Category Archives: Economics

Rainbow Capitalism

Suppose you have a beach house and a “friend,” Jane, who invites herself to use it all the time. I put “friend” in quotes because Jane does not actually value you as a friend; she values you only for your beach house. From July to May, Jane is hard to get in touch with. Every time you reach out to her, she comes up with transparent excuses about how busy she is. But during the month of June, Jane eagerly reaches out to you and ingratiates herself to you so that she can enjoy your beach house during her vacation month. When you eventually sell your beach house because of financial troubles, Jane predictably stops associating with you.

If you are anything like me, you will have a low opinion of someone like Jane. By someone like Jane, I mean someone who feigns intimacy with someone or some group of people to advance her own interests, without affording due consideration to the interests of the person or persons with whom she is feigning intimacy. Unfortunately, there are many Janes in the world. But not all Janes are individual people. Sometimes, they are corporations. 

LGBT+ Pride month is coming to a close, and so too are the annual discussions about “rainbow capitalism.” For those who are unfamiliar with the term, rainbow capitalism refers to how corporations pander to the LGBT+ community and its allies, especially during Pride month, by branding their products with Pride symbols such as rainbows. Some believe, for example, Target essentially does to LGBT+ people what Jane does to you in the scenario above: Target ingratiates itself to the LGBT+ community to profit from the sale of limited-edition merchandise, without ever substantively showing concern for LGBT+ people. Others, however, argue that rainbow capitalism, if not wholly good, is “a step in the right direction” because it normalizes LGBT+ representation in public. After all, just 15 years ago we would not have dreamed of the public embracing Pride the way it does today. 

In my view, both and neither of these positions is correct. If Target were doing to LGBT+ people what Jane does to you, then Target would be engaging in problematic rainbow capitalism. But this is not what Target is doing. To see this, let’s return to our example with Jane. Suppose that instead of valuing you for your beach house alone, Jane valued you for many reasons. She values your happiness and flourishing for your own sake among other things. Still, in addition to all of that, she also values being able to go to your beach house. When you sell your beach house, Jane is upset, but supports you and respects your decision. This is closer to what Target does when it engages in rainbow capitalism: Target employs LGBT+ people, has an LGBTQ+ diversity business council, published a Pride manifesto, and took a stand for transgender people when the transgender bathroom controversy was ablaze, in addition to branding merchandise with rainbows for profit during the month of June. To be a rainbow capitalist under these conditions seems to me genuinely benign. 

Now consider a different case. Some corporations have allegedly donated substantial sums of money to anti-LGBT+ organizations. It is not always clear what one means when they say that an organization is anti-LGBT+, though, so let’s stipulate that a hypothetical organization lobbies to abolish the legal recognition of same-sex marriage, and some multinational corporation funnels hundreds of millions of dollars to this organization. Then, during Pride month, the corporation slaps rainbows and “#LoveIsLove” on tees they sell to profit off of the LGBT+ community and its allies. This is clearly problematic, and worthy of criticism. Still, some will insist that the corporation participating in Pride by selling limited-edition merchandise is good on balance because it represents the strides we’ve taken toward including LGBT+ people in our society.

Social inclusion, of course, has value. Still, social inclusion for the right reasons has even greater value. It may be valuable for the awkward friend to be invited to an important party, even if the only reason he is invited is because he is friends with people cooler than he, who are also invited. But it would be of undoubtedly greater value to the awkward friend to be invited to that party because the party host likes him and wants him there. In my view, criticisms of rainbow capitalism are legitimate when they are aimed at getting corporations to treat LGBT+ people with dignity year-round, rather than showing indifference or hostility to the community until it benefits them enough to hypocritically proclaim their commitment to equality. This does not necessarily mean that we should boycott businesses that are transparently performative in allying themselves with the LGBT+ community, or that we should demand they stop selling flamboyant paraphernalia during Pride month. But it does mean that we can (and should!), in some way, hold corporations to account for failing to live up to an ideal of inclusion for the right reasons.

Thanks to Andrew J. Cohen for feedback on an earlier draft of this post.

By the way, Radical Classical Liberals turns 1 tomorrow! Honored to be a part of it. 

   

Recycling and Waste

I’ve met many people committed to recycling. I recycle. My recycling is based on my opposition to waste, which I take to be a “process wherein something useful becomes less useful and that produces less benefit than is lost” or “the result of such a process” (see my 2010, 256). I recycle, that is, to reduce lost value. If something can be made useful (again) without causing other loss, great. Recycling, though, does not necessarily reduce loss. Unfortunately, many act as if recycling is always and necessarily a worthy act. This post is meant to promote a more reasonable view, one attentive to costs and benefits.

