Does the free market corrode moral character?(templeton.org)
templeton.org
Does the free market corrode moral character?
http://www.templeton.org/market/
37 comments
#1 and #2 are basically the default. Not good news for moral character.
Very true. You probably need some legislation to get around that. For example, taxing emissions is a step towards it, but only if that money actually is spent covering the cleanup costs of the environmental damage done by the company. Other externalities should also be charged for, of course.
Besides unhiding the hidden costs, I'm not sure that more government intervention would be a good thing, but I know for a fact that I'm not qualified enough to suggest solutions.
Besides unhiding the hidden costs, I'm not sure that more government intervention would be a good thing, but I know for a fact that I'm not qualified enough to suggest solutions.
No. Just his argument breaks down. Not all kinds of #1 and #2 dispose creating trust (and educating your customers) as a viable strategy.
"educating your customers" may be possible within certain domains. But is it possible in a free market structure which must include all people?
Does the definition of "transparency" also imply that all mechanisms which emerge in a free market must be "understandable" by all participants? That is, even if you fully disclose financials, but the transactions and risks are so complex the average "customer" can't or does not have time to make sense of it, is it "transparent".
Does the definition of "transparency" also imply that all mechanisms which emerge in a free market must be "understandable" by all participants? That is, even if you fully disclose financials, but the transactions and risks are so complex the average "customer" can't or does not have time to make sense of it, is it "transparent".
"The best long term strategy"
Ignoring the fact that you made a baldfaced assertion with no factual backup or even logical argument. Why worry about long term if in short term it's possible to make a killing and retire rich by corroding morals?
And regarding ideal as in "ideal free market" ideal is euphemism for fantasy.
Ignoring the fact that you made a baldfaced assertion with no factual backup or even logical argument. Why worry about long term if in short term it's possible to make a killing and retire rich by corroding morals?
And regarding ideal as in "ideal free market" ideal is euphemism for fantasy.
Compared to what? As far as I can see, the only alternative to a free market is some kind of controlled market, and a controlled market requires some subset of the population to control it.
If you're a controller, then holding that much power is almost certainly going to lead to a corrosion of moral character -- the reason power corrupts is because it makes it too easy for an individual to get huge benefits (whether personal benefits or just service of their own personal view of the greater good) by doing (what look like) minor wrongs.
If you're not a controller, then it leads to a corrosion of moral character because your own interests will be best served by sucking up to the controllers, rather than by doing the right thing.
Of course, I haven't bothered to define what the hell "moral character" actually is, but I think the above will hold for most sensible definitions.
If you're a controller, then holding that much power is almost certainly going to lead to a corrosion of moral character -- the reason power corrupts is because it makes it too easy for an individual to get huge benefits (whether personal benefits or just service of their own personal view of the greater good) by doing (what look like) minor wrongs.
If you're not a controller, then it leads to a corrosion of moral character because your own interests will be best served by sucking up to the controllers, rather than by doing the right thing.
Of course, I haven't bothered to define what the hell "moral character" actually is, but I think the above will hold for most sensible definitions.
As far as I can see, the only alternative to a free market is some kind of controlled market, and a controlled market requires some subset of the population to control it.
Free markets do not create powerful people? I think if anything the supposed US/Soivet case studies (both of which are imperfect examples of the ideologies they were supposed to represent), is that both claimed to be removing excess power from single hands. Both did the opposite. Both ended up creating a power class.
In the case where powerful individuals are public as opposed to private people you can at least complain. With free markets, as long as their actions are legal, it's 'fair.' To create a framework for accountability, you need to create a legal framework, which of course makes the 'market' a little less 'free.'
A patent troll doesn't need to justify his actions in terms of public good. Nor does any other commercial entity. The free market theory as a moral theory might be summed up as: everyone do what's best for them. Between, supply & demand and game theory, we'll hit the best result for everyone.
Free markets do not create powerful people? I think if anything the supposed US/Soivet case studies (both of which are imperfect examples of the ideologies they were supposed to represent), is that both claimed to be removing excess power from single hands. Both did the opposite. Both ended up creating a power class.
In the case where powerful individuals are public as opposed to private people you can at least complain. With free markets, as long as their actions are legal, it's 'fair.' To create a framework for accountability, you need to create a legal framework, which of course makes the 'market' a little less 'free.'
A patent troll doesn't need to justify his actions in terms of public good. Nor does any other commercial entity. The free market theory as a moral theory might be summed up as: everyone do what's best for them. Between, supply & demand and game theory, we'll hit the best result for everyone.
> Free markets do not create powerful people?
They do only if someone is selling power, something that happens in non-free markets as well.
In a free market, willing participants make the deals that they want, pretty much without regard for what other people want. In other words, they're not affected by the powerful.
To me, the key point is not whether someone else has the money to pursue their dreams, it's whether I have the freedom to pursue mine. Non-free markets almost always place more restrictions on the little guy because rich guys buy exemptions.
They do only if someone is selling power, something that happens in non-free markets as well.
