easily help. There are also externality issues such as pollution, where parties that aren't part of a contract are harmed.

Un-modified capitalism is a lot like socialism; it's great in theory, but once you use it in practice, there are substantial issues based largely on human behavior.

Hazel Meade writes:

There is no real power imbalance. Making someone an offer that is more attractive than saying "no" is not equivalent to putting a gun to someone's head. Employers in this country cannot compel anyone to accept a job. Businesses cannot compel other to buy or sell from them (unless they are health insurers, apparently!). That is what "power" means - not making someone an offer that is better than anyone else's.

By your logic , it's impossible for a rich person to ever make anyone a "fair" offer because just by virtue of having more money they automatically have the power to magically coerce others into taking something that the other party thinks is a bad deal.

drobviousso writes:

@Chris said:

Because we don't all start as equals, in total or in each transaction, which creates a power imbalance within markets and in general. Power imbalances skew markets and rather quickly divide a population into the "haves" and "have-nots".

I'll disagree with Hazel and say yes of course there are power imbalances.

So given that, what's a better system then? System A in which the "haves" can only impact the lives of the "have nots" when the "have nots" agree to interact with the "haves?" Or system B in which the "haves" get to dictate all sorts of things to the "have nots?" Because system A is what a free market is and system B is what collectivist decision making is.

That's because there's no governance structure ever discovered that gives durable power to the "have nots." Either power quickly devolves back to the "haves," or the "have nots" quickly turn into the "haves"

David Condon writes:

Some issues with the anti-market hypothesis:
Liberals favor fewer immigration restrictions.
Liberals favor fewer marijuana sales restrictions.
Liberals favor fewer copyright restrictions.

Liberals are opposed to extreme wealth, but this should not be confused with being anti-market. What matters for most people when it comes to policy is which tribe they see themselves as a part of. I think this includes most libertarians. Libertarians simply chose an unusual tribe.

Jerry Brown writes:

Hazel Meade- "So how is it that the outcomes of a system in which every transaction is voluntary suddenly becomes unfair because you don't like the result?

Chris expresses my view very well. I would just add that in real life every transaction cannot be considered voluntary. As in the labor market- people who need to feed themselves cannot fairly be said to be free to walk away from a job if that is what they need to acquire the means to feed themselves. The real world is not like 'nevermind, I will not take your offer because it is too low and I will just sit here and let my family go hungry instead'. Society generally recognizes this, a market doesn't. So society attempts to correct for what the market does not recognize by making various rules or redistributions if necessary to satisfy what standards society determines need to be kept. Lefties generally agree with that. Right wingers agree with the concept, but consider different standards to be important. Extreme libertarians are off in some lala land of their own.

Chris writes:


There are definitely power imbalances and it's not just between two people making a deal, but in access to to sellers and buyers as well and the dividends that come with access. For instance, If I have $20,000 sitting around I can put it into a high yield bank account, but if I don't already have that I'm stuck with a low yield savings account. If I can afford a Tesla, there was recently a deal for free fueling at their charging stations, but if I can only afford an old used car, I'm stuck with buying gas for an inefficient car that will likely also cost more in maintenance. If I inherited a million dollars, I can risk half of it starting a new business, if I'm from a low income family I would have to beg for a high interest loan and if anything goes wrong at all, I could become homeless.

The markets a wealthy person has access to are inherently different and more advantageous than those available to the poor. It's not that someone is putting a gun to the poor person's head to make them take the low pay job, it's that there aren't any other options (what are the options without a relatively expensive degree?). And it's not that, from an equilibrium curve point of view, a price isn't fair, it's that the buying power of the wealthy skews that equilibrium price up (housing In safe, convenient areas). There are so many things that are easier and more profitable for the wealthy and so much harder and costlier for the poor that it pushes them further and further apart.

And I don't necessarily have an answer, but I do know that just accepting systemic inequality and 'have-nots' as a necessary byproduct of the invisible hand of the free market is too high a cost for me.

Andrew_FL writes:
But just as people on the Left will tend to object, "We're not anti-market, we're pro-X, Y, and Z," people on the Right will tend to object, "We're not anti-Left, we're pro-X, Y, and Z."

I know you are looking for insight that's valuable in explaining the right and left throughout history and across numerous societies, but at the moment, the most prominent faction of the American right would not object at all to being called anti-Left. In fact they would probably go so far as to endorse your description of them and fail to see any reason why being anti-Left isn't all they need to be.

Miguel Madeira writes:

@David Condon:

"Some issues with the anti-market hypothesis:
Liberals favor fewer copyright restrictions."

If this is true (and I don't know if it is - "liberals" have strong ties to Hollywood, after all), it is not a the "anti-market hypothesis": intellectual property put in the market things that, without it, it will be free (free as in "free beer").

If you want a good counter-example, cap-and-trade will be good (a policy who creates a market where there was none, and who is supported for most of the center-left; but even in this case, much of the hard left is suspicious of the cap-and-trade, and specially because of the "-and-trade")

Weir writes:

It's true that we don't all start as equals, so every population is divided into its haves and have-nots. But if the haves do really well for themselves in a market, why wouldn't they also do really well for themselves in the absence of a market? In politics, in government, in the competition for rents, wouldn't the same people get ahead and do well, in every situation making use of that good fortune they were born with? That actually is what happens.

If you have two parents, and they're smart, and they keep a lot of books in the house, and they keep showing up for work on time, aren't you going to be the kind of person who can turn the political process to your advantage, no less than the market process? There'll be "imbalances" either way. And what happens is that these imbalances are actually much worse, in practice, when the really good students opt to get ahead by becoming wheelers and dealers in the political marketplace, which is similar to an actual market except that it's rigged.

You can build a successful career for yourself at the expense of everyone else in a rigged, statist, corporatist, cronified welfare state. If you wanted to really entrench the divisions in society, then the really effective way is to get the government to lock it in and strangle the competition in its crib. You can get the government to build these walls and really skew things to your advantage, because you're smart and you know how to get things done. That's how those expensive degress got so expensive. That's your government at work. Same with housing in safe, convenient areas. Politics again. We are all paying the cost of lousy, unfair government policies.

Miguel Madeira writes:

"But if the haves do really well for themselves in a market, why wouldn't they also do really well for themselves in the absence of a market?"

The argument is that, in the political process, everybody has 1 vote, while in the market the "haves" have more "votes".

Peter Gerdes writes:

I think your point about not trying to offer an internal description of the attitudes of members of the left but merely trying to identify a commonality is a good one. Just because that isn't what subjectively motivates members of the left doesn't mean it isn't a unifying attribute of parties on the left.