Say you have a bicycle you no longer use and decide it shouldn’t take up your space anymore. You advertise it for sale for $50. You get multiple requests to see it, schedule them, and the first person to look at it buys it. Great. It’s out of your space. Why were you able to charge $50 for the bicycle? Because someone else had a use for it that was worth at least that $50 to them.

Now say you have an old beat-up tricycle taking up space. You advertise it for sale for $20. You get one request to see it, schedule that, but the visitor declines to buy it. Why were you unable to charge $20 for the tricycle? Because no one had a use for it that was worth at least that $20 to them. (Indeed, you probably would have taken less, but no one thought it worth any amount.)

Now let’s say that instead of a bicycle, it was a large bag of used metal cans. And instead of a tricycle, it was a large box of used batteries (or styrofoam or…). You get an offer for the former but not the latter. Why? Because the former can be used by a recycler in a way that profits them while the latter cannot. Someone looking at the batteries, might say “I’ll take them off your hands, but it will cost you $10.” What does that suggest? It suggests that it is possible to make use of the batteries—via recycling or otherwise—but not in a cost-effective way. It suggests, in fact, that making use of the batteries would cost $10.

What does it mean that it would cost $10 to recycle the batteries? That they would need to pay for something else—perhaps labor to take them apart, energy to melt (parts of) the batteries, chemicals to neutralize those in the batteries, or other such goods and services. Notice that using those things not only costs money, but may also negatively impact the environment. Perhaps the generation of energy used contributes to greenhouse gas emissions. Perhaps the chemicals used are bad for the environment or perhaps their use results in a byproduct that is. The labor, of course, could have been used in other ways—perhaps on work meant to reduce greenhouse gas emissions!* In short, that you must pay to recycle the batteries suggests that doing so may not be the best thing to do.

Lest anyone think I am secretly anti-recycling, I am not. I simply think we should be attentive to the costs and benefits. If the overall benefits of recycling something are higher than the costs, on my view, we should recycle it. I even admit that one of the possible benefits of recycling is the emotional satisfaction one gets from contributing to improving (or at least not damaging) the environment—but, of course, if that emotional satisfaction is due only to falsely believing one is helping, one should improve one’s beliefs. There are, after all, alternatives to recycling. Reuse is obviously better, for example. Reducing use is also often better (though, again, one ought to be reasonable: plastic bags, for example, make life far easier, so not using them at all, as some propose, seems costly). And, for better or worse, some things should probably just be put in a landfill.

Added: At the end of the day, it’s simply not clear to me why anyone would assume any particular industrial process would necessarily be good for the environment—and recycling is an industrial process.


*I am not an expert about recycling. If it turns out that there are cost effective ways to recycle batteries (or styrofoam or …), I would retract the objection to doing so. I take it that if there were, we would not have to pay more for doing so than for putting them in a landfill.

Thanks to Connor Kianpour for suggestions on an earlier draft of this post.

The Saga of David Friedman

In my latest YouTube video, I chat with economist and legal scholar David Friedman on free-market anarchism; the Society for Creative Anachronism; tectonic geology; the quasi-anarchic legal systems of medieval Iceland and 18th-century England; being converted to anarchism by Robert Heinlein; how getting a Ph.D. in physics led to being an economist at a law school; the joys of fomenting war and exploiting one’s students; how he repeatedly achieved promotion through violence against his predecessors; how to make medieval armor both for humans and for turnips; how innovations in fireplace design facilitated adultery; and the perils of central planning for wizards.

Post-Modernism and Economics

I’m neither an epistemologist nor an economist; I offer this nonetheless.

  1. Post-modernism is, at root, a rejection of the view that knowledge has foundations.  This does not entail that there is no knowledge or no objective truth.  Nonetheless,
  2. Some post-modernists seem to mistakenly believe there is no objective truth.
  3. Economics, as the study of exchange, accepts—indeed, relies upon the assumption—that people have subjective preferences.  This does not entail that all preferences are equally good or that there is no such thing as “objectively better.”  Nonetheless,
  4. Some economists seem to mistakenly believe there is no objective value.

I’ve long wondered whether those in 4 making the same sort of mistake as those in 2.

Note that for those in 2, there is no objective truth to discover, so nothing other than the (somehow always subjective or inter-subjective) project of learning why people believe what they do and how this affects them. This is, to be sure, an interesting and valuable project, but not one that can be objectively defended if it’s own reasoning is right.

