Tag Archives: markets

Value realism

People have different ideas about how valuable things are. Before I was about fifteen the meaning of this was ambiguous. I think I assumed that a tree for instance has some inherent value, and that when one person wants to cut it down and another wants to protect it, they both have messy estimates of what it’s true value is. At least one of them had to be wrong. This was understandable because value was vague or hard to get at or something.

In my year 11 Environmental Science class it finally clicked that there wasn’t anything more to value than those ‘estimates’.  That a tree has some value to an environmentalist, and a different value to a clearfelling proponent. That it doesn’t have a real objective value somewhere inside it. Not even a vague or hard to know value that is estimated by different people’s ‘opinions’. That there is just nothing there. That even if there is something there, there is no way for me to know about it, so the values I deal with every day can’t be that sort. Value had to be a two place function. 

I was somewhat embarrassed to have ever assumed otherwise, and didn’t really think about it again until recently.  It occurred to me recently that a long list of strange things I notice people believing can be explained by the assumption that they disagree with me on whether things have objective values. So I hypothesize that many people believe that value is a one place function which takes a thing as its argument, not a two place function of an agent and a thing.

Here’s my list of strange things. For each I give two explanations: why it is false, and why it is true if you believe in objective values. Note that these are generally beliefs that cause substantial harm:

When two people trade, one of them is almost certainly losing:

Why it’s false: In most cases where two people are willing to trade, this is because the values they assign to the items in question are such that both will gain by having the other person’s item instead of their own.

Why it’s believed: There’s a total amount of value shared somehow between the people’s posessions. Changing the distribution is very likely to harm one party or the other. It follows that people who engage in trade are suspicious, since trades must be mostly characterized by one party exploiting or fooling another.

Trade can be exploitative:

Why it’s false: Assuming exploitation is bad for he who is exploited, if a person chooses to trade, we can assume he is either not exploited or is deceived. Free choice is a filter: it causes people who would benefit from an activity to do it while people who wouldn’t do not.

Why it’s believed: If a person is desperate he might sell his labor for instance at a price below its true value. Since he is forced by circumstance to trade something more valuable for something less valuable, he is effectively robbed.

Prostitution etc should be prevented, because most people wouldn’t want to do it freely, so it must be pushed on those who do it:

Why it’s false: Again, free choice is a filter.

Why it’s believed: If most people wouldn’t be prostitutes, it follows that it is probably quite bad. If a small number of people do want to be prostitutes, they are probably wrong. The alternative is that they are correct, and the rest of society is wrong. It is less likely that a small number of people is correct than a large number. Since these people are wrong, and their being wrong will harm them (most people would really hate to be prostitutes), it is good to prevent them acting on either their false value estimates, or coercion.

If being forced to do X is dreadful, X shouldn’t be allowed:

Why it’s false: Again, choice is a filter. For an arbitrary person doing X, it might terrible, but it is still often good for people who want it. Plus, being forced to do a thing often decreases its value.

Why it’s believed: Very similar to above. The value of X remains the same, regardless of who is thinking about it, whether they are forced to do it. That a person would choose to do a thing others are horrified to have pressed on them, that just indicates that the person is mentally dysfunctional in some way.

Being rich indicates that you are evil:

Why it’s false: Since in every trade, both parties are benefited, being rich indicates that you have contributed to others receiving a large amount of value.

Why it’s believed: Since in every trade, someone wins and someone loses, anyone who has won at trading so many times is evidently an untrustworthy and manipulative character.

Poor countries are poor because rich countries are rich:

Why it’s false: That the rich countries don’t altruistically send a lot of aid into the poor countries is reason perhaps, though it’s not clear that this would help in the long run. Beyond that there’s no obvious connection.

Why it’s believed: There’s a total amount of value to be had in the world. The poor can’t become richer without the rich giving up some value.

The primary result of promotion of products is that people buy things they don’t really want:

Why it’s false: The value of products depends on how people feel about them, so it is possible to create value by changing how people feel about them.

Why it’s believed: Products have a fixed value. Changing your perception of this in the direction of you buying more of them is cheatful sophistry.