However, I think your missing the key point of Yudkowsky's explanation: liberals treat the market as if it were a person subject to the usual norms of behavior. This doesn't just explain issues with prices but their anger about many other aspects of the market. While seeing people like Sergey Brin and Bill Gates getting fabulously wealthy might seem perfectly fine if you conceptualize it as simply "Well they are making a bunch of savy trades/choices and deserve to keep their profits." However, if you think of the market as a human actor, e.g., a king or tribe leader distributing the spoils, I think everyone would be horrified if such a leader gave one (supposedly equal) member of the tribe 1000 times what everyone else got. When we think of individual humans doling out rewards to tribe members who have shown heroism, bravery, or otherwise done a great service for the group we feel they deserve some extra but unless they've undergone great suffering for the rest of the tribe would find absolutely gigantic rewards wrong. Similarly, on issues like price gouging it seems fine if prices rise in a disaster if you just think of it as a mechanism of efficient allocation but, again, if your personalize the market and imagine an individual responding to the plight of others by taking away from them rather than giving it sounds monstrous (whether or not there are better alternatives isn't the issue). The other behavior on the left you identify can easily be seen as a consequence of this. Liberal economists search for academically respectable reasons to critisize the market because of their preexisting affiliations with those who think about it as an actor.

However, I don't see any tension between your explanation and his. It seems quite plausible to say: the left is anti-market because they conceptualize the market as an agent and apply our usual norms for human agents to its effects.

As for deciding if Yudkowsky is right or not I think the test is whether or not people give different judgements when they see the same kind of results at scales where they can directly see all the individuals involved and the choices made (i.e. which lack 'room' for the extra actor of 'the market')? I suspect we will find that the results which seem so abhorrent to people when imposed by the abstract force of 'the market' are suddenly just fine when they are just the result of a bunch of individual choices all of which are reasonable.

drobviousso writes:

>The argument is that, in the political process, everybody has 1 vote, while in the market the "haves" have more "votes".

And what does that vote get the downtrodden? Would you say that the police do a good job of respecting the civil rights of poor and minorities? Would you say that the quality of schools and bus routes are the same in poor neighborhoods as they are in more affluent suburban areas? Does this 1 vote get the IRS to fix a billing mistake as fast as your bank?

The haves in effect get more than one vote in the political process, too. You can't make the haves weaker by giving them *more power* which is what the political process is.

So maybe there are arguments for the political process (protip: there are), but power disparity isn't one of them.

Chris writes:


Yes, I agree fully that there will always be power imbalances, and we will always struggle with addressing that issue. But to just take it as a fact of society and not try to remedy extreme imbalances would just be turning a blind eye to something we should be trying to fix.

I also agree that politics can be dangerous as well and can be used as a protectionist tool of the powerful. I think that's really a separate issue though because no matter what ideal libertarian world you strive for there are going to be politics and States in some form; they've existed as long as the market, if not longer. If not a central government, then trade groups, corporations and unions. Like capitalism, politics isn't something you can ignore, and really the history of politics and the State is the history of the masses trying to shift the imbalance of power out of the hands of the few. That is the power of democracy; that at its basis decisions are made made by the population. As with capitalism though it is a constant fight to avoid the slide toward extreme power imbalances.

In both capitalism and politics we need regulations in order to guide the system in a direction that works for all of us, not just a few. Those rules need to be constantly evaluated, revised and protected to make sure they are serving us well, but to demand that there be no rules is just a quick way to return to feudalism.

Hazel Meade writes:

For instance, If I have $20,000 sitting around I can put it into a high yield bank account, but if I don't already have that I'm stuck with a low yield savings account. If I can afford a Tesla, there was recently a deal for free fueling at their charging stations, but if I can only afford an old used car, I'm stuck with buying gas for an inefficient car that will likely also cost more in maintenance. If I inherited a million dollars, I can risk half of it starting a new business, if I'm from a low income family I would have to beg for a high interest loan and if anything goes wrong at all, I could become homeless.

None of those things are what I would call "power imbalances". A power imbalance means one party to a transaction wields power over the other and thereby can coerce them to accept a deal they don't want. In all of those examples, there is a consensual fair exchange of value between both parties. The fact that there are third parties who can't afford to make the same deal has nothing to to with whether it's fair for Tesla to sell you a car and not someone else.

It may be unfair in some sense that people start off with different advantages, but that's a completely different thing than saying that market transactions are unfair because one party to a transaction has power over the other. It's not the "market" that is unfair - the market is just responding to extant facts on the ground.

people who need to feed themselves cannot fairly be said to be free to walk away from a job if that is what they need to acquire the means to feed themselves.

This isn't the 18th century. Nobody is on the verge of starvation unless they take a minimum wage job. And the overwhelming majority of market interactions that the left deems in need of intervention don't involve life-or-death choices. Look at "net neutrality" for instance - nobody is going to die because their ISP prioritized video packets.

Chris writes:


The market brought many minorities into the US in chains; the political system defended their rights. You can argue that the State was complicit in the slave trade, and continues to be complicit in the systemic mistreatment of minorities and poor, but it is at least able to have the discussion of how people should be treated. The market doesn't account for ethics, morality or culture very well and would have (and does) go on enslaving people because cheap labor is great for profits.

The State can do horrible things at large scales, but it can also do wonderful things, if we push it to. The market is similar but much harder for us to direct from within the market unless you happen to be wealthy and have enough "votes" to matter.

Hazel Meade writes:

@Chris, you realize that libertarians do favor rules like bans on slavery right? When we talk about a "free market" we're talking about a market where all transactions are voluntary - i.e. there cannot be any forced labor.
We've already got rules that forbid people from forcing people into market transactions they don't want to be in. If there are other forms of coercion then we can address those to remove the coercion. What you want to do is to add an additional layer of coercion at the government level, instead of addressing it by making market transactions at the root level freer and less coercive?

David Condon writes:


I would say any policy which encourages the exchange of goods and services is pro-market, and copyright discourages exchange. Cap-and-trade increases the costs of exchange of goods manufactured with pollution and thereby discourages exchange. Whether these are good or bad policies is a separate issue, but copyright as it exists today is a terrible policy.

Swami writes:

Chris, thanks for clarifying your concerns about markets in such excellent detail and eloquence.

However, please allow me to push back in the spirit of creating a useful and mutually beneficial dialogue...

First, I fail to see how the least advantaged are harmed by giving them the freedom to cooperate in an economic exchange (and mutually voluntary interactions are pretty much always intended to be cooperative). Indeed, I think they are more likely to get a disproportionate share of the subjective value. A starving person gains more from a loaf of bread than a billionaire gets from a third mansion. IOW, you seem to be making two mistakes at once, you seem to be evaluating value as an objective thing AND not recognizing that the more disadvantaged a person is the more they are likely to gain and gain disproportionately by cooperating with those with higher skills. To put this in concrete terms, a gardener benefits infinitely more by living around scientists, brain surgeons and Bill Gates than they benefit by living around gardeners. Seriously, the disadvantaged are likely the most advantaged by free markets.