Similarly, for those in 4, there can be no objective defense of their project–whatever value it has is subjective.

Better views of both post-modernism and economics are, obviously, available. Lack of foundations can leave us finding objectivity in coherence, pragmatics, or reliable truth-finding methods (or even correspondence). Reliance on the subjectivity of preferences for one purpose is consistent with objectivity (of the goodness,* for example) of the same preferences for other purposes—and with objective value elsewhere. Indeed, I think the group noted in 2 only includes some (the worst) post-modernists and I think the group noted in 4 only includes a few (and not the best) economists. I worry, on the other hand, that students in many college departments (not, usually Philosophy Departments) do fall into 2 and many economics students fall into 4. We should seek to prevent both.


*People can subjectively value, or not, items without objective value and people can fail to subjectively value items with objective value.

The Quadruple Threat to America Today

America faces a quadruple threat. The four threats are related in various ways, too often mutually supporting. I am not including COVID-19, though it could easily be considered a 5th threat. My reasons for doing this are: (1) it’s a threat everywhere, in no way distinctive of American life; indeed, it would be best considered a global natural disaster; (2) it is related to the threats I do discuss; indeed, like all natural disasters, it’s impact is determined by our responses—and the other threats make bad responses more likely. I offer these for consideration as I think they must all be addressed if liberalism is to survive.

The first threat is straightforward. We might call it xenophobia or extreme in-group bias. It manifests in multiple ways, especially racism, sexism, anti-immigrant biases, and anti-semitism. This may seem to be largely confined to those on the so-called “right,” but it applies to many on the left as well. On the left, one need only think of Bernie Sanders’ anti-immigrant views or Joe Biden’s recent pro-American economic policy; on the right one need only think of talk of the “Wuhan flu” or “China flu” instead of “COVID-19”—both play on the insider/outsider distinction to blame someone else for our problems (or at least prevent outsiders from becoming insiders). Maliciously shifting the blame provides cover for those who seek to refuse to take action to limit the harm. Taking responsibility (not necessarily blame) means working to fix the problem. Many of our governments—and many individuals—refuse to do so. This, of course, is at least part of why the number of COVID cases and deaths in the US is on the rise. Like all natural disasters, how we react to it determines the overall impact it has. Of course, the Black Lives Matter movement is currently the most straightforward evidence of in-group bias, in the form of racism, as protestors correctly point out how institutional racism, especially (but not only) by way of police actions, are extremely unjust and, indeed, a matter of life and death for many. This seems to be a concern primarily of “the left,” but with leading support from libertarians (defying the standard left/right dichotomy). For those interested in that, see Radley Balko’s and Chris Coyne and Abigail Hall’s books (CE*).

The second threat is the economy, as we fail to institute a reasonable response to the COVID-19 pandemic and as we face the repercussions of widespread use of collateralized loan obligations (see this Barron’s piece and this piece in The Atlantic), much as the 2008 recession was at least partly caused by widespread use of collateralized debt obligations. Regarding the latter, it is unfortunate in the extreme that the federal government failed to learn any lessons from the collapse of the housing market bubble or its past support for big banking and the latter’s issuing of bad debt (itself encouraged as the big banks correctly realized that even if the debts really went south, they would be bailed out by taxpayers—because in the US the one thing we like to socialize is big business’s losses). Unfortunately, we may see the same thing repeat. Indeed, it may be worse since there is more invested in CLOs than there was in CDOs and the CLOs largely include commercial debt—and the pandemic is hard on many commercial enterprises. Regarding the government response to the pandemic, we can only note what has been often noted—widespread, enforced, and complete shut-downs of multiple markets may or may not help reduce spread of the disease, but would only do so at the obvious cost of making it more difficult—and more expensive—for people to get necessities. While middle and upper class professionals are often able to work from home with no or little loss in pay, many—especially those in the restaurant and entertainment businesses—cannot. At the end of the day, shutting everything down to save lives is foolhardy as it will cost lives. If markets are all closed, we won’t have food and other necessities. Those who live paycheck to paycheck (and many more) won’t be able to pay rent, etc.

