Bloggingheads TV with Joseph Heath on Filthy Lucre

This was recorded a while back, before I cut my hair and became a Canadian. I chat with University of Toronto philosopher Joeseph Heath about his new book (only in Canada!) Filthy Lucre: Economics for People Who Hate Capitalism. Think of it as Economics in One Lesson for Naomi Klein fans. This is a good, really readable book. I think it helps a lot that he's not an economist. The section on right-wing fallacies is largely on the money and a great challenge for rote libertarians and conservatives. The section of left-wing fallacies is terrific, and it would be terrific if more folks on the left were anywhere near as economically literate as Heath.

  • David Isecke

    I largely agree with everything here, but I have one (small) nit of my own. You say:

    “I don’t yet have a principled way of articulating the difference between OK maximizing (e.g., Wal-Mart using publicly-financed roads) and not-OK maximizing (e.g., attempts at regulatory capture) within suboptimal institutions.”

    I don’t feel that this is the most useful distinction. Rent seeking, in a society where over 40% of the GDP is spent by the government every year and where every aspect of our lives is regulated, is not only rational, but can be considered a certainty under the laws of human action. It is unrealistic and futile to attempt to assign blame for it.

    What I believe we should instead be concerned about is not so much rent-seeking as rent-GIVING. Just because a business or industry puts its hands out does not mean that we are compelled to give benefits to them. We must be careful about assigning blame; in such a system as ours, -not- lobbying politicians could lead to an unfair competitive disadvantage for the company in question!

    I believe that it is fair to that we now live in a patronage society. It is not the fault of the individual companies and corporations that the game is rigged, and I do not believe that we can blame them for attempting to survive – or even win – under crooked rules. We can scarcely blame them even for lobbying for more crooked rules that tilt towards them, when they can see how other companies and industries have done this very thing.

    The culprit here is you and me – to the extent that we tolerate and even elect governments who shamelessly deal in patronage, using our tax money as a slush fund from which they can reward their backers. Deregulation is fine, but only if we also replace the principle of “Too Big to Fail” with market discipline.

    In other words, let’s not blame the corporations for asking. Let us blame ourselves for acceding to these requests.

    This may all seem like very fine hairs to split – but it does answer the Wal-Mart conundrum. There is no meaningful way to limit the use of public roads to one company or another – so that is not what we should concentrate on correcting. But there is a meaningful way to prevent Wal-Mart from taking local homes and storefronts in order to build mega-complexes; we must eliminate the inappropriate use of Eminent Domain. It bothers me less that Wal-Mart would ask for these takings than that our elected representatives would ever give it to them.

    • mk

      This is a pretty fair point.

      The entire system of capitalism is unavoidably geared towards maximum profits. We can brand certain instances of profit-seeking “undesirable,” but if we call them “immoral” it’s worth asking how much we can reasonably expect of a profit-maximizing company.

      Is our goal really a more responsible corporate America that doesn’t seek rents? Or is the goal a better system which does not reward rent-seeking?

      I think we can do “all of the above” — give companies a hard time for seeking rents, give politicians a hard time for doling out rents, and petitioning legislators for fundamental reforms which outlaw undesirable rent-seeking.

      The reason why we should give companies a hard time is that they really are responsive (to some degree) to the moral norms of the surrounding environment. At the extreme, you can’t do something everybody hates because you’ll get boycotted, and that’s not profit maximization.

      So, all of these techniques are fine; but we should pay attention to which techniques are effective. Do we really realistically expect that corporate America will become more “responsible” because we get loudly and collectively mad at them? Maybe, maybe not.

      The most likely avenue of change may be a new set of meta-regulations (ideally like a constitutional amendment) outlawing favoritism. It’s not perfect, and there’s lots else to do in the meantime, but this may be a reasonable option.

    • William B

      This is the kind of problem for which Experimental Philosophy was created. We know there’s no difference between pushing the fat man in front of the speeding train to save five people and flipping the switch to save the five by killing the one, and yet we feel the difference.

      Morally, we’ve got to bite the bullet here. Either everything is okay, or nothing is. Walmart didn’t ask for the interstate highway system, they just figured out a way to take advantage of it. We feel like there’s something wrong with trying to write the laws in your favor, but what if, as Benquo says, a law is going to be written, whether you like it or not? Blame politicians? But they didn’t ask to be part of a system where the path to success lies not in creating “fair” laws, but rather in appealing to special interest groups. They’re just playing the game. It’s the fault of you and me, for allowing the government to have so much power? Well, they’ve got the guns, and plus, we’ve got to earn a living; we can’t spend all our time thinking about what the best form of government is (even if we did, the returns would be very, very small).

      And none of us asked to be born in the first place.

      When you excuse someone who was “just following the rules,” it seems to invalidate the moral basis of Libertarianism. How do you circumscribe “the rules”? Using the highways vs. lobbying for public subsidies seems to be, morally, just a case of pushing the fat man vs. flipping the switch.

  • David Isecke

    As to the question of smaller or larger firms: Who cares? Without artificial barriers to entry, and without special patronage or protection for older firms, there is no reason why the market should not decide on the optimal size of firms in a given industry. In fact, I am not even concerned about private monopolies, so long as these two conditions hold. Unfortunately, in our current patronage economy, neither condition generally holds.

    • PottyMoose

      Without state artificial boundaries on business power there will be business driven artificial boundaries. Cartels will form, anti-competition trusts, local monopolies, and industry monopolies will set the rules. I would rather have the rules set by an organization with at least some democratic oversight and the chance to work for the public good than organizations that have no interest in anything other than maximizing profits at all costs.