Seven Deadly Economic Sins

0:00:07.7 Trevor Burrus: Welcome to Free Thoughts. I’m Trevor Burrus. Joining me today is James R. Otteson, the John T. Ryan junior professor of business and ethics at the University of Notre Dame. His latest book is Seven Deadly Economic Sins: Obstacles to Prosperity and Happiness. Every Citizen Should Know. Welcome back to the show, Jim.

0:00:25.4 James Otteson: Thank you very much, Trevor. It’s a pleasure to be with you.

0:00:27.7 Trevor Burrus: It’s been too long. The last time we were discussing The End Of Socialism, which we’ll put in the show notes, but today we’re discussing The Seven Deadly Economic Sins, but the first question is, I think kind of obvious, why is a philosopher writing about economics?

0:00:42.4 James Otteson: That’s a good question and a fair question. I guess what I would say is, one of the problems I think economics has is that nobody can or is interested to pay attention to it, and that’s partly economics, the fault of economics and economists, it’s not just because people know that economists disagree about lots of things, they vote for different parties, they’re on different sides of issues about taxation and trade and all kinds of other things, but if you dip in anywhere to an economics journal, so the journals where economists actually publish their material, it’s extremely difficult for a lay person to make any sense of, so you see lots of equations what relation that has to actual human beings, an actual human life is very difficult to figure out, and so what I thought was, there might be a way to address sort of both of those. So on the one hand, it is true that economists disagree about a lot of things, but on the other hand, there are some basic fundamental principles that do enjoy widespread consensus among economists, and then second, if you could get somebody who could present that in a way that someone who’s not already a trained economist could understand, that might actually provide some benefits.

0:02:00.1 James Otteson: So that’s what I tried to do in the book. You’re right, I am a humanities trained, I’m a PhD in philosophy, but I’ve spent a lot of time reading and coming to appreciate the discipline of economics, but from a humanities background and trying to relate it to actual human beings, actual human life. And the aspirations we have to lead a good and just and humane life, and I think the fundamental principles of economics can actually help us to understand what would be a good life for ourselves, how we can make good decisions about how to rank our priorities and how to achieve our goals in life as individuals, and then also on the policy level for society.

0:02:40.0 Trevor Burrus: And you and I are both, or I have an undergrad degree in philosophy, and then I did the law school thing, but we’re both big appreciators of Adam Smith. Now, would Adam Smith have said, I am an economist? ’cause he might be the one economist that people can name, at least for like a Jeopardy category. So would he have said, I am an economist?

0:03:00.2 James Otteson: No, he would not have said that. In fact, he would have called himself a moral philosopher, which is what his title was, so… To be fair, in the 18th century, when he was writing, there was no discipline called economics, that was not a thing, and professors at universities were divided into just two categories, you were either a professor of moral philosophy or a professor of natural philosophy. So what was called then natural philosophies, all the things that had been subsequently subdivided into the studying of the natural world, so everything from astronomy to geology, biology, botany, all of those were called natural philosophy. And then the other category was what was called moral philosophy, which was the study of everything related to human beings and human behavior.

0:03:49.8 James Otteson: So all the things we would now recognize and separate out as from psychology, moral philosophy, political philosophy, political science, sociology and economics. So he called himself a moral philosopher, and I think that’s actually the right way to think about it, what are the… How do human beings behave sort of empirically, we can study it empirically, how do human beings behave under different circumstances, but then marry that to an idea of how human beings should behave what kinds of institutions should they have? So de would have called himself a moral philosopher, and I think that’s right, that’s the founding of what later became the discipline of economics, but at its beginning, it linked very closely empirical studies of how humans behave, how humans behave, and the kinds of institutions they create on the one hand, and on the other hand, moral philosophy, what sorts of goals should they have, what should they aspire to be and to do.

0:04:45.4 Trevor Burrus: Does economic need philosophy, or maybe to clarify, is there an implicit philosophy in economics that sometimes maybe economists don’t want to admit when they put a paper on AER and it’s got a bunch of graphs about housing prices, that doesn’t seem very philosophical, but is there an implicit philosophy in economics?

