Harvey Weinstein, Bill O’Reilly, Donald, and on and on and on. There can no longer be any doubt about the existence of male privilege and how it breeds sexual entitlement. Something has to change.

The obvious answer for men on the individual level is to call out instances of misogyny and loudly condemn any sexual assault within our own immediate vicinity (in addition to not being a pig). But what to do on a systemic level? A lot of the commentary coming out now casually connects misogynist culture with some notion of capitalism, but it’s not clear to me what role the American economic system plays in all this.

[Anyone who has ever read this blog knows my sympathies to the market economy, though I’ll admit it’s not perfect and there can always be productive tinkering.]

Capitalism, in most real world manifestations of the word, allocates resources based on consumers’ preferences. When inequality is such as it is in the United States, rich people’s preferences are overrepresented massively because consumption is a function of income. If the consumers’ dollar is their vote, people with more dollars have a lot more votes. Money is power and I don’t think this is up for debate. In this sense, movies will be made that reflect men’s view of the opposite gender because they write the checks for the movies to be made and have more money to spend on movie tickets. If those with more money don’t want to see football players kneeling in social protest, then the profit-maximizing action for the NFL is to make a rule disallowing kneeling during the national anthem. Essentially, a capitalist system will shake out to reflect the interests of those with money and power, even if those interests are discriminatory and completely exploitative like in the case of Harvey Weinstein. Under these scenarios, I admit, the market economy is a system that rewards and perpetuates unethical behavior. [Not all corporate behavior is done under profit-maximizing conditions, however.]

On the other hand, I’m cognizant of arguments that show the market economy as being a force for good in this debate. Money talks, but this can go both ways. Bill O’Reilly was effectively forced out from Fox News because advertisers were boycotting. They didn’t want to be associated with such a vulgar human being. Were their decisions based on ethics, or just avoiding bad PR? Either way, the boycott worked. Similarly, Harvey Weinstein was forced out from his own company and seemingly blacklisted from the entire industry. Compare this to the President: his first wife alleged marital rape, he’s had countless sexual assault allegations, and the Access Hollywood tape was a smoking gun showing what kind of person he is. But he’s still in power. He’s not the only politician or person in government to retain their position after doing terrible things. We can all choose to support companies that we think are ethical and not use our dollar votes to support unethical ones, yet we are all bound to pay taxes to the same government.

So then I wonder: Under what circumstances do market forces punish men for this behavior better than the democratic process? It’s easy to look at the very real faults of a consumer-driven market economy and see an alternate system based on public control as the antidote. But if culture is the real problem, a new economic system might not make much of a difference. In fact, high-quality legislation from the democratic process could be disappointingly ineffective if the underlying culture is so engrained. If you think of different countries around the world with less ‘capitalist’ economies, how much of an improvement is there? For European countries that boast higher female participation in corporate boardrooms or the legislature, was it because of their culture or some sort of tinkering in how their economy is structured? I’m skeptical that replacing the current US economic system with, say, a full-on Bernie Sanders system will improve much. A sexist culture will still put sexist men in charge, though often we assume the right democratic outcome weeds them out.

The economy is not always a zero-sum game. We can both be better off without it coming at the expense of someone else. But power is a zero-sum game. So the asymmetric power of men, reenforced by their asymmetric holdings of money and connections, does come at the expense of women. Closing this power gap absolutely needs to be a policy priority, but more importantly it must be a cultural priority. Market forces should be used in tandem with legislation and the democratic process; anyone suggesting only markets or only a new economic system will cause the change which we would like to see should rethink their approach.

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Three new podcast episodes, starting with most recent:

  1. 2002 Nobel Laureate Vernon Smith talks about his work in experimental economics and how Adam Smith’s Theory of Moral Sentiments influenced his work.
  2. Dan Hirschman of Brown University discusses “stylized facts” and their role in the process that takes ideas from academia to public policy, specifically inequality.
  3. Nell Compernolle of the University of Michigan tells the migration story of Nepalese men and its impact on marital attitudes.

Lots more episodes coming soon, hopefully. If you know anyone that would be interested in being interviewed, let me know!

New podcast episode finally out. I interviewed Carson about The Ethics of Locavorism. Essentially, the question is: if we want to be ethical consumers, should locavorism be a priority in our consumption habits? I won’t spoil the answer, but we examine the case for locavorism through the environmental lens, economic lens, and trying to foster communities. Find the RSS feed here, iTunes here.