***

Questions:

Is my hypothesis right? Do you think of value as a one or two place function? (Or more?) Which of the above beliefs do you hold? Are there legitimate or respectable cases for value realism out there? (Moral realism is arguably a subset).

What’s wrong with advertising?

These two views seem to go together often:

  1. People are consuming too much
  2. The advertising industry makes people want things they wouldn’t otherwise want, worsening the problem

The reasoning behind 1) is usually that consumption requires natural resources, and those resources will run out. It follows from this that less natural-resource intensive consumption is better* i.e. the environmentalist prefers you to spend your money attending a dance or a psychologist than buying new clothes or jet skis, assuming the psychologist and dance organisers don’t spend all their income on clothes and jet skis and such.

How does the advertising industry get people to buy things they wouldn’t otherwise buy? One practice they are commonly accused of is selling dreams, ideals, identities and attitudes along with products. They convince you (at some level) that if you had that champagne your whole life would be that much more classy. So you buy into the dream though you would have walked right past the yellow bubbly liquid.

But doesn’t this just mean they are selling you a less natural-resource-intensive product? The advertisers have packaged the natural-resource intensive drink with a very non-natural-resource intensive thing – classiness – and sold you the two together.

Yes, maybe you have bought a drink you wouldn’t otherwise have bought. But overall this deal seems likely to be a good thing from the environmentalist perspective: it’s hard to just sell pure classiness, but the classy champagne is much less resource intensive per dollar than a similar bottle of unclassy drink, and you were going to spend your dollars on something (effectively – you may have just not earned them, which is equivalent to spending them on leisure).

If the advertiser can manufacture enough classiness for thousands of people with a video camera and some actors, this is probably a more environmentally friendly choice for those after classiness than most of their alternatives, such as ordering stuff in from France. My guess is that in general, buying intangible ideas along with more resource intensive products is better for the environment than the average alternative purchase a given person would make.  There at least seems little reason to think it is worse.

Of course that isn’t the only way advertisers make people want things they wouldn’t otherwise want. Sometimes they manufacture fake intangible things, so that when you get the champagne it doesn’t really make you feel classy. That’s a problem with dishonest people in every industry though. Is there any reason to blame ‘advertisers’ rather than ‘cheats’?

Another thing advertisers do is tell you about things you wouldn’t have thought of wanting otherwise, or remind you of things you had forgotten about. When innovators and entrepreneurs do this we celebrate it. Is there any difference when advertisers do it? Perhaps the problem is that advertisers tend to remind you of resource intensive, material desires more often than they remind you to consume more time with your brother, or to meditate more. This is somewhat at odds with the complaint that they try to sell you dreams and attitudes etc, but perhaps they do a bit of both.

Or perhaps they try to sell you material goods to satisfy longings you would otherwise fulfil non-materially? For instance recommending new clothes where you might otherwise have sought self-confidence through posture or public speaking practice or doing something worthy of respect. Some such effect seems plausible, though I doubt a huge one.

Overall it seems advertisers probably have effects in both directions. It’s not clear to me which is stronger. But insofar as they manage to package up and sell feelings and identities and other intangibles,  those who care for the environment should praise them.

*This is not to suggest that I believe natural resource conservation is particularly important, compared to using human time well for instance.

When to explain

It is commonly claimed that humans’ explicit conscious faculties arose for explaining to others about themselves and their intentions. Similarly when people talk about designing robots that interact with people, they often mention the usefulness of designing such robots to be able to explain to you why it is they changed your investments or rearranged your kitchen.

Perhaps this is a generally useful principle for internally complex units dealing with each other: have some part that keeps an overview of what’s going on inside and can discuss it with others.

If so, the same seems like it should be true of companies. However my experience with companies is that they are often designed specifically to prevent you from being able to get any explanations out of them. Anyone who actually makes decisions regarding you seems to be guarded by layers of people who can’t be held accountable for anything. They can sweetly lament your frustrations, agree that the policies seem unreasonable, sincerely wish you a nice day, and most importantly, have nothing to do with the policies in question and so can’t be expected to justify them or change them based on any arguments or threats you might make.