0:05:08.4 James Otteson: Yeah, that’s a good question. That’s really sort of two questions, one is, do economists read philosophers? And the answer to that is probably not very much, maybe they did as undergraduates, but in their professional lives, not very much, of course that goes both ways. Professional philosophers don’t spend a lot of time reading what economists write either. But your other question, which is, is there an implicit philosophy that undergirds or that informs a lot of economics? I think the answer to that is probably, yes, if you think about what most contemporary, not all, but what most contemporary economists do, they seem to approach the world with the following assumption that what we should do is enable people to achieve their preferences, so whatever your preferences are and preference… The term preference is very broad, it can mean anything from whether you like chocolate or vanilla ice cream, to what’s your highest goal…

0:06:04.5 Trevor Burrus: Heroin, it could be heroin right?

0:06:08.7 James Otteson: It could be heroin, what are your highest moral aspirations or your bad moral aspirations? They’re all just preferences. And so I think implicitly, a lot of economists are really just what we might call utilitarian, So utility is just whatever makes you happy, and the goal of economics is to figure out how you can get people to achieve more of their preferences, to score higher on UTILS, U-T-I-L-S, this is this weird category of units of happiness or pleasure, I guess, without importing a lot of moral judgment about, well, is it the case that some preferences are bad and some preferences are good, or some are better than others. So I think you’re right, they tend to be sort of assumed utilitarians.

0:06:55.3 Trevor Burrus: There’s egalitarianism, at least there, which runs throughout your whole book, which is my favorite thing about it, that it really is a philosopher talking about economics in a philosophical way, and one thing that you keep coming back to is sort of equal dignity and respect for people, and so it seems that if we’re preference-​agnostic in the sense of being like, you like chocolate and you like vanilla, or you like heroin and you like marijuana, maybe one reason we would do that is because we should be respecting other people’s preferences if we command or demand the same respect for our own.

0:07:34.6 James Otteson: Yeah, no, that’s a good point, yeah. You’re right. One of the central claims I make in the book is that… And it’s a moral claim that human beings are equal, moral agents, they’re equal in dignity, so if you are a human being, you are a moral agent, which means you have the capacity to make choices, of course, on the other hand, that also means you are responsible for the choices that you make, that both of those, the freedom and the responsibility go hand in hand, but that is a kind of moral egalitarianism, that’s not quite the same thing as say a preference egalitarianism, so I could… If you are an equal moral agent to me, which means that among other things that I should respect, the way you want to construct your life, so you have a path that you want to achieve your goals in life, and my default setting should be to assume that you have reasons for what you wanna do, even if I don’t know what they are, or maybe I don’t understand them, or even if I disagree with them, but the default should be to respect you as a moral agent and the choices that you make, but it doesn’t follow from that that I can’t criticize your choices.

0:08:47.1 James Otteson: I might say, Well, yeah, I’m gonna give you the free… I will respect your freedom to lead the life you lead that you want to lead, but that doesn’t mean that I can’t say, Well, I think you could be doing better, or there’s something else you might… Maybe you should do other than what you do, so I would say there’s a moral egalitarianism as far as sort of moral agency goes, but not necessarily a preference egalitarianism.

0:09:12.2 Trevor Burrus: Getting into the economic… The Deadly Economic Sins. The first one, which I think opens up a bunch of questions that many people who are against markets have, but the first one is that wealth is a positive sum game, which I guess to people like you and me, and probably long time listeners of Free Thoughts is quite obvious, but it’s something that we continually have to remind people.

0:09:37.9 James Otteson: Yeah, no, that’s something that… You’re right, maybe you and your audience, that’s not gonna seem like much of a revelation, but I promise you that’s a revelation to a lot of people, and to be fair to them, there’s a good reason. So if you think about great civilizations in the past, you think about the Egyptian pharaohs and their pyramids, or you think about the Roman Empire, or the Song Dynasty in China. They had a lot of things, a lot of the trappings of wealth took a lot of capital to build those pyramids, for the Romans to build the aqueducts and roads and Colosseum and all of that. Well, how did they get it? Well they primarily got it by stealing it from others, so you enslave people, you conquer people, you take their labor, their lives, their land, and then you aggregate it in one place in Rome or wherever, and then it looks like, well, there’s all the wealth, but they got the wealth by taking it from others. So that’s just extraction. I benefit myself, but at your expense at somebody else’s expense, so a lot of human history… In a lot of human history, in fact, maybe the majority of human history, that’s the way that any person or group got wealthy was effectively by extracting it from others through theft or fraud.