Second, but related, I fail to see how you are defining "power." There are two types of power which I am familiar with in anthropology -- dominance and prestige. Dominance is using intimidation or force or deception to benefit the aggressor at the expense of the victim. Prestige though is power used (usually) in a proactive and mutually beneficial method. A person with higher skills, more knowledge, or capital, for example becomes more desirable as an economic partner. This certainly does self amplify rewards to cooperation, with the most prestigious gaining the most demand for their cooperative services. But it also socially encourages and rewards people to change themselves into more prestigious individuals by developing education and skills, working harder in more socially desirable fields, saving up capital and so forth. Power imbalances in the latter are not defects of markets when properly understood, they are necessary, even critical features, leading not just to arms races for prosocial prestige, but division of labor and creative destruction.

Prestige power is not something we should be worried about. It is something we should actively encourage. We want arms races for prestige with socially beneficial consequences -- inventors racing to invent better products, capitalists racing to take these consumer solutions to more people (and becoming billionaires if successful), uneducated kids focusing their education and career development into challenging and socially desired fields (as indicated in part by the money they can make in that field).

Third, nobody is arguing here for free market anarchism. The argument is for effective rules and enforcement mechanisms which allow mutually voluntary economic interactions without severe negative externalities to flourish. Markets do not exist in an institutional vacuum and pretending they do is sloppy thinking by advocates as well as critics of markets. What we are clearly arguing against is willy-nilly micromanagement of markets by people who don't have a clue how the complex adaptive system works. And yes, this is pretty much everyone who tries to meddle with them.

Related to this is the need to supplement market outcomes with non market mechanisms such as taxes, welfare programs and charity. The disagreement between pro and anti market teams is often that the anti group is trying to manipulate markets to accomplish things which are better handled by non market mechanisms. Classical liberals and progressives may agree with the need for effective social safety nets, but the former are more likely to see the unintended consequences of those not understanding markets trying to force employers to pay for the safety net via a higher minimum wage.

I look forward to your reply....

Swami writes:


I agree with the comment that "The rules and norms obviously can and have been changed over time, both for good and bad reasons." The institutional rules can and should evolve and adapt over time. However, the essence of a person who is not anti market is that they understand and respect that the evolved market institution which we have is beyond human understanding and control. That doesn't mean that we can't or should not influence it, just that the first step in influencing it is understanding the nature of complex adaptive systems, the dangers of unintended consequences, and the limitations we have in control. IOW, it requires a mindset which respects the complexity and value of markets and which is extremely cautious about messing with it casually.

You also wrote:

"I would just add that in real life every transaction cannot be considered voluntary. As in the labor market- people who need to feed themselves cannot fairly be said to be free to walk away from a job if that is what they need to acquire the means to feed themselves. The real world is not like 'nevermind, I will not take your offer because it is too low and I will just sit here and let my family go hungry instead'. Society generally recognizes this, a market doesn't."

Here I think you are framing the issue poorly. Eating is not voluntary for living beings in an entropic universe. What is voluntary in a market economy is how you go about getting food or making a living. You can go off and forage in the rainforest, or you can specialize in a field of self employment (millions do this now on Craigslist by offering services or buying and selling things), or you can specialize by working for someone else. The VOLUNTARY part of the issue is that you have the freedom to explore these paths and find the one that works best for you with the caveat that the market interactions need to be mutually voluntary. In your case nobody is free to not find and consume food. But we are all free to choose whether to go self employed, or to choose which employer (assuming they will have is), or free to move wherever we want to find better opportunities. Markets involve cooperation, so any interaction has to be mutually voluntary and this leads to the dynamic effects which so seem to befuddle leftists.

"So society attempts to correct for what the market does not recognize by making various rules or redistributions if necessary to satisfy what standards society determines need to be kept. Lefties generally agree with that. Right wingers agree with the concept, but consider different standards to be important. Extreme libertarians are off in some lala land of their own."

I pretty much agree here. There is disagreement over how much interference in the rules, how much influence to put in non market mechanisms and so forth. And I agree extreme anarchist libertarians are borderline living in a fantasy world. If they wanted to be taken seriously they should spend more effort actually experimenting and scaling anarchist institutions rather than just writing about it all day.

Jonathan Gress-Wright writes:


I agree Chris' slavery example is particularly bad. Of course you can't be both in favor of the market and in favor of slavery. Or at least you can only be in favor of both if you define blacks as subhuman animals without rights, which falls apart on any empirical observation. At most you could say that belief in the free market requires additional conditions for liberty, such as extending rights to all classes and races of people.

Chris' point about politics always being present is beside the point. I could just as easily say the market will always be there, e.g. in the Soviet Union, where much of the official economy was centrally organized, you had a thriving black market in which people found ways to actual trade what they wanted. Of course, being illegal resulted in all sorts of distortions, e.g. the costs of bribing or evading law enforcement were added to the expected costs of transactions. The point is what is our ideal? My ideal is the complete elimination of politics as a separate sphere of activity from economics, owing to the essentially involuntary nature of political action versus economic action. That this ideal will probably not be achieved may be relevant at some point in the discussion, but not when we're trying to explain why the market is what actually results in maximal respect for individual rights and maximal prosperity for people as a whole.

drobviousso writes:

@chris - Although I'm sometimes sloppy about it, I always attempt to write "free market" and not just "market" when I'm discussing a free market. The buying and selling of humans is a market, but its not a free market. Yes, its a bit of solipsism, but it works out in practice. There is a free market in alcohol in 2017 in the US. There is a market in cocaine, but I wouldn't call it free due to the slavery, murder, and lack of rule of law. So maybe not a difference a logistician will love, but a real one.

You say that markets don't account for ethics, morality, and culture. That's crazy talk. Companies refrain from or engage in projects for those reasons all the time (e.g., "Can't do that, think of the PR" / "We are a leader in the quest for equality, environmental justice, and look we funded a scholarship").

The market writ large isn't harder to direct. Its easy to control because it is full of feedback loops. When facts change, the market changes as fast as that fact is understood. It's not harder for "us" to control. Its harder for any one individual to control. Unlike government, no one person can claim enough power to alter it. You have to convince large swaths of people to think like you do if you want to change a market (free or not).

I kind of hate this kind of comment, because it feels to me like its all one sided, and I don't think there is a free market without representative governance, and I don't think that comes across.

But you said "The State can do horrible things at large scales, but it can also do wonderful things, if we push it to. " And my eyes about fall out of my head. The government, when pushed gave the US the Indian wars, literal chattel slavery, Jim Crowe after the formal end of slavery, and just about the highest incarceration rate in the world. And that's from one of the most free governments every put into place in the history of man kind. Who wants to push on a system where those are the best case scenarios, and the more common slip ups are thinks like King Leopold or the Great Leap Forward?

