Fair Play

Steven E. Landsburg

• Publisher: Free Press
• Year: 2011
• ISBN:
  9781451658767
• Topic: Economía
• Subtopic: Teoría económica

With his witty and instructive book The Armchair Economist, Steven Landsburg won popularity and acclaim by using economics to illuminate the mysteries of daily life, and using daily life to illuminate the mysteries of economics.Now Landsburg returns to address fundamental issues like fairness, tolerance, morality and justice—issues that are as important on the playground as they are in the marketplace. With the help of his daughter, Cayley, he contrasts the wisdom of parents with the wisdom of economists—not always to the credit of the latter.How should we feel about taxes that redistribute income? Ask how parents feel about children who forcibly "redistribute" other children's toys. How should we respond to those who complain that their neighbors are too wealthy? Ask how parents respond when children complain that their siblings got too much cake. By insisting that fairness can't mean one thing for children and another for adults, Landsburg shows that the instincts of the parent have profound consequences for economic justice.Along the way, Landsburg—with his customary sharp wit and challenging logic—pauses to reflect on an astonishing variety of issues in economic theory, the philosophy of parenting, the true nature of family values, and how to get the most out of life. He uses parent-child interactions to explain the economics of free trade and immigration, progressive taxation, minimum wages, racial discrimination, and the role of money. He makes the best possible philosophical cases for and against progressive taxation, and weighs them against the wisdom of the playground. He explains why children are a good thing, and why economic theory tells us we don't have enough of them. He meditates on the role of authority in our lives, the effects of cultural bias, and why it's important to read poetry to your children. This lively and entertaining book will inform and delight readers who have forgotten the human side of the dismal science.

1
The Economist as Parent and the Parent as Economist

HUNGER AND FATIGUE MAKE ME CRANKY. Food and sleep cheer me up. Somehow I reached adulthood without fully recognizing these truths. I knew them in the way that I knew Aaron Burr was the third Vice President of the United States, but I didn’t know them in the way that I know not to step in front of oncoming traffic. They weren’t built into my instincts.

With parenthood came wisdom. You can’t live with a toddler and fail to discover the palliative benefits of a meal or a nap. Observing those responses in my child, I discovered them in myself. It’s helped me to take better care of both of us.

My daughter Cayley, now aged nine and the apple of her father’s eye, strove from infancy to focus my attention on certain principles of applied economics, beginning with the importance of material comforts. Cayley and I have been teaching economics to each other ever since.

I also teach economics in another guise, as a professor at a university. Professors and parents have a lot in common. A good professor, like a good parent, is there to teach, to learn, and, in the best of circumstances, to rejoice as his students surpass him.

If you’re a parent, then you’re an economics teacher. Economics is about facing difficult choices: earning income versus enjoying leisure, splurging today versus saving for tomorrow; developing new skills versus exploiting the skills you’ve got; searching for the perfect job (or the perfect marriage partner) versus settling for the one that’s available. I want my students to think hard about those choices; I want my daughter to think hard about them too.

One of the great lessons of economics is that there is no single best way to resolve such choices; everything depends on circumstances; what’s right for you can be wrong for your neighbor. Economics is the science of tolerance. Good economics professors teach their students that people can live very differently than you do without being either foolish or evil. Good parents teach their children the same thing.

Economics breeds not just tolerance but compassion. The economist’s method is to observe behavior closely, the better to understand other people’s goals and other people’s difficulties. That kind of understanding is the basis of all compassion.

I teach a freshman honors seminar in economics. On the first day of class, I ask my students to tell me why today’s grocery shoppers demand larger carts than their parents did thirty years ago. Here are some of the better answers: Today’s working women can’t shop every week the way their mothers did; they (or their husbands) must stock up more on each infrequent trip. Or: Today’s working women can’t cook dinner for the entire family as their mothers did; instead they buy enough food so that mom, dad, and the kids can all fend for themselves. Or: Today’s wealthier families serve a greater variety of dishes at each meal. Or: Today’s wealthier shoppers are willing to pay higher grocery prices for luxuries like wide aisles and the carts those aisles can accommodate. Or: Today’s larger houses provide more storage space in the pantry. Or: Today’s ubiquitous ATM machines mean that shoppers are no longer constrained by their unwillingness to carry lots of cash.