0:10:57.1 James Otteson: So when people today say, they look at people who are billionaires and people who well are not. It’s understandable that their first thought might be, Well, maybe I don’t know exactly what you did wrong, but I’m pretty sure somewhere along the way you did something wrong, and I think the assumption behind that, that’s often unstated and un-​examined, but I think the assumption behind that is that really the only way there is to become wealthy is by taking it from other people, either directly or indirectly by robbing them of opportunities, etcetera. And so I would say that is certainly a historical way in human history that people have gotten and groups have gotten wealthy by taking it from others, but it’s not the only way. And in a market economy, in fact, if people’s persons are protected, so you can’t enslave me or kill me and if my property is protected, meaning you can take my property or use it or trespass upon it without my permission, then the only way that I can get anything I want from you, if you have something that I want, then the only way I can get it is with your voluntary consent, and that means that if I’m gonna…

0:12:11.0 James Otteson: If I want to partner with you, if I want to employ you, if I want to buy your resources or property from you, then what I have to do is to convince you that I have something that’s of value to you, such that you’re willing to give up or say yes to my offer or proposal. That’s a positive sum transaction. And if you think about the kinds of transactions that go on in market economies, thousands, millions of times a day, that’s really the essence of them, so these are mutually voluntary and therefore also mutually beneficial, if you didn’t think… If I made you a proposal and you didn’t think it was worth your time or it was worth whatever you would give up to get it, you have the right to say No, thank you and go somewhere else. If you have that right, if everybody has that right to say No, thank you, and if that right… And if that choice has to be respected by people, well, then the only way we get any kind of exchange or transaction or partnership is when we both agree, so it’s mutually voluntary, and then it would be mutually beneficial.

0:13:13.1 Trevor Burrus: In situations… And this gets into one of your other fallacies, situations of extreme inequality, is it fair to call it sort of a bilateral or equal exchange, if, for example, the wage that you’re being offered to work at an Amazon Factory is what… Is what you have to take so you don’t starve in the streets in a way that is not true of Jeff Bezos, and of course, Jeff Bezos could easily deny himself a small fraction of his wealth and give you a raise, and he doesn’t do that. So is it really voluntary in that sense?

0:13:53.1 James Otteson: Yeah, that’s a good question. So extreme inequalities in wealth, and that depends… The extremity matters on both ends as it were, it’s not just how wealthy is one person, but how poor is another person, and depending on how poor the other person is, in particular, how many or how few options the other person has then the disparities in wealth can indeed lead to disparities in leverage too. So what I would say about that one, this is what I argue in the book, but I’ll just make two points about that, one is the worry about great inequality in wealth, so one worry is that the way a wealthy person got wealthy is through extraction, so not through mutually voluntary, mutually beneficial exchange, but by rigging the game somehow, fraud, maybe outright theft, it could be that’s… The fraud is the Bernie Madoffs of the world, maybe other people stole or engaged in other kinds of extraction, cronyism is also something that I think has to be mentioned and explored because one way that some people and some companies and some families have gotten wealthy, not just today, but also historically, is by enlisting the government to protect them from competition, to forbid other people from entering in markets, subsidize their losses, etcetera.

0:15:16.3 James Otteson: So one worry is, Well, did you… Did the wealthy person become wealthy through extraction or… And I think that actually matters quite a bit morally, if we’re gonna judge a person morally, a wealthy person morally, while the answer to that question, how did you get your wealth? That makes a really big difference. But the other question on the other end of it, and I think it matters what’s the absolute condition of the poorer person that we’re imagining we have a rich person, we have a poor person, and let’s suppose the rich person, Jeff Bezos is making an offer. Comes to me and says, I want you to be my slave and I’ll pay you a billion dollars, okay? If my agency is protected, in other words, if I have the what I call the opt-​out option, I have the right to say no thanks and go away, and Bezos cannot make me accept the offer, can’t force me, can’t coerce me, makes me an offer, and if I have the legal and respected right to say no thanks, then despite the differences in our wealth, our moral agency is level.

