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Unquestionably it is the case that offering financial incentives can, and does, undermine motivation for certain behaviors. Not to be too crude, but if I offered my wife $100 in order to have her cook me dinner, she’d probably be less likely to do it than if we had planned something together. You can imagine other activities.

Without overblogging this. to me this is not a case of financial incentives undermining other ones, it is simply a question of clarifying what the goods in question are. But ignore that. When folks start seeing the wide applicability of this principle, they are lured to start thinking that financial incentives undermine all behaviors and have found yet another crutch for an intrinsic (you like that!) dislike of markets.

OK, fine.

Here is one application. I don’t buy it on net, but it is plausible: “We can’t possibly start paying cash to people to donate kidneys, it will undermine the intrinsic motivation to do it and we will get less kidneys. We want more kidneys, so we should avoid payments.” (Ignore all of the other reasons you may object to paying people for the moment).

OK, fine.

But I heard this one recently, with the causality a bit twisted:

“Teachers of our youth perform a service that is as valuable as anything you could possibly do for a career. It is a vocation for many, and it is vastly underappreciated and underfunded. Therefore, because teachers are so intrinsically motivated to teach our young people … we need to … offer … additional financial incentives.

As I like to say. You may try to hold both of these positions, but I suggest it is pretty awkward. YCHIBW.

 

Gifts Suck

Gifts are the original sin of commerce. My theory is that this is why “the gift economy” is so cherished by critics of anonymous, ephemeral, market exchange. Market exchanges allow us to free ourselves from the power that our families and others exercise over us. The wider the extent of market competition, the less we are susceptible to powerful firms jamming high prices and low quality down our throats, and the less we are susceptible to thuggish and bullying tactics of cartels, unions, and other connected agencies (check out the story of Steve Hindy trying to get his Brooklyn Brewery started when he was paid a visit by the NYC trade unions).

Thus, the asserted softening of social cohesion that is created by market transactions is in fact liberating.

Indeed, for the longest time, I have been reading articles and sitting through talks that suggest that “even if” there are “good” aspects of the market, it is inferior to other ways of securing the things we want and need. For the longest time, I have just accepted that too. But think about the gift economy. By using the word “gift”, scholars have stacked the deck in favor of thinking of it as good. But I see no fundamental reason why the world of gifts is good. Indeed, I suggest it is high time to turn the tables on it.

The gift economy sucks.

Do you enjoy the idea of Christmas time (or whatever holiday we want to speak of) because of the obligation that you go out and buy a bunch of shit for everyone close to you? Do you relish the anticipation of getting “gifts” from all of these people. At best, it’s a giant version of splitting the check. But it’s worse than that. Wouldn’t you rather spend time playing, singing, reading, sharing stories, hiking, cooking, with those you are close to?

Moreover, and here is why the gift economy really sucks, do you really want things hanging over your head? The gift economy is the original sin of commerce. Much like many of us today can never ever ever ever escape the bad doings of people who lived before us, no matter how decently you may live your life or treat people you encounter, those who support the gift economy are suggesting that we should live in a world where we are always indebted to someone else. That sounds quite perverse coming from critics of debt financed consumption. I do not see how constantly being in the good graces of other gift givers is any different than borrowing dollars from someone else and being expected, contractually, to pay it back.

Ultimately, the gift world is a world of power imbalances and dependency. The giver of gifts is superior to the receiver, and it seems to me that what looks to the outsider like generosity is actually just a papered over version of violence. Seriously, have you ever wanted to turn down a gift from someone? Why? I suspect it’s because you don’t want it lorded over you. I’d rather be poorer and free of mind and obligation than to have a gift and be expected to “kiss the ring.” One thing I have very much tried to do as a parent is not “lord it over” my kids when I need to take care of them … they had no choice in the matter, and cannot sustain themselves yet. I chose to bring them into this world.

In the same way, many social bonds are restrictive and suffocating. Have you ever had to “fake it” just to remain in the good graces of polite company? That is not just uncomfortable, it can grind the wheels of progress to a halt. The market on the other hand allows us to extend our sphere of interactions, and it will do that insofar as we can establish trust and reputation.

I’ve been in many seminars offered by neo-Marxists, who view the entire history of human relations as imbalanced power-relationships. It is nothing short of stunning that none of the talks I have been to seem to recognize that the gift economy and the communitarian ideals that seem to be what is needed to replace the injustices of market power imbalances are themselves institutions that very likely emerged due to the very same forces the Marxists are arguing against. If ALL of human history is characterized by oppressors and oppressed, by power imbalances, what exactly permits the intellectual swindle of exempting the gift economy from being viewed under that same lens? Our own experiences with gifts would seem to be an easy starting point.