Jonathan Gress-Wright writes:

One problem I see with the left-liberal critique of the market is that they don't make that traditional distinction between "deserving" and "undeserving" poor. If you want my moral sympathy or empathy, you need to show that someone's poverty is undeserved and that therefore some redistribution of wealth is justified. It's not enough just to point out that somebody is poorer than another person. Is he poor despite having worked hard and saved all his life? Or has he been lazy or profligate? If the former, I might see a case for redistribution; if the latter, I see no case.

The trouble is that you can generally always do a bit more to improve your own condition. So if you show me someone who has worked a minimum wage job for years, then yes he has been working, but why has he not made an effort to acquire more skills in order to compete in better-paying jobs? Especially these days it is easy to acquire new skills for free through the internet, e.g. Khan Academy or Code Academy.

The hard truth for many liberals is that a lot of the poor have really put themselves in that situation. Even if they did not get a head start, you can still often see ways in which they might have saved a bit more or worked a bit harder at their jobs or in school in order to get that competitive edge. You really need to exclude those kinds of people and show me examples of those who did the absolute best they could and still failed to make a living. Then we can talk about redistribution.

John V writes:

Jerry brown:

explain me an example of a market rule created to deal with the fact that we do not all start off as equals or with some other identity politics based reasoning.

Jerry Brown writes:

Swami @2:36, thank you for your thoughtful reply. I don't disagree with most of what you say there.

As far as the labor market, you are correct that when there are multiple options to gain an income it becomes more of an even negotiation between the employee and employer. This is one reason for the market distorting institution called public schooling in the US. An education is one way to provide a citizen with multiple options as to how to achieve an income.

Even so, there remains the necessity that one party in the labor market often needs very much to strike a deal, while the other party generally is in a situation to wait. My argument is that there is a distortion in that market that tends to reduce an individual's bargaining power versus a potential employer. That particular individual may have many, many options, but the existence of others who don't share that fortune will none the less reduce that individual's ability to strike a more favorable deal.

I have no doubt my argument could have been framed more clearly, and I'm sure there are others that could provide a better explanation of it. But thank you for taking the time to read it and reply so intelligently.

Jerry Brown writes:

John V, I am not sure I understand your question or rather, demand. But I will attempt anyways to provide an example.

Some people, for different reasons, do not write clearly in the English language. This can prove to be a disadvantage if they seek employment in a country such as the USA. Society in the USA has decided that all children must be given an education, even if they don't want one. And that it must be provided to them through public expenditure if they are not willing or able to provide it privately.

This has the effect of reducing the advantage a rich child would have over a poor child when they actually enter the labor market. It is a major market rule that affects all people growing up in the US. It has enormous effects on the labor market when children grow up and eventually enter it, even for children if their parents wanted them to work for some reason. It no doubt vastly expands the demand for school teachers. And for school buildings. And for transportation to the schools and all kinds of things.

I don't think this policy was designed by what you call "identity politics based reasoning", but then I am not sure what that means anyways.

Swami writes:


I don't think it is a realistic assumption to assume millions of employers (including the potential option of self employment) can result in a large deviance from paying based on marginal productivity over the long haul. The system dynamics of a contestable market work against any long term imbalance.

If employers were to systematically offer less due to some bargaining advantage in a domain, then that would drive up returns, which would attract more capital, which would reduce bargaining employer power. At the same time, lower wages would drive prospective workers to better fields, again improving employee bargaining power. IOW, the bargaining power objection kind of ignores that the lion's share of the power comes out of supply and demand.

John V writes:


What you describe is not a market rule. I was referring to the exchange above where I see now that "Chris" was the original respondent to Meade that I was reading but you then said Chris expressed your view quite well so it's all the same.

Meade said:

" So how is it that the outcomes of a system in which every transaction is voluntary suddenly becomes unfair because you don't like the result?"

The response that it's basically unfair... "Because we don't all start as equals, in total or in each transaction, which creates a power imbalance within markets and in general. Power imbalances skew markets and rather quickly divide a population into the "haves" and "have-nots"."

When I read things like this I question what exactly the person is referring to in terms of market rules or markets generally. I don't see any "rules" concerning markets implicit or explicit in that response. Rather, I see a justification/argument based on privilege/ID Politics for various social policies or redistribution ideas enacted by government...not market rules or regulation.

In the end, I generally see Leftists thinking "markets" as something different than what the term actually means. A market is simply a system that provides a means of exchange whereby market actors (buyers and sellers) use available information reflected through prices to find the best way to satisfy needs through mutually consented exchange with others. That's my simple layman's explanation with no real thought given to providing a comprehensive definition. But it is correct more or less.

Jerry Brown writes:

Swami @7:44. I guess you have pinned down where we disagree on how just one market, of many, actually works then. You state- "If employers were to systematically offer less due to some bargaining advantage in a domain, then that would drive up returns, which would attract more capital, which would reduce bargaining employer power. At the same time, lower wages would drive prospective workers to better fields, again improving employee bargaining power."

This is quite an extraordinary assumption-actually, an entire chain of assumptions, all based on the idea that the labor market actually works the way you think it does. This chain of events occur in some kind of timely manner that allows someone to pay their rent, for instance?

Well I will put it to you this way- the person accepting a job that pays 8 dollars an hour does not have millions of potential employers around who are ready to compete for their services every day in a manner that could provide a steady income even at that low rate. If that is your theory then it does not come even close to reality. Ditch it.

Jerry Brown writes:

John V. you said-"A market is simply a system that provides a means of exchange whereby market actors (buyers and sellers) use available information reflected through prices to find the best way to satisfy needs through mutually consented exchange with others."

That is my understanding also. I don't disagree with you on that. Where I disagree is if people say that markets will always provide the best way to satisfy society's standards. There are many standards that society demands that will not be met through markets. Markets that are fair are an excellent tool for society to use --but they are not the decider of what is possible and they should not influence the moral standards of society. I have ethical standards, you have ethical standards, there is no reason to let a market determine them.

Chris writes:


With respect to the power imbalance, there is clearly a buying power imbalance between both parties of the exchange and the third party. If you were that third party, your only option would be to look elsewhere, or offer a “better deal” to compete with someone else that gets a better deal based on their level of wealth (and not necessarily even the use of that wealth, just its existence or its use in a separate transaction, in many instances). The power imbalance is that there are extreme downsides to being poor in that all of my interactions place my needs at a higher demand (I need them more to be able to sustain or progress my life), all while increasing the supply of people like me (there are way more poor people than wealthy, skewing the supply curve in any labor transaction.) In these cases, despite a lack of coercion, the market transaction is only fair if you narrow your focus and ignore the causes of the supply and demand positions. A person can make a thousand “fair” transactions, but if each of them has a higher demand based on their lack of options in the larger market, then it’s hard to call that a fair market. And I disagree that a market can’t be unfair because it’s just responding to facts. By that rule, market transactions can’t be unfair (assuming a lack of coercion), but the market itself includes those facts on the ground and the actors within it; it can most certainly be unfair, unless you are looking at a purely theoretical market.