0:16:23.3 James Otteson: So he can’t make me do anything, and if he really does want me to do something to work for him, he’s gonna have to offer me something that matters enough to me to do it, that’s sort of the ideal case. The harder case… And this is where I think your question really gets some purchase is when the poorer person has extremely few options. So you mentioned either I work for Jeff Bezos or I die in the streets. Okay. If those are my only two options. Yeah, then that doesn’t seem like a fair exchange among moral equals, this is now somebody who’s exerting leverage over us… Over the poorer person, and that’s certainly been the case. Things like that still go on today, but certainly historically as well, I think one of the remedies, I would say two remedies to potential remedies to that or ways to address it, if not completely solve that, one is what I said a second ago, which is to make sure that everybody has an opt-​out action respected, so no matter how wealthy someone is or what status or class they are in society, everybody can say no thanks and go away and walk away if they want, so we have to make sure everybody’s option to say no thanks is respected.

0:17:39.5 James Otteson: But the other thing is to work to increase the number of options that people have, and this is one of the things, one of the I think under-​appreciated benefits of a market society is that you have millions in the United States, millions of businesses in the United States, and for any individual, you may have dozens or hundreds of options that actually goes much farther in reducing the negative consequence or potentially negative consequences of the disparities in leverage because… Yeah, if I have only one other option. Okay, yeah, then that’s it. But if I have a few or a dozen or dozens, and if those are increasing over time, then the practical effect of a difference in wealth is much smaller and much less worrisome I think.

0:18:34.0 Trevor Burrus: It offers a different type of defense of wealth itself, which I found interesting because some people, if you’re just talking about GDP, and you say, “Look at how much richer we are since 1800,” they think it’s sort of [0:18:48.5] ____ materialistic than saying, Well, what does wealth matter, how many TVs, how good of a car you have.” But one reason it can matter is because it helps level the playing field by allowing more options for the person who’s poor, ’cause then 1600 that exploitation was real and the poor person had no real options.

0:19:12.5 James Otteson: Right, and I think sometimes we think people sort of instinctively, without really reflecting on it very much, but they think that the economic situation today in 2022, United States hasn’t really changed since 1820 or 1620, but it’s dramatically different. And it’s not just in… And, as you say it’s not just in the overall levels of wealth, although those have increased to unprecedented levels. But it’s not just in overall levels of wealth, it’s also in I would say, the options available to us to construct, to everybody, to construct a life of meaning and purpose. So GDP as a measurement has all kinds of problems of its own, but what I would say is that wealth by itself doesn’t entail or equal or guarantee a life of meaning and purpose or happiness, but what increasing wealth can do is enable the possibility of constructing such a life.

0:20:14.5 James Otteson: So if I’m desperately poor and if I’m wondering if I can eat today or if my children will be able to eat today, then I’m not thinking about writing the great American novel or where my kid’s gonna go to college, or are we gonna go to Disney World for vacation, what I’m thinking about is, can we eat today? But as wealth increases and as more and more people are able to address those more pressing historical human needs of food, clothing, shelter, what that does do is open up the possibility for them to begin turning their attention to other things that do begin to fill out a life of meaning and purpose. So wealth doesn’t guarantee that you’ll have an easy life, it doesn’t guarantee that all of the things that really matter to a human being or should really matter to a human being, will in fact be in your life, doesn’t guarantee those things, but increasing wealth leads to greater possibility and greater opportunity, and it does, I think, enable people to begin having the possibility of constructing a life of meaning and purpose.

0:21:16.6 Trevor Burrus: And that gets into your philosophical defense of inequality in that regard, because there are… When you have a bunch of options, it would be bad if a bunch of people doing the same exact work farming in this field, and there was some discrepancy there that was not deserved in terms of how much they got paid, but it’s very different to say, Oh, this person is an actor, this person is a musician, this person is a circus clown, and then this person over here is an investment banker, and yes, there is inequality between these people, but that doesn’t necessarily make it immoral.