Not So Great

Here in the Sugarlands Visitor Center at the Great Smoky National Park we see:

I love that there is a nearly empty collection box. The park tries to collect small amounts of fees by selling trail maps and wildflower and wildlife guides, but at $1 a pop that is probably barely enough to cover the printing costs for most of these. What is startling about the “free” park is of course that it is no such thing. The park requires an enormous amount of resources not just to maintain roads and the usual park infrastructure, but there also requires an extensive amount of ecological conservation work that most visitors will never see nor care to think about. The park itself claims to run on a budget of just under $20 million per year (for perspective, my University’s budget is in the $2 billion per year range) and covers an area of about 750 square miles across two states.

Any of you who read about parks and recreation have heard the noise that our National Parks are “woefully” underfunded, that there are decades of deferred maintenance backlogs, that they are threatened by overuse and so on. And nominally, all of that is true. But consider that the Great Smoky National Park is THE MOST visited park in the entire national park system … and it’s not even close. It gets almost triple the amount of visits as the Grand Canyon!  From talking to a ranger, he thinks they get over 11 million visitors per year at the park.

And they charge each of these visitors … zero. Mind you, most visitors who come there are spending an inordinate amount of money to get to the park and to stay and eat and recreate near the park. If you’ve ever been to Gatlingburg and Pigeon Forge, you know what I mean (I’ll leave that rant for some other time). Needless to say, if a family of four is staying at a decent place near the main entrance to the park (there are other less busy entrances, I was over by Wear Cove) and they eat out once per day and they avail themselves of some of the absurd Vegas-like places, they are dropping an easy $2,000 just to be there. Yet, to “ensure access to all” the park remains free. I spend some of the most glorious recreational days of my life in the park this past week and paid zero dollars for it. Compared to everything else I was doing, it was worth well north of $500 to me.

So, let’s take the 11 million visitors. Even a nominal fee of $2 per visitor, which is less than ANY cup of crappy coffee served down there, would fund the entire park for an entire year. Given the fact that a family of four going to play mini-golf costs like $60, or a mediocre dinner out at any of the zillion kitchy places runs into the $100+ range for even the most basic of food, it is not unreasonable that a week’s access via car to the park should cost something along $100. If each individual visitor paid $100 (go look what Dollywood costs), then the annual revenues to the park would be $1.1 billion. That is well over a quarter of the entire national park budget (I mean for the entire system) for an entire year.

The idea that “your” National Parks are underfunded and falling apart is flatly absurd. Like almost every other aspect of our dysfunctional government, the “free” National Parks are like cheap candy given to shut the kids up on a long car ride. The reality is that even with no changes to how the parks are managed (and there are myriad changes that ought to be made), the system is entirely capable of taking care of itself and flourishing. We are the richest country in the history of the planet, and we seem incapable of getting something like this done. Yet folks seem to dream that we have both the political will and ability to do anything more complicated? Please excuse me while I go take a hike.

Emersonian Wisdom

A good friend (CD) e-mails me some choice pieces from Emerson’s essay on self-reliance. I think these are useful to keep in mind as the whirlwind of identity consumes us these days …

“In every work of genius we recognize our own rejected thoughts: they come back to us with a certain alienated majesty. Great works of art have no more affecting lesson for us than this. They teach us to abide by our spontaneous impression with good-humored inflexibility then most when the whole cry of voices is on the other side. Else, to-morrow a stranger will say with masterly good sense precisely what we have thought and felt all the time, and we shall be forced to take with shame our own opinion from another.
Whoso would be a man must be a nonconformist. He who would gather immortal palms must not be hindered by the name of goodness, but must explore if it be goodness. Nothing is at last sacred but the integrity of your own mind.
I am ashamed to think how easily we capitulate to badges and names, to large societies and dead institutions.
My life is for itself and not for a spectacle. I much prefer that it should be of a lower strain, so it be genuine and equal, than that it should be glittering and unsteady.
It is easy in the world to live after the world’s opinion; it is easy in solitude to live after our own; but the great man is he who in the midst of the crowd keeps with perfect sweetness the independence of solitude.
But man postpones or remembers; he does not live in the present, but with reverted eye laments the past, or, heedless of the riches that surround him, stands on tiptoe to foresee the future. He cannot be happy and strong until he too lives with nature in the present, above time.”

Clarity is Courage

It is good intellectual practice (probably not dinner party practice) to take your ideas until they can go no further. If I had one magic wand to wave, one feature I might consider is that all of our attempts to be liked or at least not appear to be one of the deplorables were seriously attenuated.