I wondered why this strategy should be different for companies, and a friend pointed out that companies do often make an effort at more high level explanations of what they are doing, though not necessarily accurate: vision statements, advertisements etc. PR is often the metaphor for how the conscious mind works after all.

So it seems the company strategy is more complex: general explanations coupled with avoidance of being required to make more detailed ones of specific cases and policies. So, is this strategy generally useful? Is it how humans behave? Is it how successful robots will behave?*

Inspired by an interaction with ETS, evidenced lately by PNC and Verizon

*assuming there is more than one

When is forced organ selfishness good for you?

Simon Rippon claims having a market for organs might harm society:

It might first be thought that it can never be a good thing for you to have fewer rather than more options. But I believe that this attitude is mistaken on a number of grounds. For one, consider that others hold you accountable for not making the choices that are necessary in order to fulfil your obligations. As things stand, even if you had no possessions to sell and could not find a job, nobody could criticize you for failing to sell an organ to meet your rent. If a free market in body parts were permitted and became widespread, they would become economic resources like any other, in the context of the market. Selling your organs would become something that is simply expected of you when the financial need arises. A new “option” can thus easily be transformed into an obligation, and it can drastically change the attitudes that it is appropriate for others to adopt towards you in a particular context.

He’s right that at that moment where you would normally throw your hands in the air and move on, you are worse off if an organ market gives you the option of paying more debts before declaring your bankruptcy. But this is true for anything you can sell. Do we happen to have just the right number of salable possessions? By Simon’s argument people should benefit from bans on selling all sorts of things. For instance labor. People (the poor especially) are constantly forced to sell their time – such an integral part of their selves – to pay rent, and other debts they had no choice but to induce. If only they were protected from this huge obligation that we laughably call an ‘option’. Such a ban might be costly for the landlord, but it would be good for the poor people, right? No! The landlords would react and not rent to them.

So why shouldn’t we expect the opposite effect if people are allowed to sell more of their possessions? People who currently don’t have the assets or secure income to be trusted with loans or ongoing rental payments might be legitimately offered such things if they had another asset to sell. Think of all the people who would benefit from being able to mortgage their kidney to buy a car instead of riding to some closer job while they gradually save up.

In general when negotiating, it’s best to not have options that are worse for you. When the time comes to carry out your side of a deal, it’s true this means being forced to renege. But when making the deal beforehand, you do better to have the option of carrying out your part later, so that the other person does their part. And in a many shot game, you do best to be able to do your part the whole time, so the trading (which is better than not trading) continues.

How does information affect hookups?

With social networking sites enabling the romantically inclined to find out more about a potential lover before the first superficial chat than they previously would have in the first month of dating, this is an important question for the future of romance.

Lets assume that in looking for partners, people care somewhat about rank and and somewhat about match. That is, they want someone ‘good enough’ for them who also has interests and personality that they like.

First look at the rank component alone. Assume for a moment that people are happy to date anyone they believe is equal to or better than them in desirability. Then if everyone has a unique rank and perfect information, there will never be any dating at all. The less information they have the more errors in comparing, so the more chance that A will think B is above her while B thinks A is above him. Even if people are willing to date people somewhat less desirable than they, the same holds – by making more errors you trade wanting more desirable people for wanting less desirable people, who are more likely to want you back , even if they are making their own errors. So to the extent that people care about rank, more information means fewer hookups.

How about match then? Here it matters exactly what people want in a match. If they mostly care about their beloved having certain characteristics,  more information will let everyone hear about more people who meet their requirements. On the other hand if we mainly want to avoid people with certain characteristics, more information will strike more people off the list. We might also care about an overall average desirability of characteristics – then more information is as likely to help or harm assuming the average person is averagely desirable. Or perhaps we want some minimal level of commonality, in which case more information is always a good thing – it wouldn’t matter if you find out she is a cannibalistic alcoholic prostitute, as long as eventually you discover those board games you both like. There are more possibilities.

