My Harvard colleague, the political scientist Michael Sandel, lectures on the BBC on Markets and Morals The Reith Lectures. Here is the transcript: MARKETS & MORALS LECTURE TRANSCRIPT (I don't know how long the BBC will keep these links live...).
Sandel begins by noting that he thinks that Economics is "a spurious science."
"It’s a spurious science in so far as it is used to tell us what we ought to do because questions of what we ought to do in politics or as a society are unavoidably moral and political, not merely economic questions, and so they require democratic debate about fundamental values. Economists can inform us about possible implications of policy choices, but they can’t tell us - and they don’t really claim to tell us - what’s right and wrong, what’s just and unjust. "
The gist of his argument is here:
"Looking back over three decades of market triumphalism, the most fateful change was not an increase in the incidence of greed. It was the expansion of markets and of market values into spheres of life traditionally governed by non-market norms. We’ve seen, for example, the proliferation of for profit schools, hospitals and prisons; the outsourcing of war to private military contractors. We’ve seen the eclipse of public police forces by private security firms, especially in the US and the UK where the number of private guards is more than twice the number of public police officers. Or consider the aggressive marketing of prescription drugs to consumers in the United States. If you’ve ever seen the television commercials in America on the evening news, you could be forgiven for thinking that the greatest health crisis in the world is not malaria or river blindness or sleeping sickness, but a rampant epidemic of erectile dysfunction. (LAUGHTER) Or consider some recent proposals to use market incentives to solve social problems. Some New York City schools are trying to improve academic performance by paying children 50 dollars if they get good scores on standardised tests. In Dallas, they’re trying to encourage reading by paying children 2 dollars for each book they read.
Or consider the vexed issue of immigration policy. Gary Becker, the Nobel Prize winning free market economist at the University of Chicago, has a solution: to resolve the contentious debate over whom to admit, the US, he says, should simply set a price and sell American citizenship for 50,000 dollars, or perhaps 100,000. Immigrants willing to pay a large entrance fee, Becker reasons, would automatically have desirable characteristics. (LAUGHTER) They are likely to be young, skilled, ambitious, hardworking; and, better still, unlikely to make use of welfare or unemployment benefits. (LAUGHTER) Becker also suggests that charging admission would make it easier to decide which refugees to accept - namely those sufficiently motivated to pay the price. Now you might say that asking a refugee fleeing persecution to hand over 50,000 dollars is callous. So consider another market proposal to solve the refugee problem, one that doesn’t make the refugees themselves pay out of their own pockets. An American law professor proposed the following: that an international body assign each country a yearly refugee quota based on national wealth. Then let nations buy and sell these obligations among themselves. So, for example, if Japan is allocated 20,000 refugees per year but doesn’t want to take them, it could pay Poland or Uganda to take them in. According to standard market logic, everyone benefits: Poland or Uganda gains a new source of national income; Japan meets its refugee obligations by outsourcing them; and more refugees are rescued than would otherwise find asylum. What could be better?
There is something distasteful about a market in refugees, even if it’s for their own good, but what exactly is objectionable about it? It has something to do with the fact that a market in refugees changes our view of who refugees are and how they should be treated. It encourages the participants - the buyers, the sellers and also those whose asylum is being haggled over - to think of refugees as burdens to be unloaded or as revenue sources rather than as human beings in peril. What this worry shows is that markets are not mere mechanisms. They embody certain norms. They presuppose, and also promote, certain ways of valuing the goods being exchanged. Economists often assume that markets are inert, that they do not touch or taint the goods they regulate. But this is a mistake. Markets leave their mark. Often market incentives erode or crowd out non-market incentives. "
He then speaks briefly about Gneezy and Rustichini on childcare late fines (Gneezy, U., and A. Rustichini “A Fine is a Price,” Journal of Legal Studies, vol. XXIX, 1, part 1, 2000, 1-18.), about Titmuss on paid versus unpaid blood banks, and on his own reservations about tradeable pollution permits. He sums this up as follows:
"My general point is this. Some of the good things in life are corrupted or degraded if turned into commodities, so to decide when to use markets, it’s not enough to think about efficiency; we have also to decide how to value the goods in question. Health, education, national defence, criminal justice, environmental protection and so on - these are moral and political questions, not merely economic ones. To decide them democratically, we have to debate case by case the moral meaning of these goods in the proper way of valuing. This is the debate we didn’t have during the age of market triumphalism. As a result, without quite realising it, without ever deciding to do so, we drifted from having a market economy to being a market society. The hope for moral and civic renewal depends on having that debate now. It is not a debate that is likely to produce quick or easy agreement. To argue about the right way of valuing goods is to bring moral and even spiritual questions into public discourse. Is it possible to bring moral and religious disagreements into public life without descending into intolerance and coercion? That is the question I’ll turn to in the next lecture. Thank you very much."
Update: In his second lecture, Morality in Politics, Sandel discusses why he thinks paying surrogate mothers is a bad idea (apparently in Britain it is illegal, and so there's a thriving market in which British couples hire surrogate mothers in India). He also discusses arguments for and against same sex marriage. Here is the Programme transcript of the second lecture from the BBC.
HT: Tim Harford