I’m currently reading Bourgeois Equality, Deirde McCloskey’s final installment in a trilogy. I have a lot of thoughts that will be for another day, but for now a quick observation…

Among the many ideas and arguments brought up in the trilogy, McCloskey criticizes modern-day economic thought as relying only on one of the seven principal virtues: prudence. Ethical philosophers and psychologists throughout time have recognized that human behavior is (and should be) guided not just by prudence (“rational self-interest”) but also by temperance, justice, courage, love, faith, and hope. Adam Smith, in Theory of Moral Sentiments, argued wonderfully about how human behavior guided only by any one of the four cardinal virtues (the first three plus prudence) was unreasonable and unethical. More to the point, mainstream economic analysis today is both incomplete and unreasonable to reduce all human behavior down to a rational utility maximization.

What dawned on me is how the economics discipline today is full of people worshipping this prudence-only mindset. I think the causation works both ways. On the one hand, individuals who themselves see problem-solving and behavior as largely rational calculated decisions will be disproportionately drawn to economics…because the framework they are going to be working with jives better with their own approach to life. On the other hand, students who study economics often start to shape their approach to life problems and policy decisions as if human behavior is only understood through prudence. After studying economics for a couple years, I recognize that I started to oversimplify behavioral analysis and ethics as “well, yeah, it’s in their self-interest.”

To non-economists the following parable may seem absurd, but to me at the time it sounded oddly sensical: the girlfriend of a roommate was visiting for the weekend; the roommate without the girlfriend felt this was a burden on his space and lifestyle, so he did some Coasean bargaining to allow this roommate’s girlfriend to visit and stay with them. They worked out some monetary deal to make the visit an agreeable event. Since they were sharing a room, the girlfriend visit meant the single roommate would have to sleep on the couch. What a drag! (For the record: I was not directly involved in this situation)

Another quick bit of evidence can be seen in experimental economics. Some experiments, like the dictator game or ultimatum game, are meant to isolate how altruistic humans can be in different scenarios when money is involved. Non-economists demonstrate more charity and altruism, even when the experiments are anonymous and no “self-interest” can be ascertained from their behavior. Undergraduate economics students, on the other hand, follow more closely to what “maximize utility” models would predict. Basically, they know the models. They know how they’re “supposed” to act. In a sense, they have shifted their decisions to emphasize prudence more than the other virtues. Like I said, the causation can work both ways, but I doubt that roommate would have engaged in some Coasean bargaining absent learning about the concept in economics classes. No society that I know of imposes a norm of private bargaining in such a household situation.

This reality unfortunately reinforces itself. Prudence-driven individuals are more likely to go into economics, economics is more likely to draw people towards a more prudence-based approach, and the discipline ends up staying focused on prudence only. People who are so aghast at the idea of rational self-interest being the sole driver of human behavior stop after Intro to Micro and go into other disciplines. In addition, the credibility of the subject to outsiders diminishes. On some levels, this is a fair decrease in credibility. In others, it means non-economists wrongly dismiss economic realities of scarcity and the laws of supply and demand when they shouldn’t.

I have written a concept album with a band called The Benevolent Dictators all about Adam Smith, and the first song was just released.

screen-shot-2017-01-11-at-1-50-06-pm

My motivations for writing the album and general vibe will be left for another time, but I feel inclined to discuss more about this particular song’s thematic significance. The song is inspired by text from The Wealth of Nations, Book 3, Chapters 2-4. The summary: commerce liberated the masses from the feudal system.

[Adam Smith was an 18th century Scotsman. His first book, Theory of Moral Sentiments, is about morality and human nature. His second book, Wealth of Nations, is considered the starting point for modern economic thought.]

The story begins just after the Roman Empire’s demise. Everything is in chaos and eventually order is restored via different sovereign monarchs throughout the former Empire. The monarchs don’t have the capability to enforce laws and protect everyone in their respective polities, so they enlist the help of others in exchange for big chunks of land. These estates produce enough food for the feudal landlords to survive. But, Smith observes, our desire for food is limited to the extent our bellies can make space. To utilize the surplus food, the feudal lords give their additional food to individuals in exchange for their servitude in the feudal estate. At the time, the feudal lords had no other outlets for their surplus food. Thus, their best option was to increase their power by making commoners dependent on them for food.

