Annoying Ideas

Is Steve Landsburg a closeted social democrat? I would never have guessed, but how about this statement?

...No, you’ve missed the main point, which is that markets work well when the reward to a supplier is commensurate with the social value of what he produces, and that tournaments (such as Olympic events) are classic examples of markets where that condition is not met.

Now this sounds to me like something Paul Krugman might have said, but Prof Landsburg said it right here.

What, you might say? You're quoting Landsburg again! What is your problem?

I not a big fan of Landsburg's opinions, and he can't stand me, but he does turn out to have a lot of the ideas that are just annoying enough to get my attention.

Ideas can be annoying because they are wrong, trite, insulting, or just boring. Such are the mosquitoes of the idea world. There is a more interesting type of annoying idea though, and that’s the one that undermines some tenet (or even tenant!) of one’s world view but stubbornly resists easy refutation. These are the ideas worth struggling with, although unfortunately I have a lot of trouble getting along with those who propound them. A lot of these turn out to have a libertarian flavor, and Landsburg is a nearly ideal source.

Let me back up to a recent episode of SL which provoked the comment quoted above:

What must it be like, I wonder, to be the parent of an Olympic athlete, watching your kid accomplish magnificent feats of almost no social value? When your kid is a taxi driver or a shoe salesman or a carpenter, you can take pride every day in knowing that he or she has taken someone home, or helped someone walk, or given someone shelter. When your kid is an Olympic gold medalist, mustn’t you feel a little sheepish about all the superhuman effort that went into nothing more than taking a gold medal away from someone else?

At first I thought that SL was being ironic here, but it seems not. The deep, and annoying, question is why a parent, for example, should place such a high value on some achievement like winning a gold medal but so little on providing a useful service, like driving a cab. More broadly, why should a society so arrange its values?

As in all such analyses, my instinct is to ask Mr. Darwin. For the parent, the answer is clear. Winning the gold medal (or hitting the little league home run, or being elected Prom Queen) is a big leg up in the battle for reproductive fitness – cab driver, not so much. Our society, whether family, town or nation is modeled on the primitive band in which our ancestors evolved, so that badge of fitness is or seems like one for the band (society) as well as parent. Something like 8% of the inhabitants of large swaths of Asia appear to be direct descendants of Genghis Khan and his close relatives. Our selfish genes don't give a damn about social usefulness.

So what’s wrong with the sort of economic reasoning that we see in L’s post? For me, it’s mostly just one thing – it doesn’t explain actual human behavior. One can imagine a sort of worker’s paradise in which people really thought that way but it wouldn’t be of this world. I think we can see Prof Landsburg's inner social democrat peering out here, wanting markets (and parents) to value the socially useful.

I don't mean by that that we are helpless prisoners of the Darwinian struggle, doomed to keep playing out this game to its grim Malthusian end, though, but I'm sure that we can’t pretend that these aspects of our nature don’t exist and still come to any useful conclusions.

That's why a cynical liberal like me doesn't trust the markets, even though I recognize that they do somethings very well and much better than any central planner could. And another reason that I suspect libertarians misjudge human nature.