0:21:53.8 James Otteson: Yeah, no, in fact, it can, not always, but I think it can actually be a reflection of our true identities and the unique set of gifts and abilities that each of us has. Take me as an example. So I’m a professor at a university, this kind of a job I spend my life teaching and reading and writing, but I’m not making food for people, I’m not building houses for people, so in some… In fact, Adam Smith in his wealth of nations way back in the 18th century, he distinguished between what he called productive and unproductive labor. Unproductive labor included things like professors like me and I didn’t like him. What does that mean? Well, we’re not producing a vendable commodity, we’re not producing a consumer good that somebody can use. So vocations like mine and many others, maybe even being a podcast host are things that are only enabled because of the growth in wealth in society.

0:22:55.6 Trevor Burrus: Yes, I guarantee that. I mean podcast hosting was really not a growth industry in the 1820s, it was hard at that time.

0:23:06.3 James Otteson: That’s right. Yeah, you and I both… Well, I won’t speak for you, but I probably already would have been dead, I wouldn’t have made it to this level of my life. But yeah, you and I would have been in the military or in the fields.

0:23:19.3 Trevor Burrus: Well I’m a lawyer, which is technically non-​productive labor, I would say, or not technically, often non-​productive labor. Another luxury good for many people. The themes discussed of the whole book is this, I really think it is the egalitarianism of human dignity aspect of this, and respect, mutual respect. And so when you get into some of the concepts that may be familiar to listeners, such as the socialist calculation problem of the Hayek and Mises wrote about. But you talk about it in a different way, you call it the great mind fallacy, which is also kind of about… Again, it’s about respect too, in some ways.

0:24:02.3 James Otteson: Yeah, and I think that is… So I do call that one of the seven deadly economics sins, as I call it, but that’s an assumption that I think a lot of people have, which is that there is somebody out there who possesses not only all the knowledge necessary to organize something as large as an economy, but is also sufficiently morally virtuous that we can trust that person with that kind of authority and power. And one of the arguments I make… So I don’t claim that there’s no such thing as expert knowledge, there certainly is. If I get sick, I’m gonna go to a doctor, I’m not a medical doctor, so I’m gonna go to a doctor. But what’s key to that is that the medical doctor has on the one hand, and other experts too, but I’ll just use the medical doctor as an example.

0:24:52.8 James Otteson: They have expert knowledge that’s general, and they are only able to apply it to you in particular, once they know a lot about you. So they might know general things about what health or nutrition are, for example, but they’re not gonna be able to give you any advice, prescribe medicine or a course of treatment or anything else, unless they know a lot of detailed information about you. And that’s why when you go to see a medical doctor, usually the first thing they do is get some history about you, they wanna find out your family history, your life, what’s going on in other aspects of your life, and that’s necessary for them to make any particularised judgments. And I think that is very closely connected with…

0:25:34.3 James Otteson: You mentioned Mises and Hayek, I think that’s very closely connected in particular with Hayek’s very justly famous article about the use of knowledge in society. So yeah, of course, there is expert knowledge, but it tends to be general and it’s aggregated data, it applies maybe to average or literally average human beings, but if you are not a literally average human being, then you have to have particularised knowledge of the individual situation in order to know how it applies to you. So when I say there’s no great mind or that what I call that fallacy, it’s the leap from going from, “Well, my doctor can give me good advice, therefore, my doctor or somebody else can give everybody good advice, even people they don’t know.” And in the policy realm, that’s what we tend to think, that there are policy makers or there are regulators, or that there are politicians, surely there’s somebody out there who really knows what the best way is to source this resource, to construct this company, to produce these goods. And so my argument is that, well, the general and aggregate data that they have at their disposal doesn’t actually enable them to do it because they don’t know the particularities on the ground that are required in order to bank good and wise decisions.

0:26:55.3 Trevor Burrus: They also don’t know the preferences and the preference ordering of the people involved, such as the question of whether or not you should…

0:27:01.8 James Otteson: Yeah. Absolutely.

0:27:01.8 Trevor Burrus: Should you exercise, should you smoke, should you have a gun in the house? Would be dependent upon preferences. But with some of those and you discuss it in the book that with some of those, it seems like our preferences might not be real, or at least what we say and what we do are very different. Smoking would be a good example, addiction may not be a preference in that way. So how do we deal with the fact that our preferences may not be entirely… We’ll not be entirely aware of what our real preferences are.