You may argue that you will get all the information you want in the end, the question is only speed – the hookups prevented by everyone knowing more initially are those that would have failed later anyway. However flaws that dissuade you from approaching one person with a barge pole are often ‘endearing’ when you discover them too late, and once they are in place loving delusions can hide or remove attention from more flaws, so the rate of information discovery matters. To the extent we care about rank then, more information should mean fewer relationships. To the extent we care about match, it’s unclear without knowing more about what we want.

Markets marketed better

What do you call a system where costs and benefits return to those who cause them? Working markets or karma, depending on whether the accounting uses money or magic.

In popular culture karma generally has good connotations, and markets generally have bad. Reasons for unease about markets should mostly apply just as well to karma, but nobody complains for instance that inherent tendencies to be nice are an unfair basis for wellbeing distribution. Nor that people who have had a lot of good fortune recently might have cheated the system somehow. Nor that the divine internalizing of externalities encourages selfishness. Nor that people who are good out of desperation for fair fortune are being exploited. So why the difference?

Perhaps mysterious forces are just more trustworthy than social institutions? Or perhaps karma seems nice because its promotion is read as ‘everyone will get what they deserve’, while markets seem nasty because their promotion is read as ‘everyone deserves what they’ve got’. Better ideas?

Dying for a donation

The most outstanding feature of organ markets is that most people hate the idea. This is a curiosity deserving a second glance. There are organ shortages almost everywhere, with people dying on waiting lists hourly. To sentence them to death based on a cursory throb of disgust is not just uncivilised but murderous.

First I should get some technical details out of the way. An organ market can involve buying from living donors, or selling rights to organs after death, or both. Organs needn’t go to the rich preferentially; like any treatment, that depends on the healthcare system. The supply of organs available won’t decrease – if free donations dropped as a result of sales, the price would rise until either enough people sold organs or relatives and friends felt morally obliged to donate them anyway. A regulated market needn’t lead to an increase in stolen Chinese organ imports. It would lower the price here, making smuggling less worthwhile, while stopping Australians going on desperate holidays to seek organs in the under-regulated Third World.

That they ‘commodify the human body’ is the main objection to organ markets. They certainly do that, but why is commodification terrible? Well, a commodity is generally an object subordinated to the goal of making money. Treating other humans in that way leads to abominable actions. Slavery and organ theft are examples of human commodification that rightly repulse us. This doesn’t generalise however. The horror in these examples is that people are being made miserable because they don’t want to be sold. This is a completely different scenario to people voluntarily commodifying themselves.

After all, if commodifying people is inherently wrong, why allow paid labour? Renting out a portion of your time, mind and body to a company or government is surely commodification in the same vein. Or is selling body parts just too much commodification? It doesn’t seem so to me – you can lose more of your most personal possession, your limited lifespan, working than you would selling a kidney. Regardless of how we personally answer that question, there is no reason for the public to decide where the line on commodification should be drawn rather than the people choosing to be involved.

Perhaps anyone who wants to commodify themselves must necessarily be insane and unable to make good choices. To decide that somebody with an alternative idea must not be of sound mind is a big step. The fact that someone disagrees with your opinions, especially ones without arguments behind them, hardly proves they are insane. To all of those who use their gut reaction of disgust to produce policy, Alex Tabarrok asks, “Is it not repugnant that some people are willing to let others die so that their stomachs won’t become queasy at the thought that someone, somewhere is selling a kidney?”

But can people in desperate poverty be considered to be making free choices? Many say no. So, is the choice between starving and selling one’s kidney really a choice? Yes; an easy one. One of the options is awful. To forbid organ selling is to take away the better choice. If we choose to provide an even better option to the person that would be great – but it is no solution to the problem of poverty to take away what choices the poor do have absent outside help.

A related argument is that even with better choices, poor people will be so desperate as to be irrational. However even if we accept that poor people are irrational, for anyone desperate enough to become irrational, selling an organ is probably a great idea. Given the ubiquitous human aversion to being cut up, poor people are more likely to underestimate the merit of that cash source. Should we intervene there?