Think about some policies you are either in favor of, or opposed to (and yes, I think this works in both directions). To really appreciate the idea, take it to the end. So, take for example the minimum wage. Ignoring the moral and economic arguments, just think for a moment about why you do or do not like it and what you think such a wage means and may end up doing. Now, I think a very healthy internal debate for you to have (or external one too?) is to think about how you would feel taking the position to the extreme. So, while we all argue today about whether it ought to be $7.25 or $10.10 or $15 or some other non-scientifically appointed number, take it further. If you think a $15 minimum wage will accomplish what you think it does (e.g. it tells businesses they can’t just go paying people whatever small amounts they wish, or it makes poorer people richer, etc.), then what do you think of a $60 per hour minimum wage. No one should have to live on less than $120,000 per year. Do you think this is more in line with how much businesses “owe” others? Do you think this will put more money in the pockets of the poor.

And then, perhaps compare this thinking with the complete opposite. If we are debating whether to keep the minimum wage where it is or to increase it, take it to zero. What would the world look like if there were no minimum wage at all? Would you see employers more profitable and better able to attract more workers? Would you see demand for products increase and therefore result in more employment? Would you see continued exploitation of workers and a race to the bottom for all of us.

It really becomes almost boring to debate $7.15 versus $15. We ought to be arguing on $60 versus $0 and see which of these is “closer” to better on the grounds you are arguing from. In addition to clarifying why you hold the views that you do, having the extreme version of the discussion will surely help us appreciate that on almost no policy issue is the case simply black and white – my bet is that an overwhelmingly large number of ideas we debate have big fat gray areas.

Don’t expect people will enjoy this method of inquiry, you surely will not remain popular if you pursue it. “Hater of the poor!” “Commie!” And so on. But don’t let that distract you.

Can you hold the idea of “equal pay for equal work” and still be a strong advocate of progressive taxation?

Ignore the moral arguments against progressive taxation – which include the political view of the founders warning against the tyranny of the majority … focus on the logical consistency for the moment.

The idea of equal pay for equal work seems to be derived from a natural desire for people being treated as equals. Assume that really is what is being advocated for. The idea of progressive taxation would seem to stand in contrast to that, with some people being treated differently than others. I suppose you could argue against me here that under progressive systems like the US that if you earn the same amount as someone else then your taxes will be similar.

There are additional logical challenges. My wife, for example, earns considerably less than people who do 100% identical work as she does. Because of the principal of progressive taxation, the second she married me she guarnateed this would happen. Adding her income to mine puts her in a higher bracket than if she were single, and on top of that since she is covered by my health policy, she declined health coverage but received zero of the cash value of that. So, receives far less than each of her co-workers for doing identical work. This is exclusively a direct consequence of a progressive taxation system. So clearly folks seem to be perfectly fine with unequal pay for equal work …

As a general argument, what happens to my wife is no different than what happens to people who may otherwise be paid nominally the same but who work more than others. Their hourly work delivers them less remuneration than others doing identical hourly work. Lest you think that the REASON folks are paid differently matters, this makes the two ideas sit very uncomfortably next to each other.

I’ve yet to see very much acknowledgement of these sort of twisty pretzels in political-economic views, but I think this is because thinking through the logical conclusions of particular views is a lot of work and often leads to conundrums that probably would require any reasonable person to soften otherwise hard views or have to rethink views entirely.

 

Leo Rosten’s delightful short story on an “Infuriating Man” …

One of our fine students, Dan DiLoreto shares his insights on how local and state regulations stifle commerce and ultimately hurt not just consumers but workers too. Here is a bit:

The alcohol industry ultimately operates as a case study in how protectionist policies at both the national and the state level hurt growth and limit consumer choice. Trump’s tariffs exemplify this nationally, while legal strictures like Minnesota’s in-state grape requirement and the three-tier system demonstrate it on the state level. In both scenarios, businesses are often forced to raise costs and curtail investment in new innovations.

If consumers want to receive more products for a lower cost, battling protectionist policies is an essential step. This applies at the state level as much as on the national stage.

More from Walden:

If I knew for a certainty that a man was coming to my house with the conscious design of doing me good, I should run for my life …

I want the flower and fruit of a man; that some fragrance be wafted over from him to me, and some ripeness flavor our intercourse. His goodness must not be a partial and transitory act, but a constant superfluity, which costs him nothing and of which he is unconscious. This is a charity that hides a multitude of sins. The philanthropist too often surrounds mankind with the remembrance of his own castoff griefs as an atmosphere, and calls it sympathy. We should impart our courage, and not our despair, our health and ease, and not our disease, and take care that this does not spread by contagion.

How about this?

Most of the stone a nation hammers goes toward its tomb only. It buries itself alive. As for the Pyramids, there is nothing to wonder at in them so much as the fact that so many men could be found degraded enough to spend their lives constructing a tomb for some ambitious booby, whom it would have been wiser and manlier to have drowned in the Nile, and then given his body to the dogs.

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