Tuesday, September 13, 2016

British Trade Secretary Unwittingly Expresses The Idea That We're All In This Together

Whenever you bring up prosperity and inequality these days, you almost always hear something about "incentives." If there's too much equality, the thinking goes, people won't be motivated to work as hard, and overall economic growth will suffer. People aren't going to work just out of a sense of obligation or whatever -- you have to structure it so that they need more money and more money is the reward.

Crucial to this picture is the idea that you have to appeal to self-interest, and that what that means in practical terms is money-as-motivator.

Because I think of this as so much a part of a certain kind of orthodoxy, I was very surprised to find the British Trade Secretary recently appealing to the opposite logic. People have to work harder out of duty, he said -- not thinking of what they want for themselves, but thinking instead of what they owe to others. What's even more surprising to me is that he wasn't talking about poor people and pulling yourself up by your bootstraps and all that yada yada. He was actually talking about rich people -- about the power-players of British industry.

The Secretary, a "Euroskeptic," was chastising these power players for being unwilling to engage in the wheeling and dealing he thought necessary to give post-Brexit Britain prosperity and a strategic advantage.

Calling the British "fat and lazy," he said that business leaders had an obligation to work harder and longer:

"We’ve got to change the culture in our country," he said. "People have got to stop thinking about exporting as an opportunity and start thinking about it as a duty -- companies who could be contributing to our national prosperity but choose not to because it might be too difficult or too time-consuming or because they can’t play golf on a Friday afternoon."

So: rich people are relaxing and hanging out, instead of working to earn more money, and the Secretary is telling them to suck it up and put their nose to the grindstone because it's their moral obligation.

Let me unpack the surprising things in this series of remarks. First, there's an acknowledgement that money isn't the only thing in life. As we've written about before, this directly contradicts the working assumption of many policy-makers and managers. For example, doctors trying to negotiate for more time just kept being asked what financial compensation they wanted. When they tried to explain -- no, it's not about money -- the response was basically, "Don't be ridiculous. It's always about money."

The Secretary's remarks are interesting because they explicitly acknowledge that it's rational and self-interested to act in ways that earn you less -- because you want to be doing other things. As indeed all of us do.

The second surprising thing is that there's an appeal to the concept of "duty" or obligation. Usually when you're talking about prosperity and economics, bringing up ethics and morals is verboten. In the economic model, people are self-interested -- there are no duties and obligations, there are just preferences you might have for doing one thing rather than another.

Now, suddenly, duties are back in the picture! Wow. This is potentially a big deal. Because if we can have duties and obligations to contribute to overall prosperity, even when we don't feel like it, then surely we can have a whole host of other obligations? Like making sure no one is going hungry or without medical care in one of the richest countries on the planet? Where will it all end?

Actually, the whole "duties of prosperity" thing brings up another thing we've covered previously -- about how economic thinking is weird when it comes to motivations. Because when we use economics, we're supposed to imagine ourselves as self-interested from the individual point of view. But we're also supposed to choose policies that maximize wealth or well-being overall -- choosing for general prosperity. The two are obviously different: what makes me wealthy or well may not be what makes everyone else wealthy or well. The chastised business leaders exemplify this perfectly: what makes them better off is golf. What makes the country more prosperous is something else entirely.

I guess one question all of this raises in my mind is something like this: if rich people want to golf more and poor people need more money, why can't we just move some money around? I mean, who needs British prosperity? Evidently not the business leaders. They're doing fine. They'd rather be kicking back with a pint.

The people who really need British prosperity are the poorer people. So here's a crazy idea: maybe instead of forcing rich people to work more when they'd really rather not, maybe we could just give the poorer people some of the extra money lying around in the richer people's bank accounts. Doesn't this seem like a simpler solution?

Don't the Secretary's remarks have a tone of "we're all in this together?" And if we're all in this together, why not go all the way?

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