Information Problems

I've been reading a lot lately about the information problems inherent in economies, solvable by market mechanisms and price systems and such. Standard modern arguments for the potential efficiency of socialist systems usually include some defense of alternate ways of processing this information, dealing with scarcity and allocation and providing some incentive for the development of efficiency and innovation.

An interesting information problem that I haven't seen discussed yet, though, is the insurmountability of information problems within individual decision-makers. If we think that people fundamentally try to act to improve their own utility--people try to be happy--we quickly run into the problem that we couldn't even plan one person's life with any acceptable degree of precision. People don't know what makes them happy. People don't know what makes mankind happy, although there are plenty of competing ideas. Large portions of our mental decision-making energy goes not towards figuring out how to maximize known utility functions given constraints, but towards figuring out what our utility functions look like to begin with.

This information problem, I would argue, dwarfs even the problem of figuring out how to allocate scarce resources. In any world with any scarcity (or, any remotely plausible world!), accurate price signals force people to think about what's actually important to them. Beyond any of the allocation and incentive effects of free market prices, I think they help people--and, over time, cultures--figure out how to be happier with what the world has to offer.

"Enough, and As Good"

So, if you are as much of an old-school political philosophy lover as everyone should be, you know that John Locke had a theory about why property rights are just. Basically, if you own something legitimately and voluntarily give it to someone else, that seems like it's always intuitively okay. So the question is how people can initially turn something from "random piece of nature" into "MY random piece of nature". Locke said it was totally cool to grab whatever you wanted, as long as you a) mixed some of your own labor in with it and b) left "enough, and as good" for everybody else.

This is stupid. (Well, b) is definitely stupid. a) may be stupid as well, but that is another post.)

The biggest problem with Locke's standard, as countless mostly left-wing political philosophers have pointed out, it is literally impossible to take anything for yourself and leave "as good" for everybody else. Any time anyone appropriates anything, everybody else is left with marginally worst options--particularly future people, who will have no chance to fight for any frontiers currently being claimed. And while there may always be theoretical frontiers to grab pieces of (thank you, Star Trek), the moon is substantially less desirable and substantially more difficult to acquire than, say, the Americas. If the "enough and as good" standard is true, then no acquisition of property has ever been legitimate. Long live the People's Revolution!

Why did Locke think he needed this provision? Probably because of some edge cases where we have strong moral intuitions. For instance, if you claim the one water source on a desert island after you and your friends are shipwrecked there and start charging them rent, you are clearly an asshole. Therefore, Locke says, you cheated: you didn't leave enough water for everyone else.

However, in situations like this, our moral intuition about the legitimacy of property ownership is being clouded by our stronger moral intuition about not being a douchebag. Imagine another desert island with two water sources: a pair of mysterious wells. You and a friend are shipwrecked there; you each take ownership of one. Seems perfectly fair so far, right?

A day later, in a drunken fit of despair fueled by the cache of pirate rum you've discovered on the island, your friend throws a dead fish into his well. The water becomes contaminated and undrinkable. Your friend will die of thirst unless you're willing to share the water from your well.

Would we think it was morally acceptable to refuse water to your friend, or to force him to perform a variety of degrading sexual acts each time he wanted to drink? Well, when you claimed the water, you met Locke's standard: you left enough and as good for your friend. So clearly you own your water legitimately, and can do whatever you want with it. But you'd still be a complete dick if you didn't share it with him at some reasonable price.

The reason we intuitively object to one person taking sole ownership of an essential resource and refusing to share it is that they're an asshole, not that they don't legitimately own their property. Legitimate property ownership is irrelevant. Locke doesn't need the "enough and as good" standard to explain our anger.

Not convinced? Let's look at another situation. Instead of an island with one ample water source, let's set our poor shipwrecked people on an island with no water sources at all. The only source of water is one barrel from the ship, which has washed up somewhere on the island; it has exactly enough water for one person to survive until rescue, but cannot possibly be shared.

According to Locke's theory, the first person to find the barrel couldn't appropriate it. In fact, nobody could claim any of the water; the instant they claimed any, they'd be depriving someone else of enough water to survive! Surely our intuition runs the other way. Not only should one person claim the water, he would be completely justified in enforcing property rights over it should someone attempt to steal it.

How does this differ from the first, objectionable scenario? In each case, someone is claiming arbitrary ownership over a lifesaving resource needed by others. However, in the first case, the water monopolist could trivially benefit everyone else by not being an enormous dickmonger. In the second, he couldn't. Our intuition is responding entirely to the dickmongery of the first situation, not an objection to property rights acquired in this manner.

The moral? Go for it. Claim lots of stuff that other people might want or need. Just don't be a dick about it.

Minimum Wage in Haiti Relief Efforts?

Context: a discussion of disaster relief efforts in Haiti.
Comment: "The US should spend its relief funds paying for infrastructure projects, as long as we require the Haitian government to pay everyone involved a decent living wage for their work."

Criticism: Why ought we pay a higher wage than people are willing to work for? I'm not just being heartless: if the US is going to spend a fixed amount of aid money in Haiti (a reasonable assumption, I think), why on Earth would we give it to a smaller number of lucky people rather than a larger number of people? It seems unambiguously more equitable to divide aid money up as far as possible, rather than concentrating it in a few lucky workers. And the best way of doing this, in public works projects, would be to hire many people at low salaries rather than a few people at high salaries.

Furthermore, if we're trying to help Haiti as a whole, shouldn't we be trying to maximize the number of public works projects? Even if it was somehow unfair to the construction workers that we hired at low wages, it seems even less fair to channel aid money to construction workers at the expense of the Haitians who would otherwise be helped by the projects we could build at lower cost.

It's nice to want things. But wishing that everyone in Haiti was living on a decent wage doesn't mean that dividing up a fixed sum of money into higher wages is the morally correct thing to do. Flawed kneejerk reactions strike again!