If things go well, students challenge each others’ answers in insightful ways. One student says that today’s shoppers buy more because advertising techniques have become more effective. Another objects that with a given income, shoppers who buy more of one product must necessarily buy less of another.

The point of the exercise is not to understand shopping carts; it’s to understand the technique of understanding. To succeed at this game, students must be sensitive to the problems of families very unlike their own. Learning to see the world through someone else’s eyes is an essential part of economic training; it’s also an essential part of growing up.

There are a lot of good questions to practice on. Next year I think I’ll ask my students why two-earner families generally save less than one-earner families with identical incomes. Is it because the two-earner family hires a housekeeper? Is it because working mothers care less about their children’s future than stay-at-home mothers do? Is it because working mothers provide such good role models that their children can make it on their own without a large inheritance?

Or else I’ll ask why, in every culture, men are far more likely than women to commit suicide. Is it because women feel a greater obligation to continue caring for their offspring? Or is it because women live longer, and can therefore look forward to surviving the spouse who is making life unbearable?

Teaching this stuff is a lot like parenting, really. When my daughter comes home in distress because she thinks she’s been slighted in the schoolyard, I can help by encouraging her to imagine events through the other kids’ eyes. There’s a technique to that kind of imagination. You make a guess; you ask if it seems plausible; you check whether it’s consistent with all the evidence; you refine your guess. That’s exactly how a good economics student thinks about shopping carts.

Economics is about more than just individual choices. It’s also about social choices: rewarding initiative versus promoting equality; preserving freedom versus preserving order; providing opportunities for the masses versus providing a safety net for the least fortunate. In other words, we want to ask: What is right? What is just? What is fair? My daughter is keenly interested in the same questions, more concretely posed: Is her allowance an entitlement or a reward for a clean room? Should she be free to ignore her parents’ advice and wear a summer jacket on a winter day? Should she and her friends choose a video that most of them love or a video that none of them hates? Every time a child cries “That’s not fair!”, a parent is forced to confront some issue of economic justice.

I am bilingual. In the classroom, I speak the language of graphs and equations; in the living room I speak the language of dreams and imagination and the drying of tears. In the classroom I talk abstractly about the advantages of writing an enforceable contract; in the living room I talk concretely about why Cayley’s friend Jessica doesn’t like her to change the rules of checkers in the middle of a game. In the classroom I talk about the general problem of delineating property rights; in the living room I talk about the specific moral issues raised when one child lays claim to a quarter of the communal sandbox. Being bilingual doesn’t mean you have twice as much to talk about; it means only that you get to talk about the same things twice.

But here’s something odd: Sometimes issues that seem murky and difficult in the language of the classroom become clear and simple in the language of the living room, and sometimes the reverse is true. This suggests that parents and economists have a lot to teach each other.

That’s what this book is about. It’s a patchwork of essays about issues—basic human issues like fairness and justice and responsibility—that both parents and economists are forced to confront. It’s about principles of right and wrong which are obvious to every parent, but must be taught to wayward children and wayward economists. It’s about techniques of understanding. It’s about teaching economics, and using ideas from economics to teach tolerance and compassion and intellectual rigor. It’s about using economics to understand the family, and using the structure of the family to illuminate issues in economics.

Every now and then, an insightful college student challenges a professor and turns out to be right. To a conscientious professor, that’s the most joyful experience you can have in a classroom. Parents—at least the kind of parents who encourage the lively exchange of ideas among family members—have ample opportunity to feel the same kind of joy. So do opinionated authors, if their readers are attentive. The arguments in this book are the product of sustained and careful thought, and they seem to me to be right. But when they’re wrong, I hope that in the spirit of the classroom and the family dinner table, you’ll let me know.

