Economics Is Inevitably A Moral Science

I think that most people intuitively grasp the most prominent moral dimensions of economic discussions. Assume hypothetically an equal starting point in distribution of resources, a scheme of property, contract and tort rights, the need to engage in productive activity and exchange to survive, some sort of fixed metallic medium of exchange, and a perfectly effective government which enforces these rights (magically) at no cost. In such an arrangement, any subsequent distribution after the initial distribution will be the product of voluntary action by all participants. In such an arrangement, any attempt to modify the arrangement can only result in modifying an outcome which was voluntary for all to an outcome which was not voluntary for all. Opponents of such modifications could be said to manifest care about autonomy. I’ve been as explicit as I can in setting up the hypothetical to make clear that of course this is not the world we live in. But many believe that our world approximates it well enough to regard a range of proposals as threats to autonomy. Of course, whether that is the case depends on the actual arrangement, the proposal to change it, what it does. These are empirical questions.

In any such arrangement, some will end up with more and some with less over time, through the vagaries of talent, effort, and luck. When the result of such processes leads to someone suffering that isn’t ameliorated by voluntary action, and as a result some propose a modification to the above arrangement which impedes the autonomy of those who have resources by taking them away involuntarily and giving them to those who suffer, no more than is necessary to ameliorate the suffering and not enough to prevent the original owners from being unable to pursue any of their projects (this is important) such a person manifests concern for suffering that exceeds their respect for autonomy. Those who oppose this manifest respect for autonomy that exceeds their concern for suffering. A policy to alleviate suffering that hampers someone’s ability to pursue their projects involves more, however (concern for equality, resentment, attraction to austerity as an end in itself, etc.) which complicate matters.

Now I want to suggest that there is no objective basis for preferring one of these values to another, and that on the whole, we all see the point in each of them. Imagine an episode of Lost in which ‘Sawyer’ gathers a bunch of medicines from the plane crash, someone comes to need one of these medicines to survive, and he refuses to surrender it. Someone who uses force to take it from him isn’t exactly respecting his autonomy, but if he complains, we tend to say “tough.” That manifests one of our moral commitments. By contrast, we also find ourselves favorably disposed to someone who opposes a group plan to sacrifice some individual for the sake of the group. In any society these values will trade off of each other, thus opening up the possibility of endless debate about which should determine our decisions in any particular situation.

There are, however, many other more subtle ways that economic policies reflect moral concerns. Once you no longer have a metallic medium of exchange, you have the ability to increase the money supply in various ways. If you artificially lower the interest rate, you make people more likely to borrow and less likely to save. This is itself a moral preference that weights frugality less than whatever this hopes to achieve. But it does something else too: Keynes called it “animal spirits,” a somewhat mocking term for encouraging people to have confidence in the economic future so that they will make decisions they otherwise would not have made. Since using the levers of government to increase confidence, borrowing and spending over what they would otherwise be drives prices up and eventually discourages these very activities, it is ultimately a form of dishonesty. We are all opposed to dishonesty when it does nothing but facilitate exploitation, but we also are much more ambivalent about it in other settings. When a doctor tells a terminal patient that there is hope, this is benevolent dishonesty, and it too is motivated by a desire to lift the patient’s (animal) spirits by giving her false hope. Preferring hope to truth is a moral preference, as is its opposite.

There are many other examples of these sorts of things, especially in tax policies. What I hope to persuade you to entertain is the hypothesis that every economic policy decision is motivated by moral considerations and involves moral trade-offs of the preceding sort.

It is common in politics to do two things. The first is to identify the moral concern that animates one’s own policy preference while ignoring the moral concern that animates one’s opponent’s policy preference along with the trade-off, so that one can represent the conflict as one between good versus evil. This is tiresome to watch when one understands that it is occurring, but worse, it is dishonest. The second is to represent economic policy as exclusively a matter of knowledge and efficiency, as if there was no disagreement about ends, no moral trade-offs, and the conflict between those who favor one policy and their opponents was simply a conflict between knowledge and ignorance. To treat the economy as if it were a broken machine and to say “step aside and let the engineers fix it,” to treat those who resist you as the stubbornly ignorant whose refusal to step aside merely delays the repair, is to ignore the fact that the economy is made of people, and that every economic policy is an attempt to induce people to behave in some fashion or other because one prefers those behaviors. In short, every economic policy is a moral policy. Since one could not have failed to notice this, to pretend otherwise is also dishonest.

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