The
Imperial MARKET
Kuttner (ch. 2) argues that more of human
interaction has become a market relation – similar to Marx’s notion of a Cash
Nexus.
Conservative
View: A
society-wide equilibrium at maximum efficiency occurs when individuals have
freedom to rationally choose based upon self-interest. (i.e. a Pareto Optimum)
Alternative
View: If
people don’t act rationally, preferences are unstable, buying power doesn’t
reflect merit, and some costs and benefits are not captured by the market, then
outside-market measures would produce better results.
Examples:
1.
People
who smoke are maximizing their utility therefore government shouldn’t encourage
them to quit.
(Some economists even argue that they are helping
society by dying young)
2.
People
who commit suicide must be maximizing their utility.
3.
But
if voters choose a universal health care system, conservative economists would
be opposed (who is irrational now?)
Irrational
Behavior Examples:
1.
Endowment
Effects à people will charge more to
sell a bottle of wine than to acquire the very same wine. They will buy a movie
ticket for $10 if they lost $10 on the way to the theater, but choose not to
buy another one if they lost a previously purchased ticket for the same amount.
2.
Smokers
deliberately buy cigarettes by the pack even though it’s cheaper to buy by the
cartoon. Smokers favor higher cigarette taxes. (Whitman’s Maxim – “Do I
contradict myself…”
“Consumers
have wants, citizens have values.” Mark Sagoff
It
is tautological to argue (as conservative economists do) that whatever
consumers buy in whatever amounts they are always acting to maximize their
satisfaction (i.e., looking to promote their self-interest). This is called revealed
preference and cannot be used to say anything useful.
But
the market has been encroaching upon more and more areas where it once was
absent – encouraging people to act as consumers rather than citizens.
1.
Land
and labor were not for sale in the 18th and part of the
19th centuries.
2.
Whittle
Communications brings commercials into the school room along with documentaries
(channel one).
3.
The
2000 Olympics was a Coca-Cola event. Sports stadiums are named after
corporations.
4.
National
Public Radio is now sponsored by corporations (gov. supports just 18 percent of
its budget)
Should
some things be beyond price?
Write
on a piece of paper Y or N for each of the numbered items below. Y means you
would allow it to be for sale and N means you would not want it to be for sale.
1.
Fetal
tissue
2.
Organ
transplants
3.
Blood
4.
library
books (rented instead of free)
5.
child
labor
6.
pollution
emissions
7.
votes
for candidates
8.
politicians’
votes in Congress