2
The Lessons of the Playground

I AM BLESSED WITH A CHILD SO PRECOcious that at age five, when she was watching television and heard newly elected President Bill Clinton announce his intention to increase the income tax, she immediately burst into tears. There never was a prouder father.

The tax package came wrapped in the usual rhetoric: “The rich have too much and the poor have too little”; “They have more than they deserve,” “It’s only fair,” and so forth, ad tedium.

From the fact that politicians supply such rhetoric, I infer that there are voters who demand it. Probably that’s because it helps them feel less guilty about living by the sweat of their neighbors’ brows. Better to pretend your neighbor deserves to be exploited than to admit you’re just being acquisitive.

The key word here, though, is “pretend.” The fact of the matter is that nobody really believes the rhetoric of redistribution. You can use that rhetoric to fool some of the people some of the time, and they might appreciate being fooled. But nobody believes it all of the time, and deep down nobody believes it even some of the time. Nobody even comes close to believing it deep down.

How do I know this? I know it because I have a daughter, and I take my daughter to the playground, and I listen to what the other parents tell their children. In my considerable experience, I have never, ever, heard a parent say to a child that it’s okay to forcibly take toys away from other children who have more toys than you do. Nor have I ever heard a parent tell a child that if one kid has more toys than the others, then it’s okay for those others to form a “government” and vote to take those toys away.

We do, of course, encourage sharing, and we try to make our children feel ashamed when they are very selfish. But at the same time, we tell them that if another child is being selfish, you must cope with that in some way short of forcible expropriation. You can cajole, you can bargain, you can ostracize, but you cannot simply steal. Moreover, there is no such thing as a legitimate government with the moral authority to do your stealing for you. No constitutional convention or democratic process or any other institution of any sort can create a government with that moral authority, because there is simply no such thing.

These are not morally complex issues, no matter how much we try to pretend otherwise. Politicians and commentators make their livings by encouraging that pretense, but when we talk to our children the pretense falls away. No adult has any difficulty distinguishing between good and bad behavior on the playground.

The lessons we teach our children reveal the truth that is in our hearts. If you want to know what a politician or a commentator really believes, look not to his speeches or his columns, but to the advice he gives his children. If you want to know whether a politician is behaving well or badly, ask how his behavior would be received in your family room.

A few years ago, I took my daughter Cayley and her friend Alix to dinner; they must have been six years old. For dessert, each had a choice of ice cream now or bubble gum later. Alix chose the ice cream; Cayley chose the bubble gum. (Money-saving tip for new parents: Start early and convince your kids that bubble gum is a dessert.)

After Alix had finished her ice cream, we went off to buy Cayley’s gum. Cayley got her gum, Alix got nothing, and Alix cried foul. To any adult outsider, it would have been clear that Alix had no case. She’d been given the same choices as Cayley had and had taken her rewards up front.

The same issues arise in adult life. Paul and Peter face the same range of opportunities in their youth. Paul chooses the easy life, working forty hours a week for a guaranteed wage. Peter devotes his youth to creating a new enterprise, working around the clock for risky rewards. Then, in middle age, when Peter is rich and Paul is not, Paul cries foul and assaults the system that fosters inequality.

I wouldn’t want to argue that Peter’s choice is intrinsically more admirable than Paul’s, any more than I would want to argue that a taste for gum is intrinsically more admirable than a taste for ice cream. But I do want to argue with Paul’s reasoning about the consequences of that choice. A good test is to ask whether any adult would take it seriously in a dispute between first graders. Paul’s griping fails that test.

