Thursday, February 3, 2011

Economic Morality

In response to a blog post by Ed Glaeser that I found especially good, Nancy Folbre offered a rebuttal:

We humans experience periods of dependency at the beginning of our lives that largely determine our access to resources – including the development of our own human capital – as adults. We remain subject to unexpected illness, disability, unemployment, accident and assault as adults, and if we survive these, we eventually become dependent on others in old age.

Individual freedom doesn’t necessarily conflict with the care of those we love, because love itself shapes our preferences, our utility functions. We often freely choose to sacrifice for others.

But preferences alone don’t provide a secure basis for the care of dependents. That’s partly why societies develop concepts of social responsibility and legal obligation that often infringe on individual freedom.

She makes some good points, but I am not sure her good points undermine Glaeser's key idea: Freedom is cherished among economists. As nearly as I can tell, he didn't say that no economists value other moral qualities. He also made clear that there are trade offs:

Economists’ fondness for freedom rarely implies any particular policy program. A fondness for freedom is perfectly compatible with favoring redistribution, which can be seen as increasing one person’s choices at the expense of the choices of another, or with Keynesianism and its emphasis on anticyclical public spending.

Many regulations can even be seen as force for freedom, like financial rules that help give all investors the freedom to invest in stocks by trying to level the playing field.

The belief in freedom does, however, create a predilection for human interaction and trade.
That said, I'm not sure the two would universally agree about economic morality. Read the two articles to judge for yourself.

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