Meanwhile, a bunch of city dwellers (called “Burghers”) were given a special exemption by the king to start making stuff. These are the artisans and merchants. Soon, the Burghers had shiny baubles and trinkets that they were looking to sell. The feudal landlords might have limits for their desire to fill their bellies, but they have no boundaries on their childish vanity. The feudal lords wanted to show off how great they were and get their hands on these diamond trinkets. As a result, they started to trade their surplus food not for the servitude of commoners, but for the luxury goods the merchants were selling.

What they used to exchange for the servitude of hundreds, sometimes thousands of men, was now going to service their childish vanity. As the demand for these trinkets went up, so did the supply, so the previously dependent commoners now could join in on the market. Before, when the commoners were given subsistence-level resources in exchange for their work, there was of course no incentive to innovate or increase efficiency. They did the bare minimum that allowed them to survive, because any extra work would go unrewarded. Now, they began to cultivate different areas, knowing the fruits of their labor would mean more money for themselves. Prosperity follows.

In addition to the cultivation, this new market brought about interdependence where dependence used to be. In a sense, all of the parties involved were just as reliant on each other as before. The commoners of course needed the landlords as consumers of their goods, and the landlords needed an outlet for their surplus food. The difference now was that the power was completely decentralized. Rather than a commoner being subjected to the whims of one feudal lord, the market gave him the ability to appeal to the childish vanity of all the landlords to which he could ship his goods.

What is more exciting than reading about how peaceful commercial exchange liberated the masses from the tyranny of the feudal system? Smith emphasizes how this ‘silent revolution’ came about not because a top-down authority dictated it, and not because anyone was consciously trying to bring about positive change for the masses.

A revolution of the greatest importance to the public happiness was in this manner brought about by two different orders of people who had not the least intention to serve the public. To gratify the most childish vanity was the sole motive of the great proprietors. The merchants and artificers, much less ridiculous, acted merely from a view to their own interest, and in pursuit of their own pedlar principle of turning a penny wherever a penny was to be got. Neither of them had either knowledge or foresight of that great revolution which the folly of the one, and the industry of the other, was gradually bringing about.

There are free PDFs all around the internet if you’d like to read the passages in their entirety. Here is one.

I leave you with the lyrics of Silent Revolution:

They say beauty is in order
What’s left over in so few hands
But the landlords spell their doom
Wanting the jewelry the merchants have

The price they paid could buy them
A thousand different men
And though they get the diamond
Power leaves them
And commerce wins instead

Here comes the silent revolution
Moving slowly, no certainty
Interdependence, cultivation
From no design comes prosperity

Without any intention
Without beneficence
The feudal system’s dying
Lords made obsolete from
Their childish vanity

Without any intention
Without beneficence
The feudal system’s dying
Lords made obsolete from
Their childish vanity

For those of you not aware, I did a podcast series with the Development Research Institute at NYU earlier this year. It was nine episodes focusing on development that happens on a level other than the nation-state. Each episode featured me discussing a paper with its author and is worth checking out. My favorite one is probably the fourth episode, focusing on the centuries-long history of one New York City block. Here’s the summary:

Between Houston and Prince Streets on Greene Street in lower Manhattan, one city block has undergone dramatic changes over the course of four centuries. Today this Greene Street block is home to luxury retail and expensive residences, but not too long ago it was filled with art galleries, brothels, and garment manufacturing. The shifts in the block’s physical character and value were often sudden and totally unanticipated. Looking only at the nation-state level can obscure meaningful growth that occurs on much smaller levels, but how much can we learn from looking at just a city block? William Easterly of New York University tells us about this exciting and surprising history of one New York City block and what it can teach us about development.

Here’s a link to the iTunes page.

I’ve got a new post over at Novel Stance about putting the “economic anxiety” of the Western working class in the greater context of global income trends. A couple excerpts:

Whatever legitimate economic anxiety Brexiteers and Trumpkins have from the last few decades of increasing globalization, it is dwarfed by the historic rise in living standards nearly everywhere else in the world.

In a sense, we can think of the “Western working-class” being pushed aside by an “Emerging Market working-class.” Emerging market economies like China, India, Brazil, and Indonesia are building their own middle classes, simultaneously lifting hundreds of millions out of poverty and displacing the Westerners that used to do that work.