And what about differences in income that result not from choice but from pure chance? Once again, look to what you tell your children. If you’ve ever served cake to more than once child at a time, you’ve heard the refrain “No fair—my piece is smaller.” And if you were feeling very patient at the time, you might have tried to explain that a child who can enjoy his cake without regard for what’s on his sister’s plate can expect a lot more happiness in life than a child who is constantly distracted by the need to make comparisons. Because we want our children to be happy, we tell them that when somebody gives you a piece of cake, you have occasion to rejoice, and that if another child has more, you might remember that the world is also full of children who have less. Remember that lesson the next time your coworker gets an undeserved promotion.

The disconnect between the standards adults impose on themselves, and the standards they impose on their children, is rarely to the adults’ credit. If you live in the average American household, the Corporation for Public Broadcasting lifts about $5 a year from your pocketbook to fund projects like National Public Radio. NPR apologists (adults all) attempt to dismiss that small predation by pointing to others that are much larger: The Navy alone, for example, spends ten times as much for weapons procurement.

Perhaps those apologists are aiming their appeals exclusively at childless voters. What parent could accept an excuse like “Sure, I stole the cookies, but I know another kid who stole a bicycle”?

All parents know a specious argument when they see one. Voters, by contrast, buy into specious arguments all the time. The great paradox is that parents and voters are often the same people. I believe the source of the paradox is that—quite sensibly—we tend to think harder about how and when to discipline our kids than we do about how and when to discipline our congressmen.

My proposal is to save intellectual labor by recognizing that you don’t have to think separately about your kids and your congressman. A good rule of thumb is that if your kids aren’t allowed to get away with something, neither you nor your congressman should be allowed to get away with it either.

3
What Cayley Knows

NEARLY EVERY ECONOMIST IN AMERICA is appalled by Pat Buchanan’s revival of protectionism. So is my daughter Cayley. The difference is that, unlike the economists, Cayley is appalled for the right reasons.

Economists know that trade is the engine of prosperity. From this they deduce—correctly—that a national refusal to trade is a national refusal to prosper. They cite studies showing—again correctly—that to save one American autoworker’s $50,000 job through tariffs or import quotas, car buyers collectively pay an extra $150,000 a year through higher prices. They argue—correctly once again—that free trade, like technological progress, might displace some workers but must make Americans wealthier on average.

Those are the arguments I make in my college classroom. My favorite teaching tool is a fable based on a tale told by Professor James Ingram of North Carolina State University. It’s the tale of a brilliant entrepreneur who invented a new technology for turning grain into cars. The entrepreneur built a factory by the sea, surrounded its inner workings with secrecy, and commenced production.

Consumers were thrilled to learn that the new cars were better and cheaper than anything Detroit had to offer. Midwestern farmers were thrilled when the factory ordered vast amounts of grain to feed into its mysterious machinery. There was indeed dismay among those autoworkers who had been trained in the old methods, but there was also a general recognition that...

Table of contents

• Cover
• Title Page
• Copyright page
• Contents
• Acknowledgments
• Chapter 1: The Economist as Parent and the Parent as Economist
• Chapter 2: The Lessons of the Playground
• Chapter 3: What Cayley Knows
• Chapter 4: Authority
• Chapter 5: What Life Has to Offer
• Chapter 6: Cultural Biases
• Chapter 7: Fairness I: The Grandfather Fallacy
• Chapter 8: Fairness II: The Symmetry Principle
• Chapter 9: The Perfect Tax
• Chapter 10: The Perfect Tax, Deconstructed
• Chapter 11: Responsibility: Who Ya Gonna Blame?
• Chapter 12: Bequests
• Chapter 13: People Wanted
• Chapter 14: The Third R
• Chapter 15: The Arithmetic of Government Debt
• Chapter 16: The Arithmetic of Discrimination
• Chapter 17: The Arithmetic of Conservation
• Chapter 18: What my Daughter Taught me About Money
• Chapter 19: What my Daughter Taught me About Trade
• Chapter 20: Advice to an Economist’s Daughter
• Appendix: Further Reading
• Index
• Footnotes