Also, this isn’t the 18th century, you are correct, but to state that nobody is malnourished is nonsense. A large portion of people are not able to fully interact within the market (children, elderly, sick, mentally ill) and are constantly facing actual starvation without charity and government programs. I think this is one of those times where the right doesn’t really understand the facts of the situation for a huge number of people. You personally may not be threatened with starvation or malnourishment or even know someone who is, but millions of people in the US face it every day, and will for their entire lives.

You’re note on net-neutrality is a strange one to use. Net-Neutrality is stopping a group of near monopoly companies in one market sector from dominating a separate, but related market sector. This is the kind of thing that a Libertarian should be all about because it’s an abuse of a monopoly to artificially increase the costs within that market, driving out competition and increasing costs for consumers. All net-neutrality is saying is that a company can’t charge another customer more for use of its infrastructure than it charges itself for the use. It’s only an issue because the companies that own the (government funded and protected) monopoly on the network want to use that monopoly to control another market.

Chris writes:
“the disadvantaged are likely the most advantaged by free markets.”
I take issue with both of your arguments for this. First, the starving person does gain more from the loaf of bread, but its cost is also elevated by that high demand. If you’re literally starving, the free market takes that into account when setting a “fair” price. The same happens everyday with jobs. If you are desperate for an income of any kind, and don’t have the expensive higher education to get a technical job, the demand for any job is high for you (and the supply of candidates is also nearly unlimited, due to inequality). An employer in this situation can offer pretty much any pay and you would take it over the alternative of homelessness and starvation. Your loaf of bread thought experiment is reality for millions of people in this country. Second, the gardener benefits more by gardening than Bill Gates benefits by having him there, but that, again, just devalues the gardener’s work, pushing his pay down. In that example, the market should respond by lowering the number of gardeners and increasing the cost of gardening services until the two are on equal footing. Unfortunately, the gardener probably has a limited supply of jobs, a high demand for a job and an unlimited supply of competition for those jobs, meaning he’ll just go on working and barely getting by (or being replaced when he in fact stops “getting by”.) In this scenario, the gardener lives in poverty, will die an earlier death, will have trouble maintaining a reasonable standard of living and will have children who will be at a huge disadvantage because they started with almost nothing. On the other hand, Bill Gates will have a nice lawn and will just pay someone else to work his lawn when the previous gardener dies his early death. Feels like a power imbalance to me.

Your argument for prestige being advantageous is great, in theory. In reality, there are a huge number of people that legitimately aren’t able to significantly increase their prestige. They may be working multiple jobs just to get by and can’t afford the cost or the time away from work to go to community college, much less a more prestigious university to increase their prestige. There are other issues with the prestige model as well. For instance, we tend to prefer people like ourselves, and as such, there is a high level of “prestige” that comes from being a white male, since that is currently and historically the person in charge. If you are not white or male, you have a distinct power imbalance caused by this. There are other factors too: tall people, people without an accent, people with blue eyes, skinny people, etc. all come to any economic transaction with a higher prestige, based completely on human nature and nothing related to the transaction itself. If you don’t account for the reality of the poor and the inherent biases of humans, then yes, prestige is a great driver of the market. In reality, it’s only a great driver for some people, and this works to increase inequality.

Hazel Meade writes:

I'm trying to draw a distinction between situations where one party has power over the other and so can coerce an exchange the other party does not like, and situations where a third party just happens to be a more attractive exchange partner, because they have better skills or more money. Those are two different situations. The exchange is clearly unfair in the first case, but it is not at all obviously so in the latter. The fact that other people offer better skills or more money isn't unfair to you. The fact that there's a large supply of unskilled labor isn't unfair to the unskilled laborer. These are matters of objective merit. Whether you like or not, the difference in merit exists - it's not something made up by society, like racism, or imposed by force. If you're an unskilled laborer, it's a fact that you're just not as objectively qualified for some jobs than others. It's not unfair for the employer to hire a more qualified person. If there's an oversupply of unskilled labor, it's just a reality that your labor isn't that valuable to others. It's not unfair that your labor isn't worth more than $8.

On net neutrality, this is actual a perfect example of what I've mentioned elsewhere. The libertarian approach is to ask "why is the market doing this", and then correct the underlying issue - in this case, local cable monopolies, which were historically created by local governments. Your response seems to be "well we can't get rid of the local cable monopolies (no idea why), so instead we're just going to force them act like how we imagine they might act if they weren't monopolies" (based on some sort of fantasy of what you think consumers would demand if there were). Actually, I don't think consumers would give two hoots about net neutrality, what they really want is better customer service and lower prices. And they want their video streaming to be uninterrupted, which net neutrality would make more difficult.

Chris writes:


The buying and selling of humans is a free market between the buyer and seller. It takes extra-market forces to prevent the product from being humans. Also, if you are in favor of racial integration, then you also have to be in favor of occasionally forcing a seller to work with a buyer (African Americans in the 60’s, for instance) Otherwise, you have large populations that don’t get access to free markets at all. My issue with Libertarianism is that it's completely against regulation, except for whatever counter case you bring up, be it not selling humans, having to sell to minorities or monopoly busting.

I stand by my statement that markets don’t account for ethics, morality or culture. Companies will do the bare minimum to appear appropriate, and that often includes misleading claims (greenwashing), outright lying or hiding of facts (Cigarette companies and cancer research), spending more advertising about something “good” they did than they spent on the actual thing (that scholarship you mentioned). There’s also entire markets devoted to the worst in us: revenge porn, dubious miracle cures, racist and sexist t-shirts. Companies do things that are terrible to others and for the market because it will increase shareholder value: underfund pensions, poison rivers knowingly, buy small competitors and shut them down, fire people for anything that reduces productivity: getting pregnant, being sexually harassed in the office or getting injured on the job. People will exploit any culture they can in order to profit, destroying that culture in the process; gentrification of “cool” neighborhoods or commercialization of black, punk or geek cultures. There is an endless list of examples of market actors behaving as badly as they can get away with. I would say it’s a long enough list to justify saying that the market doesn’t account for ethics or morality in any meaningful way. At best it is a gauge of a population’s average standard of ethics or morality, but even that I’m not sure of.

Unlike government, no one person can claim enough power to alter it. You have to convince large swaths of people to think like you do if you want to change a market (free or not).

