A quarterly magazine of urban affairs, published by the Manhattan Institute, edited by Brian C. Anderson.
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What Should Never Be For Sale
Michael Sandels new book examines where markets and morals conflict.
11 May 2012
What Money Cant Buy: The Moral Limits of Markets, by Michael J. Sandel (Farrar, Straus and Giroux, 256 pp., $27)
Michael Sandel, a professor of government at Harvard, opens his new book with a provocative question: Isnt there something wrong with a world in which everything is for sale? In five crisply written chapters, he asks where transactional markets should end and democratic society should begin. The logic of buying and selling . . . increasingly governs the whole of life, he contends.
Take, he says, a commonplace practice: Jumping the queue. In New York, the Public Theater puts on its summer Shakespeare in the Park performances free of charge, but many who stand in line dont go to the show, instead selling their free tickets. In Washington, professional line-standers wait for passes to newsworthy free events like the recent Supreme Court hearings on Obamacare; their employers then often sell the tickets to lobbyists. In China, people wait for the right to see a sought-after medical specialist and then sell that right to the highest bidder. In America, some people pay for concierge medical service to forego waiting in line at a doctors office. First-class airline passengers often can bypass lines both to get on a plane and to go through customs. Sandel rightly notes that the public would object if government bodies auctioned off seats to committee hearings. But he worries that even an informal system of line-jumping puts ordinary folks at a disadvantage.
Line-jumping, however, was not scarcely imaginable three decades ago, as Sandel maintains. It is, in fact, immutable human behavior, constituting another form of that hardy perennial: the black market. In the Civil War, some rich Northerners paid poorer workers to enlist in their place. In the old Soviet Union, people regularly jumped lines with money to get better housing than the state allocated (residents of rent-regulated New York still do this). In twentieth-century wartime, people living under rationing used informal markets to reallocate state-decreed food provisions.
Not all of these examples are morally equivalent, and not all harm the public good. As Sandel concedes, whether markets or queues do this job better is an empirical question. Line-jumping is egregious when it blunts the need for a change in response to demand, rather than simply rearranging existing demand or creating new supply where unmet demand exists. Consider the airport example. Few should object to an airline offering a customer who paid five times as much for his seat the chance to board the plane first. But most of us see something objectionable in the airline giving this first-class customer a special pass, called Fast Track in Britain, to allow him to cut the customs line. Everyone from the rich to the poor should have an interest in efficient government. Allowing people to avoid bad government reduces their interest in fixing it.
Examining politicians use of economic inducements to change behavior, Sandel illustrates an unwelcome new phenomenon. In recent decades, he writes, the notion of incentives has come to define the discipline of political economics. President Obama has used the ungainly new verb— incentivize—29 times on the subject of social issues (his three immediate predecessors combined used the term four times). Sandels Harvard colleague, Roland Fryer, Jr., has encouraged schools with large minority populations to pay students to go to class or to do well on tests. Other programs have paid kids to take AP exams or to read books. New York City, for a while, paid mothers who took their kids to a doctor. Some economists think Americans should be able to sell organs in a formal marketplace rather than have patients rely on donors. Some advocates of reducing carbon emissions push programs such as carbon offsets—letting an individual compensate for driving a big car or flying in an airplane by paying someone else to, say, plant a tree.
In many of these cases, Sandel observes, politicians use incentives to avoid discussing morals. But a mother should encourage her child to read because its the responsible thing to do, not because she is taking advantage of a loaded incentive. If emitting carbon is bad, then someone driving a big SUV should suffer social shame, not have everyone say that its OK as long as his carbon emissions are offset. As Sandel puts it, markets dont wag fingers. Legalize prostitution and it becomes another service job; fewer people wonder if it is, well, moral for women (or men) to sell their bodies.
Sandel has a practical rejoinder as well to obsessive incentivizing: it may not work. It is a mistake to assume that incentives are additive, he says. In Switzerland, more than half of a towns residents agreed to site nuclear waste when politicians framed it as a civic duty. When politicians offered cash, only 25 percent agreed. Conserving altruism, as another Sandel colleague, Larry Summers, once counseled, may not ensure that altruism is there when we need it. True enough, and personal motivations are difficult to discount. Are you a chump to donate your deceased fathers organs, for instance, when the going rate for the lot is $800,000 and you need the cash to put your kids through school?
For the most part, Sandel convincingly argues that employing markets where morals or other considerations should reign can sometimes corrode behavior rather than correct it. But are we not using markets where we should? Sandel considers the financial crisis the result of a heady time of market faith and deregulation—an era of market triumphalism. He wonders why the financial crisis discredited government more than the banks.
One explanation that Sandel doesnt explore is that Americans recognize that the government was wrong to suspend markets rather than letting them work. The financial bailouts that began in 2008 werent a government ratification of free markets; they were a government repudiation of them. And just as using markets where they dont belong has crowded out morals, in Sandels phrase, not using markets where they do belong has invited moral judgments. People march against bankers because they understand that when markets fail to discipline people and companies, other forces must do the job. Perhaps the accidental lesson of Sandels book is not just where markets dont belong, but where they do.