0:27:35.1 James Otteson: Yeah, that’s one of the things where it’s a good question and it’s a complex question, ’cause there are lots of pieces involved in that. That’s one of the things where economists will often say, “Well, I don’t wanna hear your words about what you want, I wanna see what you do.” So we can figure out what matters to you by seeing what you actually choose and what you actually do.

0:27:55.2 Trevor Burrus: This is a good time for my favorite economics joke, which is, “Two economists were walking down the street and a Porsche drives by, and one of them says, I want that, and the other one says obviously not.” Not exactly a knee slapper but yes, it’s on this point.

0:28:12.3 James Otteson: No, but it is at that point, you’re right because… Yeah, and I have an economist friend who shall remain nameless, but he’s a pianist, so he plays a piano, and he likes to bait students by… Tell his students that I’m a piano player, and occasionally students will say things to him like, “Gosh, I wish I could play the piano.” And he says, “No, you don’t.” And when they… They’re a little puzzled by that, but he says, “No, look, if you did wish you’d play the piano, you would play it, you’d be playing it. The fact that you aren’t actually playing a piano proves you don’t actually want to.” I think the more general lesson from that is that we have a ranking of preferences. Some of our goals in life or the things we wanna achieve are more important than others, and if we abstracted from the actual constraints we face in the world, meaning, we have limited time, we have limited resources, we can’t do everything we would like to do. If we imagine that, well if we actually had unlimited time or we had unlimited resources, what are the things you would like to do? Okay, sure, there are all kinds of things.

0:29:17.4 James Otteson: So there’s a sense in which we basically have infinite preferences, but because we have limited or scarce resources including time, we can’t do all the things we wanna do, we have to make choices about it, and those choices are under those constraints, and they reveal, if not what all of our preferences are, what they do tend to reveal is our ranking of preferences, what matters more and what matters less to us. What kinds of trade-​offs we’re willing to make, what kinds of trade-​offs we aren’t willing to make, and that applies to all kinds of things. So piano playing, for example, that’s one. Others, including about smoking. I’ll come back to smoking in just a second. But if you think about something like driving a motorcycle, the question of well should you drive a motorcycle? Well, there’s really nobody who can answer that for you except you, because it depends on all kinds of things that are unique to you. Your risk tolerance, whether you enjoy it, what benefits you get from it, what other resources you have, maybe what other obligations you have to other people, all of these things are gonna come into your decision about whether to drive a motorcycle. The default, I argue, if we start with that premise we started, we talked about a long time ago about equal moral agency, the default, I would say is to trust that people can sort these things out on their own and respect the choices they make. But that brings us to things like addiction.

0:30:39.9 James Otteson: If you’re addicted, the thing I think is interesting about the questions of smoking or you mentioned heroin earlier, if you’re addicted to something like heroin, what that does by calling it an addiction, if you’re addicted to it, what that means is that you’re no longer… Almost by definition, making a free choice anymore, now it’s a coerced choice. It’s not a coerced choice by another person, maybe, but your capacity for free choice has been limited and maybe even completely obliterated depending on how we understand what addiction is. So I think that’s not the same thing as asking or viewing people’s choices that they may say in market exchanges as being the default is to respect them, you respect them because you assume they’re making a free choice. If they’re not making a free choice, then that takes it completely out of that realm, and I think justifiably leads us to view it much differently.

0:31:41.6 Trevor Burrus: The questions of preferences, which I think you put together for another one of your fallacies, which is the economics is amoral fallacy.

0:31:50.5 James Otteson: Oh yes.

0:31:51.6 Trevor Burrus: Helps get to this question of, Well since it is about preferences and trade-​offs then it kinda has to be related to morality in some way, if it’s related to our values.

0:32:01.8 James Otteson: Yeah, that’s exactly right. So many people think that economics is sort of this cold, calculating cost-​benefit analysis, doesn’t really speak to human beings as persons, their full identities, and I don’t disagree that cost-​benefit analysis can seem pretty antiseptic and not really fully capturing everything there is to a human life. In part, because we can’t… A cost-​benefit analysis has to be based on what we can measure and count, and not everything that matters in a human life can be measured and counted in the right sort of way. On the other hand, what I do think is the case, and this is what I argue in that section about whether economics is amoral or not, is that economics really, I think, deals with the choices human beings make under the constraints they face. And the choices human beings make are based on all the things that matter to them, so that’s not just preferences about what brand of Blue Jeans do they wanna buy, or what kind of car they wanna buy, but also their moral aspirations. So here’s one of the suggestions I would make, if something matters to you morally, if you have a moral goal, either in your own life or for your society or for the world, then that moral goal should entail different choices you are going to make. In other words, it should affect what you actually decide to do.

