On Economics

Woman Receives Sentence for Welfare Fraud

Entrepreneur Defends Price Increase of Daraprim Drug

These two stories have the same plot – “person uses economic system unethically to their own advantage.” That one of them is filed under the website directory “crime” and the other under “business” only reflects the reality – the welfare fraudster is thwarted by the rule of law, and the biotech extortionist faces “the court of public opinion,” who pursue the case only for as long as clicks generate advertising revenue.

These stories reduce our thinking about economics to something like “humans are fundamentally self interested, so the only system which will cause a society to prosper is one in which it is in everyone’s self interest to make as much as they can.” This line of reasoning only works in the abstract, however – our daily experiences are filled with good, hardworking people who hit rough patches from time to time for thousands of complicated reasons. It’s also impossible to apply with any consistency – the benefit cheat is used as proof that such programs should be stopped, and the person driving up the price of vital drugs is merely an unfortunate side effect of a system to which there is no alternative.

In various parts of the world, people are wondering if there is an alternative. The reelection of Syriza in Greece, Jeremy Corbyn winning the Labor party leadership in the UK, and the pace at which Bernie Sanders’ campaign is gathering momentum are all evidence of a willingness to challenge some basic ideas which have ruled the West for decades. In response, some are just putting their hands over their ears – when challenged about the lack of affordable housing, the UK Prime Minister explained the most important strategy to solving the issue was growing the economy, not doing something practical like introducing lower down payments for people who are planning to actually live in a house rather than rent it out for twice what people can afford. In the US Republican debate recently, the only thing more certain to get a round of applause than bashing the current administration was to use the phrase “I will never support a policy which makes it more difficult to do business in America.”

I have no idea where any of this will lead over the next few years, but I’m optimistic that there could be a more reasoned debate about these things. Maybe we could lose the assumption that profit rules the world, and that all of life is figuring out how to best build a society around that reality. Maybe flawed people with huge potential for good and bad elected by other flawed people with huge potential for good and bad run the world. We need systems which fight our tendencies toward laziness and greed, and help us when our lives are impacted by others’ similar tendencies. We don’t need systems which assume one is morally wrong and the other is inevitable.

A friend and I got into a heated conversation about this issue a couple of years ago which amusingly lead him to exclaim “It’s social darwinism!” quite aggressively to a surprised server who had come to refill our water glasses. That’s not particularly relevant, but it’s good to end on a joke.