Well, I think my argument is that because of existing (and worsening) inequality, this is demonstrably false. There are a relatively small group of extremely wealthy corporations and in some cases individuals that do have the power to alter the market in significant ways. There are actors that have the buying power to make decisions that affect all of us, for example the entire potato market hinges on what McDonald’s is willing to buy. There are actors that have the power to influence the understanding of facts at a large scale (and a free market is based on information symmetry), for example marketing in general, paying for false and misleading “research”, directing the reporting of facts in the media. This isn’t nearly an exhaustive list of the ways the wealthy can and do influence the market. It may not be one person controlling the whole market, but neither is government. The government is composed of many people and is further influenced by the desires of the masses, and unlike the market, its charter is life, liberty and the pursuit of happiness. The market’s charter is efficiency. Government without a market component leads to inefficiency and is unsustainable while the market without a government component leads to horrible humanitarian abuses. I’m not arguing against the free market, I’m arguing that an unregulated market has shown itself to lead to abuses, much like an unregulated State. Without a guiding principle of our ethical and moral ideals, both the State and the Market are not working for the masses.

Chris writes:

@Jonathan Gress-Wright

Your entire “undeserved” versus “deserved” poor is so incredibly condescending and not at all related to reality. My counter argument would be: would you say the same about the undeserved wealthy and the deserved wealthy? Are you in favor of reducing the wealth of those that just happened to be born into it, or got it from luck or unethical means? And really, there is so much research that shows that poor people aren’t typically poor because they “deserve” it, they are poor because they were born that way, live in unhealthy and dangerous environments, have reduced access to early education and can’t afford higher education (even if they somehow excel in the low quality early education), and will likely never have access to a job in which they can save up a significant amount of money. On top of this, if they do excel and try any risk, such as starting a business, and then don’t succeed (and many businesses don’t succeed, for a variety of reasons, independent of wealth status), they have lost everything they saved and have no real safety net to get them back on their feet and able to try again. The poor pay dearly for mistakes while the middle and upper classes do not. The “deserved” wealthy are usually wealthy because they kept trying things until they made it; poor people don’t have this luxury. You may look at a poor person and say “look, they quit school to join a gang” and I see someone who didn’t have the advantage of a stable home, lives in a neighborhood where safety is reliant on joining a gang, and really may actually be making the smartest market choice available, as modern gangs often act as corporations with increased pay with time. Is the gang member deserved or undeserved poor? What was their better option?

These aren't edge conditions either, these are vast numbers of the poor. They do their best with the limited resources allowed, and sure, some are terrible people, but so are many wealthy people. The market has never been great at justifying wealth based on personal character. The myth of the employee that starts at the bottom and works hard to climb their way up is just that, a myth. In reality, they don't move up in the company 99% of the time because they don't have the skills to perform the jobs higher up. There is no mailroom training that is going to compete with a masters in science to work in a lab.

Jonathan Gress-Wright writes:

I'm not actually in favor of any forced redistribution; I'm just saying that you'd have more of a case if you could show the recipients are genuinely incapable of working out their own problems on their own. I also think maybe you're the one with an unrealistic view of poverty. Sometimes poverty really is forced on people; I would say that's the case for many poor people outside the US. What's interesting is to see how they behave when they get to a place where they have opportunities for self-advancement. Compare how e.g. poor Chinese immigrants do against poor native-born blacks. Poor Chinese immigrants faced many of the same hurdles you describe (included both culturally and legally sanctioned racism) but more often escaped poverty through simple hard work and saving. That's why we don't talk about a Chinese crime problem in the same way we talk about black crime problems.

I think your response is typical of the left: you think that an argument sufficient for voluntary charity is also sufficient for forced redistribution. If I were to give my money voluntarily to a charity, I might be less strict about judging the recipients. But if you want to persuade me that it's OK to put a gun to someone's head and make him handover his money for your charity project, I think it's reasonable to apply a more stringent standard.

Chris writes:


No really, I think you have an unrealistic view of poverty. See the link below for a quickly found overview of research on the topic. Unless you consider being born into poverty to make you "deserved" poor, then a large percentage of poor people don't really "deserve" it. Did you know that on average it takes 5 to 6 generations to move up the ladder, if people move up at all?


Also, your example of Chinese immigrants versus African Americans is extremely flawed. First, you hear about black crime more largely because there is a huge population in comparison to Chinese Americans. Further, most of the Chinese immigrants in our history came here willingly as opposed to the ancestors of African Americans who came as slaves and were then freed into a society that still considered them sub-human property and have only in the last generation or two really made any headway in rights. It's a little hard to make a comparison between those two groups. Add to this that there are a great number of Chinese Americans that have not escaped poverty (15.8% of the Chinese population in America and 2 million Asian Americans total). You are taking the stereotype of the hardworking, successful Asian as fact for an entire population.

I don't know how typical my response is for the left, but I do believe that redistribution is important to ensure that we don't leave people behind or doom entire populations to poverty. I think it's less harmful to shift a dollar from the wealthy to the poor than it is to leave the status quo. I'm up for debate on how that distribution occurs (which methods are most effective at reducing poverty or achieving other goals) but I don't believe that relying on Charity (which is fickle, faddish, selective and limited in scope). If the market was taking care people or even allowing them the opportunity to rise above their situation by anything other than luck or crime, then I would fine with it being unregulated. It's not performing that role, largely because that isn't its purpose.

Hazel Meade writes:

I want to take up your gardening example, and the issue of deserving and undeserving. I agree this language is condescending, but I also think it's naive to simply assume that everyone in poverty is unfortunately stuck there for no good reason. Often, people with substance abuse and mental health problems end up poor. You have lots of people who can't hold down a job because they show up drunk or high, or not at all. Or they have behavioral problems, get in violent fights with co-workers, can't work to a deadline or keep a schedule, etc. There are people who are lacking the most basic life skills. Maybe not their fault, but still a fact. It's not unfair that employers prefer not to hire those people.

The other thing is to get into this gardening thing - you're saying it's unfair to the gardener that gardening skills aren't in more demand, but I just don't see that as unfairness - if gardening skills aren't in demand, that's a clear signal to people to stop being gardeners and find some other occupation. You act like it is monstrously unfair for other people to essentially be honest about what they want and need through clear price signals, and instead advocate that they pretend to value the gardener's work more than they really do. That's not really helping society in the long run.

I would generally agree without about racial bias and sexism and so forth. White males do get a premium because individuals treat each other unfairly. But I think the solution is to work that out through social evolution and by letting the market figure out that it's profitable to hire minorities and women, since they come at a bargain price. Wherever human irrationality exists, there's an arbitrage opportunity.

Also I would suggest that the concept of a UBI is probably a better system for correcting for inelasticities at the threshold of poverty. The UBI would basically assure people that no matter what happens, they aren't going to starve to death, so go ahead and take risks, go ahead and look for the best job you can get. this would create a lot less distortion than attempting to "fix" market prices to what you think they ought to be, thereby mucking up price signals.

Jonathan Gress-Wright writes:


I'm not sure whether your problem is with the distinction between deserving and undeserving or with the supposed implication that all poor people deserve to be poor. You seem to be arguing that every poor person is by definition deserving, which I think can be easily refuted. Now maybe you're saying most poor people are deserving of redistribution, which might be true but I don't believe it and I think you'd have a hard time demonstrating it to my satisfaction. But even if that's true, do you admit that, if a poor person were genuinely responsible for his own poverty, he would not be morally entitled to receive forcibly redistributed wealth in the way a deserving poor person would be?

