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Date: Fri, 31 Aug 2007 19:48:01 -0400 (EDT)
To: James W Mickens <jmickens &AElig eecs.umich.edu>
cc: Dave Morris <thecat &AElig umich.edu>, improvetheworld &AElig umich.edu,         Steven Reeves <steven &AElig aptigi.com>, reeves-hayos &AElig umich.edu,         reeves-kalkman &AElig umich.edu
From: Daniel Reeves <dreeves &AElig umich.edu>
Subject: Re: mind the gap

You're characterizing our disagreement as hinging on whether public policy 
should optimize economics subject to moral constraints or optimize 
morality subject to economic constraints.  I'm unclear on what either of 
those really mean for public policy.

Let me first defend Graham's point.  He concedes whole classes of 
exceptions and I think social injustices are included, if not explicitly. 
His argument -- that income inequality is not, inherently, unjust -- 
remains intact.  I gather you agree with that weaker claim.  Dave and 
others have said his argument is simplistic.  It does make 
simplifications.  That doesn't make it wrong.

Rectifying social injustice is absolutely under the purview of public 
policy.  No disagreement there.  (As I said at the time, your 
improvetheworld post on affirmative action was brilliant and changed my 
thinking on that issue.)

I'm ready to concede the slavery point and back off my economic argument 
against slavery.  Public policy should simply protect basic human rights. 
Capitalism doesn't do that by itself.

Maybe we need to pick a specific public policy to disagree about, if we 
still disagree.  Want to take sides on the stock market regulation 
question?

Also, James already knows this, but for others:  economics is about much 
more than money.  It's the mathematical analysis of what motivates people. 
And just to nip a potential subthread: the non-mathematically inclined are 
not allowed to blithely declare human motivation to be irreducible to 
mathematics.


--- \/   FROM James W Mickens AT 07.08.31 18:32 (Today)   \/ ---

> Economics and ethics both deal with people and the implications of their 
> actions, but in terms of defining "good" and "bad" actions, economics is 
> woefully inexpressive. Economics tells us how money interacts with itself, 
> but this interaction does not have an intrinsic moral character. Thus, the 
> idea that "an increase in total wealth increases net welfare" originates from 
> outside economics---it is an attempt to ascribe a moral character to an 
> economic policy. The wealth-welfare conflation is attractive because it makes 
> public policy (i.e., public morality) easy: increase a society's wealth and 
> everyone will be better off. However, the obligations and rights that I have 
> to exchange money with other people are merely a subset of the obligations 
> and rights that define my entire moral universe; attempts to describe my 
> complete moral calculus in purely financial terms will lead to tortured 
> logic, particularly when trying to explain "obvious wrongs" such as slavery 
> that possess both a financial character and a moral character.
>
> Even if slavery encouraged the creation of extremely wealthy societies, most 
> people would still argue that it is inherently wrong. But how could this 
> argument be derived from purely financial principles? We could do things like 
> assigning a monetary value to freedom, but this is intellectually silly. The 
> value of freedom shouldn't fluctuate according to the vagaries of the market; 
> I don't want the worth of my freedom to vary according to the exchange rate 
> between the peso and the dollar, or the status of the sub-prime lending 
> market. We could avoid the characterization problem by fiat by saying that 
> slavery is an ethical issue, not an economic one. But what are the rules for 
> making such declarations? How do we determine when an economic or an ethical 
> calculus should be used? Is unequal access to health care an economic issue 
> or an ethical issue? Is unequal access to education an economic issue or an 
> ethical issue? There are countless questions of this form. This suggests that 
> when making public policy decisions, our strategy should be to determine the 
> most moral action allowable given our financial constraints, rather than the 
> most wealth-creating policy with the best moral repercussions. The two 
> formulations might sound similar, but they are very different. One makes 
> morality the first-order concern and the other makes wealth generation the 
> first-order concern.
>
> Paul Graham's views on income inequality are broken because they try to 
> conflate economic outcomes with moral outcomes. Graham says that "to the 
> extent that income varies simply according to how much wealth people create, 
> the distribution may be unequal, but it's hardly unjust." Strictly speaking, 
> Graham means "unjust" in an economic sense; he's saying that we can't call 
> skewed income distributions unjust if they are the result of an unbiased 
> economic system which does not arbitrarily punish some and reward others. 
> Fair enough---if we allow a market to work in an unregulated fashion and 
> define "unbiased" as "respects supply and demand," then the final wealth 
> distribution may be fair from the economic perspective. However, the results 
> may be deeply unfair from the *moral* perspective. Graham ignores the 
> systemic, discriminatory, and, in fact, immoral barriers to economic 
> participation in America and elsewhere. As we discussed in our debate on 
> affirmative action, factors like racism, sexism, and differential levels of 
> parental income distort one's potential for success. This is not fair, but 
> Graham seems to disagree. Graham looks at unequal wealth distributions and 
> implies that because they are "just" in the economic sense, they are just in 
> the moral sense. This is intellectually dishonest and simply incorrect. It is 
> insufficient to point out what is and then claim that this is what should be 
> since free markets lead to optimal net outcomes. It is unfair for two people 
> with equivalent work ethics and levels of intelligence to achieve different 
> economic achievements due to factors that they cannot control. This outcome 
> might be Pareto efficient or maximize some other economic metric, but it is 
> not moral.
>
> Free markets optimize economic variables, not moral ones; the two sets are 
> sometimes related but definitely not equivalent. The assumption that the two 
> are synonymous is an unhealthy fetish amongst libertarian economists. By 
> converting moral dilemmas into problems of wealth generation, libertarian 
> economists often ignore underlying social injustices. These injustices are 
> often much more indicative of net welfare than an expanding GDP.
>
> ~j
>

-- 
http://ai.eecs.umich.edu/people/dreeves  - -  search://"Daniel Reeves"

A man who set out to get thinner
Decided to eat no more dinner.
When his friends said let's see
Who can be more fat-free,
He died and declared "I'm the winner!"
   -- Laurie Reeves