The Limits of Markets

Here is a Facebook conversation I had with Lee Sharpe about the limits of markets. The conversation took place on a thread, so, initially, Lee was responding to another commenter, whose comments I did not post.

Lee Sharpe:

People may not make the best chioce, but it is better for society if everyone is allowed to make a variety of choices even though some will be bad. That is how better ways of doing things are discovered.

When you say “who lack the capacity to understand where an acceptable boundary lies”, who is that boundary supposed to be acceptable to? Obviously not the person themselves, since then no regulation would be required. Why should politicans and those who donated to their campaigns decide what choices are acceptable to anyone else when it doesn’t affect them?

Andrew Hanson:

“Why should politicans and those who donated to their campaigns decide what choices are acceptable to anyone else when it doesn’t affect them?”

That’s how democracy works, except it’s not necessarily those who donated to their campaigns, but those who voted them into office.

Do you think people should be able to sell their votes in a democratic system? Do you think parents should be able to sell their children, or sell their children’s organs? Or, should children be able to sell their organs themselves? Should a person be able to sell himself into slavery? Should parents buy hugs for their kids?

Tyler Cowen talks about the limits of markets in this EconTalk with host Russ Roberts:

http://www.econtalk.org/archives/2007/03/cowen_on_libert_1.html

It’s about the first 7 minutes of the podcast.

Lee Sharpe:

“That’s how democracy works”

You are arguing on a different axis than I. I’m looking at what policies are good, not which ones are popular politically.

“except it’s not necessarily those who donated to their campaigns, but those who voted them into office.”

You are less cynical than I.

“Do you think people should be able to sell their votes in a democratic system?”

Ideally, I would like there to be no selling of votes, but I recognize that this is extremely difficult to control, and it’s very easy to get around the law, and expensive to enforce it. When I was in college, we brought pizzas to a long dorm voting line to convince the students waiting to vote their to stay. Was that “buying votes”?

“Do you think parents should be able to sell their children, or sell their children’s organs? Or, should children be able to sell their organs themselves?”

Similarly, if you make it illegal to sell organs, you’re just moving things to the black market. The situations you describe here are extreme, and those who would engage in them are in extreme circumstances who will disregard the law in pursuit of their needs. Making it illegal denies them to pursue it through the legitimate sector and have access to police and courts. And then they resort to violence to resolve disputes, as drug dealers are forced to now.

“Should a person be able to sell himself into slavery?”

Selling yourself into “slavery” is agreeing to work for a given wage, so really this is employment. Calling it slavery is false. I have no problem with voluntary employment.

“Should parents buy hugs for their kids”

Sure, I guess, if they want to give their kids hugs? I don’t understand this one.

Andrew Hanson:

(1) Well, I don’t think I was suggesting that we shouldn’t look at policies that are good or bad, I was just saying that, in a democracy, we elect politicians to make decisions about what is and isn’t acceptable (i.e., what the laws are). I was just answering your question about why politicians should be able to do that, i.e., “because that’s how a democracy works” (the assumption is that democracy is the best form of government available). It’s fine if you don’t think they should be able to do that, but you ought to propose some alternative structure of government that better satisfies our goals.

(2) I’m probably as cynical, I just don’t think it’s *necessary* for a democratic system to function the way our system does.

(3) Ideally, there would be no murders, but I recognize that this is extremely difficult to control, and it’s very easy to get around the law, and expensive to enforce it.

(4) No, you were not buying votes by selling pizza. There was no binding contract and students weren’t influenced to vote one way or the other.

(5) I don’t understand why the harms of the black market always necessarily outweigh the benefits of having less harvesting of childrens’ organs, for example. Would you be comfortable having a court legally enforce a contract that harvested a child’s organ?

(6) It is certainly possible to sell oneself into slavery. Slavery is just one person considering another person her property. It doesn’t matter who does the selling (slave traders or autonomous persons). We think slavery is impermissible because it violates inalienable rights such as the right to move about freely and the right to bodily autonomy. Are you denying that there are relevant distinctions between slavery and voluntary employment in present-day society?

(7) The idea is that commodifying every aspect of our lives dehumanizes us. Tyler Cowen speaks of the sadness and discomfort he often feels when he writes his “Markets in Everything” posts on Marginal Revolution.

(8) I agree with you that there should be a market for organs, but I think your insistence that markets shouldn’t have any limitations is disingenuous.

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