> You are taking the stereotype of the hardworking, successful Asian as fact for an entire population.

Of course I'm talking about population averages. There are many successful blacks and there are certainly poor or criminal Asians, including Chinese. But that Chinese on average do better socioeconomically than blacks is I think pretty solidly established. So you have to ask why some groups tend to escape poverty more than others. I think if your only explanation is that one group was enslaved over 150 years ago, you don't have a good explanation. For example, you might look at whether blacks starting to advance at a similar rate to other groups once legal restrictions were lifted, but they seem to lag behind as a group. There's also good evidence that blacks were advancing FASTER before the Great Society welfare programs were instituted (see research of black economists Thomas Sowell and Walter Williams).

I think you're basically misunderstanding me, though. I am not interested in judging the poor because they are poor; I'm saying that, if you want to use violence to redistribute wealth, you need to pass a higher bar than just pointing at inequality. I don't think you appreciate the moral problems with forced redistribution; you seem to think it is the moral equivalent of voluntary charity and that all you have to do is demonstrate some need and you have made the case for redistribution. I'm saying that may be sufficient to persuade me that a rich person ought to give the poor person some money, but to persuade me that it justifies violence is something else.

For example, let's say you're poor but you work very hard and save up and forgo many conveniences and luxuries in order to get ahead. Your neighbor doesn't make the same effort and is still poor. Now some bureaucrat or politician looks at your wealth and decides that it's not "fair" that you have so much more than your poor neighbor and forces you to share. Morally I think it's outrageous that you are essentially being punished for having worked hard and saved so much, while the other guy is rewarded for having made less effort. But if you wanted to spare some of your wealth to help your neighbor, I would have no problem with it, even if I believed he might have worked a bit harder.

Now if you had been born into wealth and never had to work, I would concede that the case for redistributing your wealth by force is stronger (though probably not strong enough to convince me that forced redistribution is justified). The problem is that welfare programs do a bad job distinguishing the deserving from the undeserving; they often don't even make the effort. E.g. Medicare entitles anyone over 65 to free medical care, regardless of how much they've worked or saved.

One last note: many redistribution programs end up being regressive despite progressive intentions, which I think even you might have a problem with. Social Security and Medicare are again examples of this. With SS, for instance, you get the same annuity even if you started work later in life, as many middle class people do, since they spent the first earning years in college.

Chris writes:


I think we are using fair and unfair at different scales and definitions. I don't disagree that an employer shouldn't be forced to hire someone that can't perform a job, nor do I feel that someone should have to pay more than something is worth, though in the gardener example, if the state forced people to pay more for gardening or not have it at all, it would essentially lead to the same end as the market where there are fewer gardeners making more money. What I find monstrously unfair is that because the ex-gardener is poor, they are now in a situation where they likely can't afford the time and cost for training in another field and they may have to move to enter that field and moving is an expensive and time consuming process (that they again likely can't afford). A 'fair' market shift has led to a person being unable to reenter the market. This is happening all of the time and is why a "fair" market isn't necessary creating "fair" outcomes in the larger sense. In this example it's 'unfair' that there is a huge cost associated with just losing a job due to market conditions. And really, fair and unfair isn't even the right term for the situation. A more appropriate way of thinking about it is that for the individual, it sucks and for society, we've lost a productive member because they can't afford the shift. I believe that it's fine for the market to determine equilibrium pricing, but that its the States duty to ensure that the market isn't destroying livelihoods in the process and to find ways to help people become productive again. I would also argue that the State should prevent people from being discriminated against in the market for their race, sex, etc. I don't think it's okay to just say minorities have an advantage in the market because they're cheaper. It's also not effective; the income differential for women actually grows over time, it doesn't decrease when people realize they are just as good as a man. The same holds true for minorities and short people. Biases don't go away on a short enough timeline to really matter to anyone.

Chris writes:


I am arguing with your assumption that a large portion of poor people "deserve" to be poor (large enough for you to make it an issue). I would also argue that it's really easy to judge from higher up the wealth bracket. You have no real idea what it's like to be those people. You have no idea what environment they grew up in, what they've gone through, why they haven't achieved great success. Are we to arbitrate the worth of each poor person to determine if they deserve help or not? How could that process possibly work? Are we to do the same for the wealthy as well to see if they deserve to have a good life? And as a society are we okay with saying anyone, good or bad, deserves the conditions that some poor people live in?

In the end though, I don't think it's wise or helpful to even try to determine who's "deserving" of any fate. Again, there are plenty of wealthy people I think are terrible human beings, but I'm not arguing that we should distribute their wealth based on how they earned it. I'm arguing that we should redistribute wealth because the wealthy don't need as much as they have and the poor desperately need more to survive and be productive members of society. My ideal is a world where people aren't constantly living on the edge of financial ruin and where the smart and motivated can achieve a greater life for themselves. Not only do I think everyone deserves this, I think our society would be a better, more productive one if it were true. Right now this ideal doesn't apply to a huge (majority?) of people and I'm not okay with that. I'm not okay with that, not because I'm emotional, but because I'm empathetic to the lives of others that are less fortunate than myself. I'm from a wealth bracket in which I know I have had times where I've been a few mistakes away from poverty and fully understand that we don't always have power over our situation; the people who believe they do usually inherited enough of a safety net to have made a few mistakes and taken a few risks that others less well off then themselves could not have made.

Swami writes:


It is not an extraordinary assumption. It is a pretty straight forward description of how the market dynamic operates. I have basically just given two examples of how prices and profits function as both signals and incentives. And I am no armchair economist, I have thirty years of experience hiring hundreds of people and pricing tens of billions of dollars of products. I certainly would not suggest markets work perfectly or instantaneously, but the more they go out of whack, the higher the profit opportunities for fixing the problem.

But to be specific, yes, over the long haul, if some dastardly capitalist firm tried to use its alleged superior-ability-to-withstand-starvation to drive down wages, then every other employer would have a market opportunity to step in and lure away these underpaid workers. They would be fools not to do so. I gained countless employees by providing a better offer, and I lost many too, and I never once tried to use my mythical superior bargaining power to circumvent the process.

Your take on markets ignores the essence of market dynamics. Indeed, it gets to the core of this discussion. The way markets actually work is complex and counterintuitive, and those who resent or disagree with them are often trying to fix something which they frankly misunderstand. A make-shift solution to a fictional problem.

As to your comment on whether the process would work fast enough to solve the problem of a person who needs to pay rent this month, again you are missing the dynamic. The market has been working this way for centuries now and the going rate for labor already has been and is continuously adjusted for supply and demand. There isn't one employer and one employee. There are millions of both interacting continuously where the competition is more between companies with each other and between potential employees with each other.

