Monday, January 05, 2004

Rights & Reason: Altruism for the Soul

Virginia Postrel reviewed Gregg Easterbrook’s new book, “The Progress Paradox: How Life Gets Better While People Feel Worse,” for the New York Post. Postrel was duly unimpressed:
The book's naive economics is even worse than its folk psychology. Easterbrook treats the economy as an automated machine aimed at "the manufacture and distribution of the maximum volume of goods and services."

In fact, the market is a complex feedback system that maximizes not volume but value, which is as likely to be intangible as physical. But intangible value, at least other people's intangible value, is greedy waste to Easterbrook.

Middle-class people, for instance, are snapping up Maytag's aesthetically appealing Duet washer-dryer, which costs $2,200, instead of buying an equally functional set for $1,000. The extra $1,200 is just "money-burning" and would be better spent on charity.

But consider this: A Duet will last at least 10 years, so the additional $1,200 amounts to $2.30 a week. That's less than half what Easterbrook spends on perishable flowers. Whose aesthetic pleasure is "money-burning"? Easterbrook is understandably sympathetic to the hardships faced by poor people amid plenty. But his solution to poverty is to wave a magic policy wand.

Every American and legal immigrant should have health insurance, he says. What system should we adopt? He doesn't tell us, nor does he address the myriad feedback effects and distortions that any such system entails. Is everyone entitled to knee-replacement surgery?

We should raise the minimum wage to "at least $10 an hour," he says. Doubling the minimum wage would make the "prosperous majority" happier, because they "could enjoy their positions with a clearer conscience."
Easterbrook’s theory, in essence, is that people only feel good when they’re altruistic, and selfishness is a necessary evil that produces necessary wealth while killing the human soul. Like most altruists, Easterbrook emphasizes intent over effect. He wants poor people to earn more money and have health care, and he’s indifferent to how that actually affects other participants, such as employers and doctors. In his view, those people should want to sacrifice their “greed” to make themselves feel better. But it’s just a tradeoff: Feel better now, pay for it later. When the minimum wage cripples your labor market, and socialized healthcare leads to a mass exodus of physicians, people will be less prosperous and less happy. At least then we won’t have a paradox.

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