I thought I’d revisit, yet again, that most important and pervasive of the rhetorical tricks associated with bad economics: fake distributional indifference. However, let’s this time come at it from what I hope anyway may be a slightly different angle. Let’s discuss the issue in the context of the perceived status of existing laws relating to legal specifications of property ownership, contracts, markets, and just in general resolving interpersonal conflicts on the basis of economic power in markets, and the use of those existing laws to complicate or block consideration of potential future laws.
The funny thought that spurred this post, which was probably triggered by something or other I read online but have since forgotten, is that conservatives, in general, seem often quite concerned about potential unintended consequences when it comes to law and government policy generally, except in certain areas relating to economics, such as legal specifications of property ownership, contracts, and other laws relating to markets. In that particular area, and seemingly only in that area, conservatives commonly consider past iterations of democratic government and the laws they generated to have already anticipated, considered, and disposed of all relevant ethical issues in a way that henceforth forever removes those issues from the public realm. One supposes that’s why conservatives feel any further attention to what most people perceive as the potentially controversial ethical issues relating to resolving interpersonal conflicts on the basis of economic power in markets is unjustified, unwelcome, annoying, irritating, and just in general something to be avoided, ignored, or opposed. It’s already been decided. It’s all over. Time to move on. Nothing to see anymore. However, that markedly inconsistent determination to ossify certain aspects of our legal system as ethical gems of timeless perfection seems to fly in the face of the underlying presumption of democratic government that nothing is ever really conclusively over, no one can ever anticipate everything, anything may have unintended consequences, new ethical issues may always arise, and social opinion on previous ethical issues may always change. Democratic government is meant to be a never ending evolutionary process and that includes laws and regulations relating to our economic system, the use of economic power in markets, and our system for distributing economic power.
Specifically in the language of fake distributional indifference, passing along distributional ethics and other potentially controversial ethics expressed in law from past iterations of democratic government does not make one neutral or indifferent with respect to those distributional ethics and other ethics. Support for distributional mechanisms or outcomes based on existing law is a normative position like any other. Like any other form of distributional ethics, it goes beyond what one can derive from “utility” as defined in economic theory and hence is inconsistent with distributional indifference. Good economics, real neoclassical welfare economics, which clearly identifies exogenous normative inputs and distinguishes those from the normative inputs of economic theory itself, can handle that. Bad economics, misinterpretations of neoclassical economic theory, the sort of economics typically espoused by conservatives for obvious reasons, cannot. By submerging the normative or ethical issues associated with resolving interpersonal conflicts using economic power in markets that require inputs from outside economic theory, by trying to ossify certain exogenous value inputs and take them off the table, bad economics essentially sets itself up as the champion of the status quo and the enemy of legal change and the democratic political process by which that legal change takes place.
In an economic context, it’s important to acknowledge an exogenous value input even if the value input in question is simply that one should support the status quo, whatever it may be, or should pass along existing value judgments based on past iterations of democratic government that are not really one’s own. One may suppose that amounts to avoiding ethical controversy, but that is incorrect. It only avoids controversy for those supporting the status quo. It doesn’t avoid controversy about the status quo. Sometimes the normative or ethical significance of received law relating to markets and distributional mechanisms derived from past democratic government is the whole issue. In a democratic system, nothing is ever meant to be conclusively decided, set in stone, taken off the table. Any value input relating to resolving interpersonal conflicts based on economic power in markets received from democratic government, including distributional ethics but also other potentially controversial ethical issues such as the extent of the market, can be revised by subsequent democratic government. It’s all forever on the table. It’s all always a suitable subject for intellectual inquiry and philosophical debate. A good economist will flag those normative inputs and clearly differentiate them from economic theory proper to facilitate consideration of such issues.
