Inequality is a market failure. We do pick this up in A Levels but then there’s little discourse on that. Not only do we dwell little on the solutions – which ranges from progressive taxation to welfare handouts – we ultimately ignore how inequality undermines the ultimate roles of markets, which is the efficient allocation of resources. I’ve always grasp the idea rather intuitively but then fail to deliver it in a philosophical and economics framework. I’ve pointed out the lack of philosophical musings in today’s study of Economics when I introduced Michael Sandel’s lecture on Markets and Morals.
I’ve always pose the question to my Economics student, if a person earns $1000 a month and another who earns $1 a month both needs a glass of water. The rich guy is willing to pay $10 for the water while the poor one is willing to pay $1. The market thus allocates the water to the rich man. We all know that this allocation is problematic and it doesn’t seem efficient; how is it that, in terms of willingness to pay, a person who is only willing to part with 1% of his monthly income gets the good when another is willing to part with 100% of his monthly income for it? So what exactly is the problem of inequality?
Once again, Michael Sandel points this out in the second lecture presented in this video. You don’t exactly have to watch the lecture in order to grasp the point but the idea is that when inequality (in terms of unequal distribution of income) exists, effective demand cannot properly reflect the ideal sort of demand signal transmission that would allow the market to allocate resources efficiently. In extreme cases, free markets becomes not entirely free. In other words, people are not transacting out of their free will but coerced by their own economic circumstances. We see this very often in the case of poor people in developing countries who are forced to sell organs, resort to prostitution, act as surrogate mothers, become a runner for crack.
Gary Becker is not wrong about the rationality of these people. They’re making rational choices but it is often that their choices is very much limited. That unfeeling market processes coerce us into certain decisions is something close to the hearts of all of us. Often, however, we can’t quite work out what is so unjust about that because we believe that to a large extent, we determine our riches. Somehow, deep in our hearts we know that some other decisions that we made caused us to be in the state we are in such that we are coerced into making that next decision. The fact that this argument comes back to us shows how each and every decision made in the marketplace by us are not independent. This makes for a determinism argument in a market setting where free will is supposed to reign.
There are much wider implications of all these arguments and I shall explore them if I get the chance.
Just last week, I was recommending that you view lectures on Academic Earth if you find TED.com not academic enough; this week we’re recommending just one video for your weekend. It’s going to be pretty intriguing and I’m sure you’d be glad to be an audience. Recently, Michael Sandel, a political philosopher, lectured on ‘Justice’ in Harvard and his lectures are available online at Youtube! Sandel begins his first lecture with the hypothetical scenario involving a moral dilemma that some of you might be familiar with and got his students thinking about moral reasoning. Sandels issued his ‘warning’ for students of Moral/Political Philosophy:
Philosophy teaches us and unsettles us by confronting us with what we already know; there’s an irony, the difficulty of this course consist the fact that it teaches what you already know. It works by taking what we already know from familiar unquestioned settings and making it strange. […] Once the familiar turns strange, it is never quite the same again.
Sandel also gave a good reply to the doctrine of Skepticism, suggesting that we should not give up moral reasoning just because the ancient and modern philosophers are unable to solve them; in fact, the continual emergence of the same old problems require that we constantly revisit these questions. He cites Kant’s remarks about skepticism; Kant describes skepticism as a temporary resting place for the mind from reasoning – that skepticism can never triumph the restlessness of reasoning.
The lectures gives us too much to think about so I strongly suggests that you take a step at a time and limit yourself to just an hour of the video each day.
The Duck is about arguments and rhetoric, which are aspects of writing and presentation that is usually missing in our General Paper classes. We have extremely few lessons where we truly tear apart arguments and examine rhetoric used by writers, politicians, activist. Getting to know how to avoid bad arguments and thereby make good ones would not only help lawyers in court but an ordinary student when it comes to presenting his/her ideas during lesson, trying to engage peers in a project/idea as well as General Paper writing.
The Pig, on the other hand, examines arguments made by others – basically a GP lesson for each of the text or passage examined in the book. It claims to hold thought experiments but basically Baggini is merely making readers think twice about arguments or scenarios presented and the ideas behind them. I didn’t quite read the books but simply browse through them. Even if they don’t present the topics well, they are good starting point for how you should actually be studying GP.
This boxer day came with reads as well, ERPZ decided not to rest on the day after Christmas so here’s your reads for this holiday weekend, almost all from The Economist’s latest double issue’s Christmas Specials.
We first have Arguing till Death, a lesson for America from history’s greatest Western Philosopher, Socrates’ life. I got introduced to Aristophanes’The Clouds through the article and is pleasantly surprised by the sort of humour ancient Greeks were capable of.
Hi There discusses politeness and courtesy in the English Language and the effect of this spread of English Language on the world today. The other talks about the virtues and motivations of being a foreigner in the world today and on the same issue is an article, A Ponzi scheme that works that looks into the migrant society of America today and the allure of it.
For viewing pleasure, How to make a splash in social media by Alex Ohanian. It’ll only require about 4 plus minutes of your attention; a short time before you dash off to the next party. Ohanian really gives a strong message about how the Internet works and how you might be able to ride on it to help you with a cause, but like what he says in the end, ‘you are not going to be in control’.
An article from The Economist‘s Christmas special edition examines the idea of progress of humanity, especially in the past century and this. I had problems reading this initially as it feels rather heavy on philosophy, but in essence I gather that in terms of health and economic growth we have made tremendous progress, but in terms of our humanity our progress is questionable.
It even raises the possibility that the concept of progress could be misguided or abused. Take, as mentioned in the article, how Hitler used ‘progress’ and subsumed it into ‘the shared destiny of a (German) nation’. All the more reason to question what progress is. So what exactly constitutes progress?
It seems like to be able to determine whether we have really ‘progressed’, we need to examine different parameters, such as in terms of science, in terms of material wealth… I never found progress this difficult to define until I encountered this article. I examine and read this from a very layman and not from a philosophical point of view, so pardon me if I appear naive or ill-informed.