In a free market, willing participants make the deals that they want, pretty much without regard for what other people want. In other words, they're not affected by the powerful.
To me, the key point is not whether someone else has the money to pursue their dreams, it's whether I have the freedom to pursue mine. Non-free markets almost always place more restrictions on the little guy because rich guys buy exemptions.
Your question parses, but makes no sense, semantically. Somewhat like "do colorless green ideas sleep furiously or seductively?".
Firstly, free markets are not entities which can act, they are a social systems which organize people, and secondly, "moral character" is a complicated abstract concept linked to personal choice and ethics.
Rephrase your question more succinctly and the answer will be obvious.
Firstly, free markets are not entities which can act, they are a social systems which organize people, and secondly, "moral character" is a complicated abstract concept linked to personal choice and ethics.
Rephrase your question more succinctly and the answer will be obvious.
I think "Freakonomics" answers this. If your goal is to get money, and there is no monetary penalty for being "immoral", then of course people are going to be immoral. It's the same reason corporations dump toxic waste -- paying the fines is cheaper than not producing the toxic waste.
I don't think anyone defines a "free market" as meaning that there is no penalty for getting money by immoral means (e.g. stealing your neighbour's wallet). Polluting a river should, of course, also be penalized and/or priced appropriately.
You don't need to define free market as that. You just need not to define free market as not that.
Penalties can either be legislated (eg fines) or consumer generated (eg Nike). But internal morality is not part of how the market works. Sure you can have Google not being evil. But if you have a sound an economic opportunity presented by creating (fro example) waste. It will be taken up by someone. Without legislation forbidding it, you can bet that there would be a business in taking garbage from London & dumping it at sea.
Penalties can either be legislated (eg fines) or consumer generated (eg Nike). But internal morality is not part of how the market works. Sure you can have Google not being evil. But if you have a sound an economic opportunity presented by creating (fro example) waste. It will be taken up by someone. Without legislation forbidding it, you can bet that there would be a business in taking garbage from London & dumping it at sea.
The problem with questions like this is that "moral" character is kind of a relative and arbitrary concept in the first place. What's immoral today might be moral tomorrow, and vice versa. In fact, if a free market becomes ingrained into the culture deeply enough, it will eventually decide what's moral. Not the other way around.
What's immoral today might be moral tomorrow, and vice versa
Well then you've already made a big statement about morality. (its relative & arbitrary). Welcome to the relativist school. You leave behind virtually all humanist ethicists, much of the The Enlightenment and of course most western religious traditions.
You are in an extreme minority. You will be accused of nihilism.
But even as a relativist, you could ask yourself questions like:
Does the free market cause individuals to be immoral according to their own view of what is moral?
Does the free market cause individuals to be immoral according to their friends & neighbours of what is moral?
Does the free market cause individuals to be immoral according to their seniors view of what is moral?
Well then you've already made a big statement about morality. (its relative & arbitrary). Welcome to the relativist school. You leave behind virtually all humanist ethicists, much of the The Enlightenment and of course most western religious traditions.
You are in an extreme minority. You will be accused of nihilism.
But even as a relativist, you could ask yourself questions like:
Does the free market cause individuals to be immoral according to their own view of what is moral?
Does the free market cause individuals to be immoral according to their friends & neighbours of what is moral?
Does the free market cause individuals to be immoral according to their seniors view of what is moral?
Excellent submission. It seems that the method they use for conducting discussions: asking a whole bunch of people in parallel for an essay, and then revealing them, allows to conversation to be a whole lot less contentious, and a much broader set of viewpoints and arguments to be heard (rather than the argument being dominated by fights over a few sticking points). I see that there are many other questions asked by Templeton.org as well. Thanks for pointing it out.
As for my opinion, I don't think the free market corrodes moral character, because it can spring back. On the other hand, it can, and it does, confuse, hide, and suppress it.
As for my opinion, I don't think the free market corrodes moral character, because it can spring back. On the other hand, it can, and it does, confuse, hide, and suppress it.
Non-transparent markets do.
Fortunately there is money to be made (arbitrage) in creating tranparency.
Unless you ban one end of that arb (shortselling).
I agree.
But not all is lost. There are ways around that. Ever heard of Put-Call-Parity and similiar relations that allow for the creation of synthetic products? (See http://en.wikipedia.org/wiki/Put-call_parity and http://en.wikipedia.org/wiki/Synthetic_options_position)
But not all is lost. There are ways around that. Ever heard of Put-Call-Parity and similiar relations that allow for the creation of synthetic products? (See http://en.wikipedia.org/wiki/Put-call_parity and http://en.wikipedia.org/wiki/Synthetic_options_position)
I trade options, and I know that people cuold put on synthetics in lieu of shorting outright. But the market makers on the other side of the trade have to short the stock in order for them to properly hedge. Since it's much harder to do, the spreads on options became pretty retarded after the short-selling ban. This reduced liquidity, put the VIX, VXO, VXN, to all time highs, and exacerbated the moves downward.
