Trade makes you responsible, but why?

It’s supposedly bad to exploit poor people by paying them as little as you can get away with in trade.

Onlookers who don’t offer the needy anything condemn those who offer some non altruistic benefit through trade because it isn’t enough. It’s interesting that we see this as a fault with the person trading, rather than with everyone. Very few people think they themselves are morally obliged to pay the poor more. I’ve discussed before how misguided this is if we care about the wellbeing of the poor person. But why do people feel this way? Here are some reasons I’ve occasionally heard, though I doubt they are all independently responsible for this curiosity:

  1. The issue is domination more than wellbeing. A trader forces a poor person into a low value deal by offering when they can’t afford to refuse. At least the rest of us respect poor people enough to mind our own businesses.
  2. It is the role of the trader to trade fairly with the poor people. It is the role of the casual observer to have opinions, not to intervene in traders’ doings.
  3. Benefiting from another’s misfortune is evil, even if it helps them, so interactions with people who need help should be charitable. It’s not great of most people to ignore poor people, but it’s horrific to go out and benefit from their hardships.
  4. Trade is a form of social relation, and people should be nice in their relationships much more than they should be to those they are unconnected to.

14 responses to “Trade makes you responsible, but why?

  1. #2 doesn’t feel like a reason someone is opposed to profiting by selling to the poor. It feels like a justification for “that’s unfair” complaining that stops short of advocating regulation. All 4 seem like plausible reactions, but I don’t identify with any of them.

    You mean high interest rates for the poor (credit cards and payday loans) aren’t really evil? I agree. Fees for check cashing are ok? I agree.

    But how about hard to disable “overdraft protection” features on entry level checking accounts designed to turn a single mistake into a huge pile of fees? That offends me, because it’s designed to prey on the tendency to believe that *I* won’t be the one to make a mistake. But it’s actually a pretty good deal for the arithmetically able and conscientious poor.

  2. Katja, this kind of discussion often misses something: the options available to people are not exogenous.

    What do I mean by this? By eliminating certain kinds of transactions, we make other kinds of transactions possible. Example: suppose we have indentured servitude, then we ban it. Some of those people who previously were indentured servants will find more renumerative work, simply in virtue of the fact that there’s still a demand for their labor (depending of course on the elasticity of that demand). (Yes, this argument presupposes a market failure for labor in the indenture society… one that has been empirically present throughout history.)

    I chose the indentured servitude example deliberately, because there’s a really good paper by Debra Satz (professor of philosophy, Stanford) that brings some of these arguments out well — also about the way that those kinds of transactions can distort the market in which the actors operate such that normal sorts of economic reasoning (Coase etc.) that would ordinarily suggest that permitting the transactions makes the participants better off just doesn’t apply.

    (Note that your argument in the linked “discussed before” post would seem to justify voluntary slavery.)

    I think there’s probably something to this argument more generally. Think of payday loans. Payday loans are quite profitable. There are (or, at least, are likely to be) lower-profit, but still profitable, ways of lending to people with bad credit. However, competition doesn’t lead to people entering the market to offer these options because those who are poor and who have bad credit also have really high information costs, high discount rates, etc., and are thus very information-insensitive. If we banned payday loans, lenders would have to offer these less profitable options. (For more on the effects of information disparity on this kind of exploitation argument, see this discussion on the Public Reason political philosophy blog. )

    (This is a bit rambley, sorry.)

  3. hmm… it says my previous comment is awaiting moderation. Is it because of the links? :-)

  4. I say 4. We are not natural consequentialists. Our ideas about morality are often based on how attractive a quality is in an ally. It’s the reason we would disrespect a mother who cared for distant Africans as much as her own kids even though it makes no difference to us which kids are being helped.

  5. How about:

    5. You’re not held socially responsible for problems you can plausibly claim you didn’t notice. Your trade might make the poor guy better off, but you had to notice his problem (he’s poor) before you could make the offer.

    Responsibility attaches to you the same way it would if you went for a swim and noticed someone drowning.

  6. A person who would take this position would probably also be somewhat dismissive of the entire system, or at least believe that all trades should be of equal value.


    6. As all trade is equal, neither poor nor rich people should exist. That they do exist implies that one has already exploited the other. It is then even more galling when they further lean on those they have already cheated. The onlooker played fair and did not cheat anyone, so therefore does not need to give back what was originally stolen from the poor.

  7. mitchell porter

    Nature says it’s due to brainwashing by a little-known communist regulatory body, the vmPFC.

  8. How about, “Treat other people as you would want to be treated?”

    I suspect that most people, when they imagine themselves facing difficult circumstances, do not think they would want to be exploited. Therefore they frown when they observe the exploitation of those facing difficult circumstances.

    I know, it’s a radical concept.

    • You’re saying if you were poor you would not want low wage employment, which is untrue of most people and you don’t explain it in your case. Calling employing you in such a situation ‘exploitation’ doesn’t add much to this vacant explanation.

      • I might well accept a below-subsistence wage if I had no other options. But I do not think I would view my employer as doing me any favors. In fact, I think I would probably resent her.

        Let me phrase my point differently. Just because a transaction is between two parties and is mutually beneficial to both, it does not imply that the transaction is not harmful. The reason is simple: A society that encourages the exploitation of the weak by the strong is not the kind of society in which you want to live. (Never mind that this is not far from our own society, thanks to a pervasive philosophy of worshipping sociopathic greed.)

        This is closely related to those highly confusing concepts like “virtue”, “dignity”, and “civilization”. Also “common sense”, to which — going out on a limb here — I am guessing that you do not give much weight.

        • Weak =/= Poor :/

          Also, what? If multiple parties engage in an action which is deemed beneficial by all involved, then how is it harmful to any of them? Moreover, how is it harmful to YOU if you aren’t involved? Am I wrong to give up 20 hours of study time to work and earn my own way through the world rather than demand a bigger slice of your tax dollars? Is it evil for the grocer to sell food at an agreed upon price?

          I’d argue it’s far more exploitative to steal part of my pay packet to fund a bloated bureau that I derive no benefit from nor did I have any say in it’s creation

    • Why pass up an opportunity for a mutually beneficial transaction? If I was in dire need of employment I would hardly turn my nose up at a burger flipper position. It’s simply two unrelated parties seeking their own benefit, but in doing so co-operating with one another to achieve greater wealth. I hardly think that’s evil, and it’s far more responsible than demanding other peoples’ tax dollars for doing nothing

  9. Paul, I finally read that Satz paper; sorry, its crap. She says that since banning some type of product might induce suppliers to offer more of other products to customers instead, we can’t really know if that ban is bad.

  10. Comment_Whatever

    5.Because we don’t live in a fantasy world where the poor person “just happened” to be in that bad position. We might imagine that Mr. Exploiter had something to do with it.

    I know, I know, paranoid conspiracy theory. Like when a lawyer charges outrageous fees to a guy going through a divorce so he can see his kids once a week instead of once a month.

    Because, quite clearly, the American Bar Association has had no say in divorce law. So the claim that the lawyer, and his “friends” had something to do with the man’s situation is quite foolish.


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