In: Uncategorized11 Jun 2012
This is my latest column for Fund Strategy
It was so strange I had to pinch myself to check if I was having a bizarre nightmare. There was Michael Sandel, philosopher and celebrity academic, denouncing traded life policies – or what he called “death bonds” – on a BBC television programme. To make the package even more odd John Redwood, Conservative MP and the chairman of Evercore Pan Asset, was also on the panel.
Those unfamiliar with the peculiar phenomenon of celebrity academics may find this scene hard to appreciate. There is a small number of high-profile academics in America who are best known as public commentators even though they hold university posts.
In economics Paul Krugman is probably the most high profile. Although he is a professor at Princeton he is better known as a columnist for the New York Times and a frequent guest on the broadcast media.
On a recent visit to Britain he appeared on numerous BBC programmes including Hardtalk (News Channel), the Jeremy Vine Show (Radio 2), Newsnight (BBC2), Today (Radio 4) and the World Tonight (Radio 4).
Sandel is essentially Krugman’s philosophical equivalent. Contrary to the popular image of philosophers he cannot spend much, if any, of his time in seminar discussions on the meaning of existence.
When he does lecture at Harvard nearly a thousand students pack into the lecture theatre to follow his course on justice. A version of the course has appeared on BBC television while Sandel was the BBC Reith lecturer in 2009.
His latest book, which he was visiting Britain to publicise, is on the moral limits of markets. The main message is that although the market economy is beneficial the development of a market society is problematic. That is why, Sandel argues, we need a public debate about how much markets should intrude into our lives.
That is where “death bonds” come in. Sandel gave them as an example, in this case prompted by the presenter, of an area where markets may be intruding too far.
Other examples include prisoners paying for cell upgrades, charities paying drug addicts to have themselves sterilised and the auctioning of torches used in the Olympic relay.
In most cases Sandel sticks to the general point that these questions need to be debated. For traded life policies he hinted strongly where he stands. He says they “coarsen our attitude to life”.
Sandel is surely right to argue that in a morally healthy society there should be robust debates on such questions. But in many respects he seems to be ducking the more difficult aspects of the discussion or in some cases getting things wrong entirely.
For a start there is the question of individual autonomy. Many people may regard a particular person’s actions as immoral but it does not necessarily follow that their behaviour should be banned. As long as that person is not harming anyone else there is a strong case that he should be free to do as he likes.
From this perspective Sandel is free, if he so chooses, to rail against traded life policies but others should be equally free to ignore him. As long as the seller and the buyer are acting freely, with no coercion involved, there is a strong case that their autonomy should be respected.
Sandel has no doubt debated the autonomy question during his long career discussing such matters but he seems less aware of other pitfalls.
In particular he does not seem to appreciate how arguments about moral limits are used against not just markets but economic growth itself.
In popular terms the allegation is that greed caused the economic and financial crisis. The idea is that irresponsible bankers helped fuel a credit boom that in turn allowed avaricious consumers to buy too much. Eventually the bubble burst and as a result everyone is suffering as a result of the earlier bout of excessive behaviour.
This narrative casts a complicated economic event, the emergence of a crisis, as a simplistic morality tale. It also suggests that moral restraint is an important part of the solution. It almost invariably concludes that people should be willing to make do with less. But not only is it undesirable to curb people’s aspirations but it also does nothing about the real causes of the crisis.
Perhaps the area where Sandel is most clearly wrong is in his assertion that market values have spread as a result of market triumphalism. In other words the defeat of socialism with the end of the Cold War has made capitalism much more upbeat and assertive.
If anything the opposite is the case. The triumphalism that followed the collapse of the Berlin Wall in 1989 was remarkably brief.
It is true that this event consolidated the view that there is no alternative to the market. But it left a capitalism that was itself riddled by self-doubt.
In that sense John Redwood was wrong to counter Sandel by suggesting that contemporary arguments about moral limits are reminiscent of the Cold War.
The current debate is not about choosing between capitalism and socialism. Instead it focuses on exactly how the market, and prosperity more generally, should be constrained.
The idea of moral limits is itself a discussion about regulation in the broad sense of the term. The debate is about to what extent that economic progress should be kept in check by moral values.
There are also parallel debates about environmental and social limits. The former, often carried out under the rubric of sustainability, argue that economic growth must be constrained for the sake of the environment. Arguments about social limits focus on such questions as happiness and inequality.
Often such arguments overlap with each other. For instance, one reason Sandel is keen on impose moral limits is what he sees as the socially corrosive impact of inequality.
By all means let us have a debate about morality. But it should be recognised that those who seek to impose moral limits on society are generally concerned about restraint rather than freedom.
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