The third threat is authoritarianism, partially with a populist demagogue. We now have a president who is likely more of a demagogue than any president since Andrew Jackson. Of course, he was enabled by changes to the office and the workings of the federal government over the last several decades. The expansion of presidential powers under the past several presidents—Republican and Democrat alike—enabled what we have now. The populism is perhaps as dangerous as anything else—promising voters bread and circuses is always worrisome. Those voters are often not well informed about how government works or about science. Now, of course, we see both the populism and the authoritarianism emerging from the debased Republican Party. The populism is clear in the MAGA crowd’s following their leader in insisting on not wearing masks. The authoritarianism is perhaps worse, as witnessed in federal law enforcement agencies frightening behavior in Portland—with the threat that such behavior will go national. The use of ICE and The Border Patrol Tactical Unit deep within the US Border started months ago (see this in the NYTimes) but seems to be picking up steam—ostensibly because the federal government is so worried about graffiti on federal buildings that they are unwilling to leave such crimes to local authorities. (See Jake’s great piece, which also indicates why this is also about populism.) In reality, of course, this may be merely a piece of political theater, aimed at distracting voters and rallying the president’s base. As already indicated, though, this is not an issue for the current Republican party alone. Presidents Clinton and Obama also expanded their powers while in office. And even now, we see scary authoritarianism from the left, when local authorities claim to have knowledge about what is necessary to prevent further spread of COVID-19 and claim that such knowledge justifies them forcing people to live under house arrest (see this piece about a couple in Kentucky) for refusing to sign a paper saying they would not self-quarantine (whether or not they would self-quarantine). Neither left nor right is blameless and neither seems to recognize that their actions are as scary (at least to their opponents) as those of the other side are (at least to them). Those on “the right” seem to think the Feds behavior in Portland is worthwhile because local authorities aren’t stopping looters. They seem to forget the value of federalism and the freedom of individuals that helps ensure (though they remember it clearly when it serves their interests). Those on “the left” seem to think the Kentucky authorities are doing the work needed given public health concerns. They seem to work with a reified sense of “the public” and forget the freedom of individuals that threatens (though they remember it clearly enough when it serves their interests).

The fourth threat is related to my last post. Its a dangerous lack of commitment to there being anything that is objectively true and to seeking such. Its not just our president that seems to lack any commitment to truth. Our culture is riddled with people who claim their beliefs form “their truth” which may be different from “your truth” or “my truth” but that must be treated as if of equal value. Never mind that there really are experts out there in all sorts of areas. Some believe their views of morality are as valuable as those of academics who spend their lives working out intricate details of moral theories and defending those theories against all manner of objection—though they themselves never subject their own views to criticism. (Why should they, when their view is “true to them,” whatever that means?) No wonder people now consider their views about disease transmission (and curing) as valuable as the CDC’s or Dr. Fauci’s. Or who consider their view of other countries as valuable as people who have actually travelled to or lived in those countries. Or who think their views of politics and economics as valuable as academic political scientists and economists who have been studying these things for decades? Admittedly, insisting that there is objective truth might sometimes sound dogmatic to those who feel insulted when faced with any intellectual opposition—as if insisting that a proposition is true entails rejecting any objection or evidence to the contrary, which it decidedly does not. Giving any belief its due can be considerably difficult. As Schumpter said, “To realise the relative validity of one’s convictions and yet stand for them unflinchingly, is what distinguishes a civilized man from a barbarian.” We must remain open to the possibility that we are mistaken even when we are convinced we are not—that is what genuine commitment to truth and truth seeking entails.

I’ll end by making some of the connections between the threats explicit: 

-Its easier to favor economic policies that favor the rich (2) when one thinks everyone else is “other” (1). Its easier to favor authoritarian actions (3) when one believes they are only used against people vary unlike oneself (1). Its easier to deny there is any objective truth (4) when one is constantly told those unlike oneself have different values and beliefs (1)

-Its easier to hate outsiders (1) when one mistakenly (4) think they threaten one’s own livelihood and that of those one cares about (2). It is likely easier to endorse authoritarian policies (3) if one thinks they are necessary to maintain economic stability or growth (2). (Less related to this discussion: it is apparently easier to deny there is any form of objectivity (4) if one believes that the only think that matters is subjective preferences (2).)

-Its easier to distrust or hate others (1) or to favor an economic policy (2) when blinded by an authoritarian repeatedly making false statements about them and grandstanding (3 & 4). Its easier, in general, to doubt there is any objectivity (4) when both that same authoritarian (3) and many others—including, if we are honest, many leftist college professors—encourage those doubts.

-Its easier to hate outsiders (1) when one refuses to learn about them (4). Its easier to favor an economic policy (2) when one refuses to consider objections to it (4). Its easier to favor forcing people to live as one thinks they should (3) without doing the hard work of listening to them (4).

I hope its clear we need a response to these threats. Liberalism—and the great American experiment—depend on it.

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