Moral debts
On my last post, Chris comments:
I would also like to say that I was not intentionally engaging in economic nationalism in the last post - my point wasn't to say that American methods are the best and only way to do anything, but rather to point out that when anti-globalists decry the fact that Americans consume disproportionately to our percentage of the world's population, they are either ignorant of or intentionally disregarding the fact that Americans also produce disproportionately.
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Money spent stops being our money once it leaves our hands because we already received fair value for it in the form of goods and services. You cannot make a moral claim to both the good and money; each party to a trade must relinquish that with which they came to the table in equal proportion as the other does.
What if they don't, but the continued claims to the traded article were symmetrical? Do you believe that the electric company still owns the electricity you paid for? Does the car company still have a say in what you do with the car? Does the farmer still own the food you bought? Why does the consumer have a hold on manufacturer, but not vice versa?
The same friend described in this post believed that the local electric company should not have been able to lobby against city takeover of their infrastructure with what he called "my money". Apparently, he believed that after he bought electricity, he still had a moral claim to the money, but the electric company had no right to either "their electricity" or "their infrastructure". He also believed that farm regulation is good because "that's our land". Really? If a farmer's crop fails, do we have to sell our car to cover expenses? I think the recent flap over crop insurance fraud is a good indication of how we really feel and how incentives should be aligned: farmers need to assume their own risks and if crop fails they need to pay for it or pay for the insurance (the problem with not having to pay for the federal crop insurance is a clear case of moral hazard). This attitude also reveals a remarkable ignorance of the history and known fate of public land - the Tragedy of the Commons.
In trying to identify other examples and counterexamples of this belief in post-transactional moral debt, I found it interesting that manufacturers and consumers are generally thought to still "owe" a natural resource provider. Apparently, all-too-popular opinion holds that a Japanese car company owes Indonesia (where their coal came from) and us (the consumers), and we also owe Indonesia. Why? Of the three parties to a very complex process, the natural resource providers are the least deserving: they simply had the good fortune to be located where deposits were found. After a generation of argument to the contrary - some of which are well-founded, like anti-imperialism, and some of which are simply wrong, like Marxism and anti-globalism - I would not be surprised to find resistance to this claim, so try this simple test: ask the same question about Saudis and oil. Do we owe them anything other than the agreed-upon price?
Returning to my original conjecture, why does manufacturing still owe a moral debt to consumers after the transaction? The consumer had the good fortune and/or ability to have or generate disposable income. Any claim that the manufacturer needs to cater to the consumer's needs is marketing, maintenance of reputation, and/or negotiating for a future purchase, but does not imply legal or moral debt. I would argue that if anyone owes anything to anyone outside the terms of the trade, it's to the manufacturers, since they have neither raw materials nor income, but manage to add value to the former in order to trade for the latter to the betterment of all. They take the most risk, and provide jobs to themselves and the resource providers and useful products to consumers in the process. Yet, somehow manufacturing has become a dishonorable profession, held in lowest esteem by those who also claim that we need more manufacturing jobs. All factories are sweatshops, all business owners are corrupt and probably evil, Enron is the rule rather than the exception, so ... why don't we have government policies to encourage more manufacturing?
Ironically, the manufacturers are the only ones not complaining or claiming a moral debt (unless they're the type who see Washington as a marketing tool - Larry Ellison of Oracle, US Steel, and GM come to mind). We don't really owe them anything other than fair value. Once the trade is made, the car is ours and the money is theirs. In fact, I have always said that we end up with the better end since we get a useful car and all they get is scraps of paper.
Just by taking a cursory look at the list, Toyota, DaimlerChrysler, Matsushita and GSK owe a substantial debt of gratitude to US consumers for driving their companies profitability.I understand his point, but I intentionally avoid that view of the beast. It gets rather too close to the idea that money spent is still our money and that we have a say in what is done with it. The explanation below should not be interpreted to mean that this was what Chris was saying (he wasn't), but rather I'm just using his comment as a jumping-off point (thanks, Chris).
I would also like to say that I was not intentionally engaging in economic nationalism in the last post - my point wasn't to say that American methods are the best and only way to do anything, but rather to point out that when anti-globalists decry the fact that Americans consume disproportionately to our percentage of the world's population, they are either ignorant of or intentionally disregarding the fact that Americans also produce disproportionately.
---------------------------
Money spent stops being our money once it leaves our hands because we already received fair value for it in the form of goods and services. You cannot make a moral claim to both the good and money; each party to a trade must relinquish that with which they came to the table in equal proportion as the other does.
What if they don't, but the continued claims to the traded article were symmetrical? Do you believe that the electric company still owns the electricity you paid for? Does the car company still have a say in what you do with the car? Does the farmer still own the food you bought? Why does the consumer have a hold on manufacturer, but not vice versa?
The same friend described in this post believed that the local electric company should not have been able to lobby against city takeover of their infrastructure with what he called "my money". Apparently, he believed that after he bought electricity, he still had a moral claim to the money, but the electric company had no right to either "their electricity" or "their infrastructure". He also believed that farm regulation is good because "that's our land". Really? If a farmer's crop fails, do we have to sell our car to cover expenses? I think the recent flap over crop insurance fraud is a good indication of how we really feel and how incentives should be aligned: farmers need to assume their own risks and if crop fails they need to pay for it or pay for the insurance (the problem with not having to pay for the federal crop insurance is a clear case of moral hazard). This attitude also reveals a remarkable ignorance of the history and known fate of public land - the Tragedy of the Commons.
In trying to identify other examples and counterexamples of this belief in post-transactional moral debt, I found it interesting that manufacturers and consumers are generally thought to still "owe" a natural resource provider. Apparently, all-too-popular opinion holds that a Japanese car company owes Indonesia (where their coal came from) and us (the consumers), and we also owe Indonesia. Why? Of the three parties to a very complex process, the natural resource providers are the least deserving: they simply had the good fortune to be located where deposits were found. After a generation of argument to the contrary - some of which are well-founded, like anti-imperialism, and some of which are simply wrong, like Marxism and anti-globalism - I would not be surprised to find resistance to this claim, so try this simple test: ask the same question about Saudis and oil. Do we owe them anything other than the agreed-upon price?
Returning to my original conjecture, why does manufacturing still owe a moral debt to consumers after the transaction? The consumer had the good fortune and/or ability to have or generate disposable income. Any claim that the manufacturer needs to cater to the consumer's needs is marketing, maintenance of reputation, and/or negotiating for a future purchase, but does not imply legal or moral debt. I would argue that if anyone owes anything to anyone outside the terms of the trade, it's to the manufacturers, since they have neither raw materials nor income, but manage to add value to the former in order to trade for the latter to the betterment of all. They take the most risk, and provide jobs to themselves and the resource providers and useful products to consumers in the process. Yet, somehow manufacturing has become a dishonorable profession, held in lowest esteem by those who also claim that we need more manufacturing jobs. All factories are sweatshops, all business owners are corrupt and probably evil, Enron is the rule rather than the exception, so ... why don't we have government policies to encourage more manufacturing?
Ironically, the manufacturers are the only ones not complaining or claiming a moral debt (unless they're the type who see Washington as a marketing tool - Larry Ellison of Oracle, US Steel, and GM come to mind). We don't really owe them anything other than fair value. Once the trade is made, the car is ours and the money is theirs. In fact, I have always said that we end up with the better end since we get a useful car and all they get is scraps of paper.
Labels: philosophy
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