The past 30 days have essentially become one very long one.
The past 30 days have essentially become one very long one.
“The best index to a person’s character is (a) how he treats people who can’t do him any good, and (b) how he treats people who can’t fight back.”
— Abigail van Buren (Pauline Esther Friedman), American newspaper advice columnist (1918-2002)
One of my favorite quotes on character. Think of it this way - if you meet the typical VC and they don't think you can make them money, what will they do? Offer you intros? advice? help? feedback? no.. they will stop communicating with you as quickly as possible because they are really busy and have to look at more deals that help make them a higher return on their fund.
In this example, the forces of the free market are directly in contrast to this definition of character.
One of my favorite quotes on character. Think of it this way - if you meet the typical VC and they don't think you can make them money, what will they do? Offer you intros? advice? help? feedback? no.. they will stop communicating with you as quickly as possible because they are really busy and have to look at more deals that help make them a higher return on their fund.
In this example, the forces of the free market are directly in contrast to this definition of character.
So if I understand you, everybody in the world should spend special time with you or they're morally bankrupt?
I think you've twisted your definition of reality a bit. Obviously, even in a world full of wonderful saints everybody can't spend hours with everybody else. The math just doesn't work out. So the act of limiting one's time with someone else cannot be immoral or bad -- in fact, it would seem to be a defining good quality. The reference you quote could only be applied in those cases where you're already spending time with each other: a restaurant, a bellhop, in an elevator, etc.
You took a wonderful quote and made it into something it was never meant to be.
I think you've twisted your definition of reality a bit. Obviously, even in a world full of wonderful saints everybody can't spend hours with everybody else. The math just doesn't work out. So the act of limiting one's time with someone else cannot be immoral or bad -- in fact, it would seem to be a defining good quality. The reference you quote could only be applied in those cases where you're already spending time with each other: a restaurant, a bellhop, in an elevator, etc.
You took a wonderful quote and made it into something it was never meant to be.
I don't think my point came across as intended, and was probably not the best example either. Just to be clear.. I ignore homeless people all the time and do not see it as a reflection on my character.
Most people that you meet with the ability to help you with your venture will do so - they will give you feedback, make intros, etc - often without the need for anything explicit in return. Its human nature, and what I would consider a norm for moral character. I think most people would say that given the resources, they would help anyone they could - everyone has a need for basic altruism.
However, when you introduce the need to capitalize on this same activity, it requires a change in behavior. My point was that, the same guy who would help you out for no reason as a norm, the minute he starts doing the same thing for money he does not have the luxury to help you in the same way any more. Now he has to make a business out of it and be efficient.
That is what I was trying to illustrate. This ability to be altruistic inherently declines when you have to take on the same role to make profit. The ability to treat someone well 1) 'who can do you no good' or 2) 'who can not fight back' changes when the bottom line is profit. It does change the nature of our character, and I think that is inherent to the nature of succeeding in a free market.
Most people that you meet with the ability to help you with your venture will do so - they will give you feedback, make intros, etc - often without the need for anything explicit in return. Its human nature, and what I would consider a norm for moral character. I think most people would say that given the resources, they would help anyone they could - everyone has a need for basic altruism.
However, when you introduce the need to capitalize on this same activity, it requires a change in behavior. My point was that, the same guy who would help you out for no reason as a norm, the minute he starts doing the same thing for money he does not have the luxury to help you in the same way any more. Now he has to make a business out of it and be efficient.
That is what I was trying to illustrate. This ability to be altruistic inherently declines when you have to take on the same role to make profit. The ability to treat someone well 1) 'who can do you no good' or 2) 'who can not fight back' changes when the bottom line is profit. It does change the nature of our character, and I think that is inherent to the nature of succeeding in a free market.
Assuming that ignoring another is a morally bankrupt action. I would argue that that is far too extreme.
Ah, I always read that foundations ads in the Economist. It's the first time I actually see those essays they mention.
Free markets will succeed only when race to the bottom is prevented in this flat world.
Are you really willing to pay as much for rotten bananas as you are for good ones?
The free market will satisfy both, at different price points. Since there are uses for rotten bananas, this is a good thing. (The "race to the bottom" people think that other people should do without things that the "race to the bottom" people don't like.)
Don't buy what you don't want, but don't insist that other people share your preferences.
The free market will satisfy both, at different price points. Since there are uses for rotten bananas, this is a good thing. (The "race to the bottom" people think that other people should do without things that the "race to the bottom" people don't like.)
Don't buy what you don't want, but don't insist that other people share your preferences.
Preventing race to the bottom = Social Safety Net
Finally, something I know the answer to.
No.
No.
Yes. I want money.
Obviously not. People treat each other horribly in the least economically free countries. I think the pattern generally holds as you move along the spectrum, too.
Correlation does not imply causation. The social and government restrictions that allow capitalism to function (enforcement of contracts, property rights, police/military protection, etc) also prevent lots of bad moral behavior.
Now, this breaks down if: