It seems that every year, someone publishes a book on the moral limits of markets. Peter Jaworski and I will most likely be writing a book responding to these other books, trying to show that most of their objections fail or are misdiagnoses of the problem. Here’s a very abbreviated taste of one topics we’ll be discussing:

Sandel argues that queuing distributes goods equally, while markets distribute according to ability and willingness to pay. Since people have unequal ability to pay, markets distribute goods unequally. They are in that way unfair compared to queuing.

We think Sandel is mistaken on multiple levels. First, substituting queuing for a market just substitutes the currency of time for the currency of money. Sure, we all have 24 hours in a day. But we are not really all equally rich in time. Some of us have massive opportunity costs for our time. For some of us, giving up an hour to stand in line really is equivalent to paying hundreds or even thousands of dollars. Queuing favors the retired, the unemployed, those with few responsibilities, and the irresponsible. It is not essentially egalitarian or fair. In particular, it tends to punish people who take on the burden of contributing much to society, while rewarding those who do not.* In short, in the short run, markets favor those with disposable income, while queuing favors those with disposable time.

But that’s just the short run. And this is Sandel’s main problem. He fails to see how the dynamics of prices and markets work. Over the long run, markets drive the prices of most goods we want to consume way down. This means that all of us are in a real sense spending less time in getting those goods, more of us are getting them, and we are getting more of them. It is basic economics to say that our standard of living is higher now because the costs of pretty much everything in terms of time and labor is much lower now.For instance, between 1835 and 1850, the price of light in Britain in terms of average labor hours was cut in half. Between 1850 and 1890, it was further cut by about 97%. Quite literally, we can buy more light with 10 seconds of labor than a caveperson could have bought with 60 hours of labor.

John Rawls argued that we should (or at least may) depart from equal distributions when doing so is to the advantage of the least advantaged. However, in the long run, distributing things via queues has no real history of meeting people’s needs or helping the least advantaged. Even in the short run, it rarely does.

Sandel and others might complain that markets allow people to buy status goods and thus to buy status. But this again misdiagnoses the problem. Unfortunately, people (including most anti-commodification theorists) are status-seekers, and they seek status goods both through markets and outside markets. (Ironically, complaining about status- seeking is itself frequently a status-seeking activity, but that does not make complaining about status-seeking inherently objectionable.)

Still, allowing people to purchase status through markets has a unique feature—it generally makes those people pay for the infrastructure to bring these former status goods to the poor. Those who purchased a Mercedes S-Class in 1980 end up subsidizing the Nissan Versa in 2013. They paid to make luxury features in luxury cars standard features in economy cars. We should expand our time horizon, and care about the prospects of the poor intergenerationally, and not just intragenerationally. We do not do that by asking people to stand in line.

*A good example of this: When I was 20, I contributed hardly anything, but I had plenty of time to stand in line for “free” tickets to Shakespeare in the park. I certainly contribute much more now at 33 than I did at 20, but I don’t have time to stand in line for such tickets. Distributing via queuing punishes my 33-year-old self for taking on the burden of a job, and rewards my 20-year-old self for not doing so.

 

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  • Sean II

    “Quite literally, we can buy more light with 10 seconds of labor than a caveperson could have bought with 60 hours of labor.”

    In fairness to Sandel, his team is also working hard to reverse that trend.

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  • http://profiles.google.com/michael.giberson Michael Giberson

    Your “pay for infrastructure” point contains much more power than your example suggests. In fact, the essence of the cost of light example you use earlier (and the more general dynamic market point), is this “pay for infrastructure” idea. Luxury goods do (in some cases) have these long-run positive spillover effects.

    When Edison built his first electric power system it was to light up the Manhattan home of J.P. Morgan, a financial backer of Edison (and the NY Times office across the street; Edison craved the publicity effects, too). Electric lights were the ultimate in luxury goods in 1882. Soon enough they became widely available and cheap.

    Anti-lock braking (ABS) is a specific example of an automotive technology that started out as a luxury option and eventually became an economy car standard. In 1970 ABS was an option for the Lincoln Continental; in 1971 it was standard for the Chrysler Imperial; also in 1971 GM introduced ABS for some Cadillacs. (Relying on Wikipedia for these claims: http://en.wikipedia.org/wiki/Anti-lock_braking_system.) In 2013 low-end cars like the Nissa Versa and Mitsubishi Lancer comes with ABS standard. Air bags, too, are such an example, though the market dynamics here are complicated by a subsequent regulatory push.

    • RogerMcKinney

      Good points! When the industrial revolution began, almost everything was a luxury item. Before the IR, almost all production for sale in the market was for the very wealthy only.

  • Sean II

    No doubt you will have thought of this already, but I think it’s crucially important to note these differences between the costs of pricing and queuing.

    The money spent in a pricing system attracts producers to the game. Every extra dollar spent is an invitation bringing more cooperation to the project

    Queueing does no such thing. The cost you suffer in terms of time spent simply vanishes into thin air. It cannot be converted. It cannot be spent by anyone else. It therefore creates no incentive for third parties to join the game.

    But…the case becomes even clearer when we remember that I had to earn the dollars I spend in a pricing system, by producing value for other people. This means the time I spent to acquire the money to pay the price was not wasted at all.

    Queuing guarantees the opposite result. The time spent on a queue is not available for socially useful labor. It is the most perfect kind of loss.

    So in moral terms, the net effect of queueing is this: it makes us spend our time in less cooperative ways. It makes us less useful, less generous, really it just makes us…less.

  • http://twitter.com/FBLiberty FB

    So expanding on the ‘long run’ point, we can also argue that paying reveals our preferences through the market discovery process, giving both producers and consumers knowledge which would otherwise be hidden. Furthermore, through the price mechanism, markets give incentives for more suppliers to enter the market and thus reduce the queue (a queue which exists whether we queue by price or by time), something that does not happen without markets.

    • martinbrock

      Here again, by “market”, you seem to mean a monopoly rent, i.e. you suppose some individual entitled forcibly to exclude users of a resource and thus to charge a rent for its use, this rent being subject to competition from other renters of other resources.

      These competitive rents are sometimes defensible, but if a queuing protocol governs use of a resource, rather than a monopoly rent, an incentive to reduce the queue still exists. In fact, you seek shorter queues this way routinely when you browse the web. Distributed servers hosting sites you browse perform this searching for you automatically.

  • http://www.facebook.com/people/Russell-Arben-Fox/763735290 Russell Arben Fox

    “Queuing favors the retired, the unemployed, those with few responsibilities, and the irresponsible.”

    Not that this undermines your general argument, but it wouldn’t be at least somewhat fair to say that this sentence could be re-written as, “Markets favor the young, the ambitious, those who take on too much work and keep too busy, and the not-easily-contented”?

    • martinbrock

      How much work is too much?

  • http://www.facebook.com/profile.php?id=1091737052 Chad Horne

    I don’t disagree with a lot of what you say, but you should probably keep in mind that when people talk about queuing they don’t necessarily mean it literally. For example, in the U.S.,transplant kidneys are distributed by queuing, but that doesn’t mean there’s literally a line that you go stand in when you need a kidney, twiddling your thumbs while you wait for a donor. It just means that those who indicate demand for a kidney (and meet all the requirements) get their kidney first. (In Canada, as I understand it, all scarce health care resources are distributed in that way).

    In the short run, this form of queuing doesn’t really discriminate against anybody–those who have disposable income or disposable time. In the short run it seems the fairest way to distribute kidneys–maybe the only fair way?.

    In the long run, t’s clear that queuing wouldn’t help things by increasing supply, but it’s far from certain that a market would do any better.

    • http://www.facebook.com/profile.php?id=1702318862 Jason Brennan

      It’s not clear from this short bit, but Sandel actually was talking about the virtues of literally making people stand in line. But you’re right that there is also the question of when things are best distributed via lottery instead of the market. So, for instance, when public school systems want to distribute access to better schools, they sometimes use a lottery system (or lottery in conjunction with testing), but they don’t allow people to pay their way into better schools.

      Sandel thinks organ markets are inherently degrading, as well as unfair and exploitative. We’ll take on his criticisms over the course of a few chapters.

      • martinbrock

        Lottery and market (by which you seem to mean monopoly rents) do not exhaust the options. Queuing is not a lottery.

        When a queue becomes prohibitively long, people don’t just give up and do without. They look for another queue, just as people look for a competitive rent when a particular rent is too high.

        Your example of a queue for tickets to Shakespeare in the park is not instructive. A better example is Bluetooth. No one owns the radio frequencies that Bluetooth uses. These frequencies in particular regions are a commons, but Bluetooth enables people effectively to share the resource, and queuing (time-division multiplexing) is part of this solution. Searching frequencies for a shorter queue is also part of it.

      • Damien S.

        ‘Rotation’ might be the missing keyword, more general than physical queuing, but without the unpredictable randomness of a lottery.

        I like markets when they’re appropriate, but I’ve tried to imagine how a non-market society could work, and figured:
        * abundant goods people can take at will
        * goods everyone can have in their lifetime, but not at once, can be distributed by rotation. (Rights to visit the national park system, say.)
        * really scarce goods would go by lottery.

        Would probably work for unpleasant duties, too. Everyone should take their trash to the curb, picking up curb trash might go by rotation. No standing in line.

  • martinbrock

    Queuing can impose lower costs than monopoly rents in some scenarios, like a time-division multiplexed channel over the air as opposed to an artificial channel like a copper wire or an optical fiber.

    Granting a monopoly over some resource and permitting a market price to emerge is sometimes defensible on consequentialist grounds, but this policy is not particularly libertarian.

  • http://www.facebook.com/people/Kevin-Currie-Knight/100000158541035 Kevin Currie-Knight

    I don’t have the book with me now, but I question whether Sandel wrote that queing “distributes goods equally.” What I remember is that Sandel wrote that distributing goods by queing is simply a less morally objectionable way to ration.

    Not that it really matters for your point, but I suspect Sandel would readily cede that queing doesn’t “distribute goods equally.”

    • martinbrock

      I had the same thought when I read Jason’s assertion attributed to Sandel. “Does Sandel really say that?” A quote is more useful in this context than a link to Amazon.com.

  • GU

    You stand *on* line for tickets to Shakespeare in the Park. ;)

    • Sean II

      Not in America, you don’t.

  • http://www.facebook.com/people/Theresa-Klein/1408551264 Theresa Klein

    Why is equal distribution considered “fair” in the first place? Doesn’t what counts as fair in any given situation depends on all sorts of contextual and cultural factors? Is it “fair” for everyone on a team to get the same grade if some members worked harder than others? Most people would say that equal distribution of goods isn’t fair if goods are going equally to slackers as well as hard workers.

    Equal distribution could be more fair if the goods were the product of a windfall, but those are rare exceptions. Most goods must be purposefully produced by human labor. Why should medical practicitioners not be permitted to sell their goods to the highest bidder? Queuing seems to presuppose a controlled price, otherwise high bidders would by definition be line-jumping. Note that a kidney under present law actually is a kind of “windfall” so we’re more likely to support waiting lists there.

  • Jod

    You are correct that lining up substitutes one inequality for another (those who had/took the time win, wealth is no longer the winning card). What bothers Sandel is that by replacing queuing with a market you have made one more area of life a place where the wealthy can buy advantage. In a society in which they seem to have all the advantages already, it is somewhat dispiriting to see more and more areas operate on the rules of the market because the same group of people always wins, and they separate themselves off from the rest of us. What you are really saying is that the sense of equality to which queuing contributes (when I, the lowly chimney sweep, get into the movie before the railway tycoon because I showed up earlier) is not a good.

  • les kyle Nearhood

    Opportunity cost is the key. Imagine that China had never decided to embrace markets and had continued Maoism. Not only would the people of China be much much less prosperous now (but there would be less of a gap between rich and poor). But the rest of the world would also be less prosperous because of all of the trade and industry contributed by a modern China.

    But it goes even further than that. If China THEN decided to institute market reforms it would do so at a much lower level of wealth due to the foregone opportunity costs of all the years wasted at near zero levels of growth.

  • good_in_theory

    “It wouldn’t be so bad, if the line still moved. But it doesn’t. It stops, every time a group of people with Flash Passes cut to the front. You used to be able to go on, say, three or four rides an hour, even on the most crowded days. Now you go on one or two. After four hours at Whitewater the other day, my daughter and I had gone on five. And so it’s not just that some people can afford to pay for an enhanced experience. It’s that your experience — what you’ve paid full price for — has been devalued. The experience of the line becomes an infernal humiliation; and the experience of avoiding the line becomes the only way to enjoy the water park. You used to pay for equal access; now you have to pay for access that’s more equal than the access afforded others. The commonality of experience is lost, and the lines are striated not simply by who can pay for a Flash Pass and who can’t; they’re also striated by race and class. The people sporting the Flash Passes are almost exclusively white, and they tend to be in better shape than those stuck on line. They tend to have fewer tattoos, and to look less, well, pagan. And by the end of the day, they start cutting lines where Flash Passes don’t even apply — because they feel entitled to — and none of them, not even their kids, will so much as look at you.”

    http://www.esquire.com/blogs/politics/whitewater-flash-pass-12403562

  • j_m_h

    I’d make two comments on this post.

    1) “It is not essentially egalitarian or fair. In particular, it tends to
    punish people who take on the burden of contributing much to society,
    while rewarding those who do not.*” This is really the critical point and the one you lead off with, the opportunity costs to some are higher than for others, is exactly what those other authors are getting at: some of us have greater effective demand. The problem is they don’t, apparently (but not knowing the specific arguments that are being made it’s hard to know) ask why that might be the case in a market economy/society.

    2) I don’t ask this in a mean-spirited way but what is the basis for your statement that you contribute more to society now than 13 years ago? If I try to ask that of myself about myself I have to consider what I add to my job that others might not and how do I make the evaluation of social contribution between non-pecuniary contributions and pecuniary remuneration.

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  • Francisco Capella

    Great post. Just one tiny thing:
    “Unfortunately, people […] are status-seekers.”
    Is it a matter of bad luck? Or do you mean that it is a bad thing (an objective valuation, if such a thing is possible)? Or that most people do not like that fact. Or that you do not like that fact.
    Maybe it is just a way of speaking without a deep meaning…

  • RogerMcKinney

    As les kyle Nearhood posted, the only legit measure of costs is opportunity costs, and opportunity costs in queuing are high. In addition, all economic goods are scarce and so some get none at all. Queuing for kidneys is a good example. Why is first-come-first-serve fair, anyway?

  • RogerMcKinney

    Sandel’s whole book is based on a straw man. No one wants to force all human activity to be part of a market. For example, all charity is not part of the market. Sandel uses his straw monster to frighten gullible readers into fearing the market.

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