Another argument regarding poverty is that organ markets are highly unegalitarian; they’re another way to exploit the poor. However, there are two inequalities involved in this market. People have differing amounts of money, and people have differing numbers of functioning organs. Which of these inequalities is worse for those with less? The most pressing egalitarian action would be to redistribute the organs more fairly. By happy coincidence the most effective way to do this is to simultaneously redistribute wealth as well. If poor people sell organs, all the better; the money is redistributed to them as organs are also redistributed to those with least.

The alternative to a market is ‘altruism’. If a brother needs an organ to live, how can you refuse? Unlike the disconnected poor person who benefits from an extra option, this family member loses their previous option of keeping both their organs and their family relationships. The latter are effectively held to ransom. This system leaves the patient with the stress of traipsing around making such awkward requests. Instead of loving support, they get to watch the family politics as everyone tries not to be left with the responsibility, everyone hiding their relief when their blood type is incompatible. Often people offer an organ, then ask the transplant team to judge them a poor match. This gets them off the hook, but leaves the ill person in a cruel cycle of hope and despair. It’s analogous to telling cancer patients ‘come for chemo on Tuesday’, then refusing them any every week till they die. If the patient is fortunate enough to find a donor, there is potentially the stifling lifelong obligation to them. People have refused organs over this. The troubling emotional dynamics surrounding ‘donation’ led Thomas. E Starzl, a great transplant surgeon, to stop doing live transplants.

My favourite argument against organ markets is ‘it will create a distopic world where an underclass exists to replace body parts of the rich’. This is flawed in a multitude of ways. Most people would be in neither category. It would create as much of a split as ‘people who make donuts’ vs. ‘people who eat donuts’. The exchange of money makes the parties more equal in the transaction than if one is the unfortunate victim of a request they cannot refuse. Individual people can’t be used as organ factories. Number of organs is a hopeless basis for discrimination, due to the effort involved in actually finding out which organs somebody has.

‘Altruistic giving’ is more coercive than a market, unnecessarily cruel to the patient, the donor and their family and friends, and leaves thousands to die on waiting lists. Organ markets can save lives without us having to sacrifice morality and should join the ranks of life insurance and money lending; markets we once thought unthinkable.

Originally published in Woroni.

Corporate ecology

Direct competition is resource intensive. Just to compete, species and companies have to invest heaps of energy in long trunks and roots, extra hunting and massive advertising campaigns for instance, instead of expanding or improving production. To avoid these costs they move into niches. Where there are multiple species or companies with very similar habits, one will eventually get an advantage somewhere and use it to get further ahead and outcompete the others. Consequently those that survive employ slightly different tactics and are spread between different habitats and markets. The fast food diverged from the fancy restaurants way back and nestled into more isolated markets. The fast food members have since emphasised their differences through differentiation of colourful plastic toys, varieties of hamburger and corporate identity, to appeal to different prey.

Companies can even evolve according to the prey’s preferences, their appendages growing beautiful but functionless layers of plastic and coloured cardboard, along with scents precisely attuned to attract passing shoppers.

All right, the mechanisms are half different (companies at least try to steer their behaviour, though I reckon natural selection comes in there to a great extent too). And the structure of the larger system is perhaps different (unless people are the decomposers, the production chain the trophic levels…yeah, whatev).

Markets are a kind of electrochemical cell

There are two processes taking place: adding and using up value from units. When everything is mixed together and these processes are happening in one place, they happen slowly (think of subsistence production by consumers). Separate them to their own containers and they happen faster (think production in factories and consumption in homes). The containers must be joined by a channel for units to move according to their value, and a wire for charges to balance that. The same value is removed from particles in one container as added to others in the other.

The extra energy pushing the charges and value laden particles between the containers can be used to run things like light bulbs and welfare systems. Alternatively it can be used to run a small heat to warm up the reaction, or an advertising industry.

While the charges can move around indefinitely, the particles eventually run out. Then it’s all over. With any luck/sensible policy the metaphor doesn’t continue this far.