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The Place for Markets: every place?

Original post made by Tom Cushing, Danville, on May 31, 2012

As a young lobbyist for a big east coast company and a college Econ major, your scribe was once assigned to cover a public meeting in which the possibility of consolidating City and County governments would be debated. The company was strongly in-favor; from a tax payer’s efficiency standpoint it made no sense for there to be three layers of police and other public services covering identical territories. For newly enfranchised minority communities in the City, however, the prospect of diluting their hard-won influence with all those County-folk was, at best, unjust -- and possibly a sinister plot to keep them “under the boot,” as one speaker expressed it. What looked like a simple, market-based solution to one set of eyes was a matter of political justice to another.

We live in an Age that author (okay, yeah – scholar too) Michael Sandel labels “Economic Triumphalism.” In his recent book “What Money Can’t Buy,” Sandel describes the rise of market-based intrusions into nearly every facet of modern life – from highway “Lexus lanes” to pollution control regulations, from paid line-standers to corporate sponsorships of everything from sports stadia to school curricula. There are ads on gas pumps and goalpost nets – even on police cars and in jails (“For a good defense, call Bill!”). Sponsored product placements abound in movies and novels. Promotions have even replaced graffiti in some traditional venues – instead of being subjected to scrawled humor (“Why look up here? …”), men who recycle their beer at the Oakland Coliseum now have to read about bumper-mounted barbeque grills, and hair loss options. These are said by economists to be neutral, values-free solutions that increase well-being and efficiently solve social problems.

But are they, and do they in all instances? There are clearly some things -- like enslavement or the sale of children – that society has placed off-limits to market forces. Others are clearly appropriate to market mechanisms. Then there are many intermediate issues where reasonable minds may differ. Ought an addict to be able to sell her fertility for a price – say, $300, thereby ensuring fewer drug-addicted babies? To some, that’s an excellent solution – to others it’s abhorrent as a semi-coerced sterilization that does not address the underlying condition. Sandel wants these issues debated.

He worries about the neutrality claim, too, and challenges the notion that markets are always values-free. Commoditization of a thing can corrupt its essence, he believes. A daycare center tried a market-based solution to the problem of late parental pickups by imposing a fine –tardiness then actually increased as parents converted their moral punctuality obligation into an economic transaction in which they merely paid a fee for their lateness. The market incentive worked at cross-purposes to a moral obligation. Blood banks that depend on voluntary, altruistic donations run better than those which pay for the fluids. When economists respond that altruism is in short supply, and ought to be conserved for really important stuff, Sandel rightly replies that community spirit is not a finite resource – it’s more like a muscle that strengthens with use. Used inappropriately, markets may cause that muscle to atrophy.

There is also a fairness objection to some market solutions – like line-standers for tickets to “free” performances of Shakespeare in the Park, who then sell those tickets to others. On one level, it is simply a transaction that increases the well-being of both buyer and seller – on another, however, it subverts the purpose of the performance, and makes the ticket available not to the person who may want it most, but to the person willing and most able to meet the seller’s price. Sandel asks whether attendance to other public celebrations – like July Fourth fireworks displays -- might also be auctioned-off (Don’t answer that, San Ramon).

The book is not an attack on the use of markets for all purposes – in many, many instances that mechanism works very well to efficiently allocate resources and incent behaviors. Instead, it is a plea that the market not be enlisted unconsciously – that a value judgment ought to be made first about the nature of the good or service, and whether it is appropriate to auction it, and whether there will be unintended consequences in a larger picture. In other words, efficiency is a good thing, but it is not the only thing.

Finally, he expresses concern about market influences that exacerbate the separation of rich from others in this democratic society. In a phenomenon he calls the “skyboxification” of America, he points out that a sense of community entails contact, and that Americans are increasingly isolating themselves from each other. For decades at the University of Michigan’s mammoth football stadium, crowds of 100,000 souls would be equally subjected to Ann Arbor’s wretched weather. Now, after a massive renovation of The Big House added 81 luxury suites at $85K/season, those with means may avoid rubbing elbows with mere fans. Sandel writes: “The disappearance of the class-mixing experience once found at the ballpark represents a loss not only for those looking up, but also for those looking down. “

Our kids call this area “The Bubble” because of its insulation from the hoi polloi. Certainly some notion of security is gained – but at a cost that we too seldom extend ourselves to calculate.


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