There are millions of jobs and countless opportunities for people to discover self employment. Indeed I believe the number in just the US is probably closer to a hundred million jobs. Obviously no one person is qualified for all those at any given point in time. But millions of these turn over each year as employers and employees continuously change who they cooperate with. The unemployment rate for people in the US looking for a job now is under 5%. And 95% of people make more than the minimum wage, even as thirty million recent immigrants have entered the country to capitalize on the high demand for labor. And guess what, they are not fleeing from countries which are pro market, but anti. They are voting with their feet and in case you need a decoder they are telling you that you are wrong.

I stand behind my statement and assure you it matches reality and my extensive professional experience quite well. More importantly I think you are the perfect example of Caplan's, Boudreaux's and Eleizer's point.

John V writes:


Yes I'm aware of these vague value statements about fairness but they don't actually say anything with regard to what I'm asking about market rules. Saying something along the lines of--- markets do not necessarily produce the best results for society--- doesn't really address my point. I'm talking about economic transactions and exchange here. What it seems that you're doing in my most charitable reading steering your point away from this economic area and into areas in which society organizes itself around different institutions. I have a hard time seeing how matters that we handle through economic exchange of goods and services As a means to manage and distributes scarce resources to satisfy needs is better handled in a different way other than markets.

Swami writes:

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Bill Woolsey writes:

I think others have pointed this out already, but let me give it a try.

It has been alleged that employers have a power advantage over employees because the employee needs a job to survive and the employer can wait. (I find the ability of an employer to wait plausible, especially if we are considering hiring an additional member of a large existing team of employees. The employer is doing OK with the current work force.) Therefore, the employee cannot hold out for a better bargain but must accept what is offered.

So, suppose our worker is compelled to accept an unfairly low wage in order to avoid the alternative of unemployment and starvation.

What happens next? The employee can now look for alternative employment. No longer facing unemployment and starvation if he does not accept a job in a hurry, he rather is eeking out a living at the assumed unfair low wage and can easily "hold out" for a better wage with an alternative employer.

Of course, there may be no real "bargaining" to it. Alternative employers simply offer more in order to obtain applications from our worker and others like him. The worker takes the new job because it pays better.

This entire scenario of the unemployed worker who must have work right away or starve and the employer who can hold out is simply inapplicable to most employment transactions.

The vast majority of new hires are by employers who hire a worker who is already employed elsewhere who then quits with his old employer.

These sorts of quits are very common and avoiding having one's employees quit in this way is the prime self-interested motivation for employers to improve wages and working conditions.

By paying more, an employer obtains additional employees whose output generates additional profit. Failure to pay more results in the loss of employees, reduced production, lower profit, and in the extreme, losses and even bankruptcy.

It is tough on the poor old employer. He must pay more and more or else go out of business.

Of course, rising wages and improvied working conditions requires lots of new hires--or really, a demand for labor growing more rapidly than the supply.

When the demand for labor grows more slowly, or even falls, then new hires drop off as do quits. When business aren't hiring, there is no reason to quit the current job. The result is increased unemployment and perhaps even reduced employment.

Sure enough, in this situation, the workers have no bargaining power and may be forced to accept lower wages.

Which is exactly what needs to happen. The lower wages will result in an increase in the quantity of labor demanded bringing the problem of slow hires and few quits and high unemployment to an end. The process is self correcting. When wages are at the property level, firms will again find the need to compete for workers by enticing the employees of other firms to quit.

Of course, better yet would be for the demand for labor to reverse any decline and grow more rapidly. But if that cannot be managed, the lower wages that firms could force employees to accept is the next best option.

Unfortunately, when the weak bargaining power theory holds sway, then wages can be pushed up too high. Or more often, the process of labor surpluses leading to lower wages, or even slower growth in wages, slows to a near stop. The quantity of labor demanded is less than supply. Hires are weak. Quitting to obtain a better job becomes much less common. And there just are not enough jobs.

This fanciful tale of the worker not having bargaining power because they must take what they can get or remain unemployment becomes a self-fulfilling fantasy when it infects labor market policy.

If wages are too high, then yes, there is little or now bargaining power for workers. Good.

If wages are too low, then on the contrary, employers compete to obtain workers. Not necessarily for the unemployed workers but rather enticing employees of other firms to quit and come work for them.

Jerry Brown writes:

Bill Woolsey, I agree with much of what you say but want to point out a few things that I find hard to agree with.
First is that it seems to me that you assume that the 'people' have a reasonable alternative to finding a job, like maybe they can just look for berries in the forest or something, in order to make a living in today's society.

Second, you seem to assume that job offers outnumber job seekers when you say that the new employee will be recruited by other employers. Is this a fair description of the labor market in the US over say the last 40 years?

And when you say- "The lower wages will result in an increase in the quantity of labor demanded bringing the problem of slow hires and few quits and high unemployment to an end. The process is self correcting." Aren't you making a few assumptions here? Like the lower wages won't decrease income that causes a decrease in demand for the production in the first place and actually adds to the problem of unemployment?

Bill Woolsey writes:

I find Brown's response puzzling.

I make no assumption that there is an alternative to working for some employer or other.

The reason labor markets work tolerably well for workers is that employees are not tied to one particular employer. They can quit.

I expressly made the argument that even if a worker takes a job with an unfairly low wage because they need income immediately and cannot hold out for a better deal, they can, while working for that employer look for another job.

The number of quits is something like 36 million per year. These aren't mostly people who are leaving the labor force. They are people who are leaving one job and going to another. Hires are more like 60 million per year. The number of people employed right now is 153 million.

Leaving one job and taking another is important.

And I don't think labor markets in the U.S. have been in surplus for the last 40 years. They were in major surplus in 2008 and have only very gradually recovered.

But that isn't the normal situation.

Anyway, if wages were too low, they would be in shortage.

The notion that workers have to have money right away and can't wait around doing nothing until an employer offers them a fair wage is irrelevant.

They can work at a perhaps unfair wage now and get a job with another employer.

Jerry Brown writes:

Bill Woolsey, labor markets operate tolerably well for workers most of the time. That's why 150 million people are able to make their living by being in the labor force. But they are also subject to social norms and government regulation, both of which, I would argue, tend to correct some of the imperfections that exist in the labor market.

I may have gotten a little sidetracked by the discussion here, but my first comment started by agreeing Yudkowsky was describing me and ended with "If suggesting that markets do not Always ensure the best outcomes is "anti-market", I guess I fit the description of "anti-market"."

The 'labor market' is just one familiar example of a market that most people think does not always function as well as it could because both sides of a bargain do not always have the same ability to walk away from a deal. This can be described as a power imbalance that is not explained by the economics and is not always dealt with through "the market" in a way that meets society's standards.

You seem to agree this can happen, which really is the point I was trying to make. We just disagree on how important the effects of it are.

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