0:33:34.2 James Otteson: And if it’s gonna affect the decisions you make, then that’s gonna be captured in the behavior that economics talks about. So in other words, economics is going to talk about and give advice about how to achieve the goals you have, but that’s gonna include the moral goals you have. And those things can be, they’re not always, but they can be reflected even in market exchanges. Think about how frequently, and I think the frequency is increasing now, but think about how often people make choices about what company to work for or whose products to buy based not just on price, not just on quality, but also on their sense of the morality of the organization. So I think that’s actually being reflected in the choices people make today, whether they agree with them or not, people complain about companies taking stances on political issues or on moral issues. Some people cheer those stances, some people complain about them, but I think that indicates that consumers, citizens, moral choices, they’re moral preferences, their moral values actually do find their way into and influence what companies do.

0:34:42.7 Trevor Burrus: Which is also another product of growing wealth, because it was very hard to be concerned about the environment or child labor, for example, when everyone was poor and children had to work. So now that we can make ethical choices in our marketplace decisions, once again, we’re becoming more moral and leading more enriching lives because of it.

0:35:03.7 James Otteson: Yeah, no, I think that’s a good point. In some ways, some of the stances we take publicly, especially when we say, “Well, I wouldn’t work for this company because I don’t like their moral view about X, whatever it is” or “I won’t buy from this company because I don’t like the way they treat their workers.” Or whatever. In some sense, you can think of that as sort of luxury preferences, these are preferences that are enabled only because we are at a certain level of wealth, and we have a certain number of options that we can make those choices. If we were much poorer and for poorer people today, you’re right, they have many fewer opportunities to make choices like that.

0:35:42.8 Trevor Burrus: And my favorite chapter is the conclusion, and I find it interesting that you took this and didn’t do eight economic fallacies, you decided to propose a possible fallacy, but only in the conclusion and it very much just dovetails with a lot of my thinking over years, the question of how much preferences control our political beliefs. But I love the term, you have this, the I am the world fallacy. It’s a great way of putting it, and there’s some insight there, I think, into how maybe we form some of our political beliefs.

0:36:15.8 James Otteson: Yeah, and I think that is a fairly… Thank you for saying that. I’m pointing that out. I think that is a fairly common one too, and I think maybe all of us to some extent, myself included, fall prey to that, and the idea behind that fallacy is that we tend to think that whatever my preferences are, whatever my values are, whatever aspirations I have in my life, those are the ones everybody else should have too. And if you have different preferences or different values or you rank them in different ways, or you’re willing to make trade-​offs that I’m not willing to make, then it’s not because you’re a different person with your own unique identity and your own unique situation and circumstances that you face, but it’s that you’re wrong, you’re making some kind of mistake. And I think we tend to not only believe that, but we think policy should reflect it. And that’s also in a way sort of connected with the great mind fallacy. We think that there’s… What we need to have is somebody in charge who’s going to enforce not only the right values, but the right ranking of values for everybody. And when it comes down to brass tacks, usually when we ask what are the preference… What are these values that should be enforced and what’s the ranking?

0:37:26.5 James Otteson: They tend to be, “Well, mine.” Whatever my preferences are, whatever my values are, those are the ones that everyone should have. Yeah, and so I think that’s a fallacy in the sense that what it fails to do is to recognize that people are not just equal moral agents, but they are unique moral agents. Each person is unique. Each of us is an un-​repeatable precious soul that has existed precisely once in the entire history of the universe, and no two people are exactly alike, which means that no single path is going to be perfectly applicable to more than one person. Whatever the right path for your life is to achieve a life of meaning and purpose, may have some overlap with others, but it will not be identical in its particulars, and I think what we need to… My suggestion in that argument is to say we need to respect that aspect of humanity as well. So it’s not just that people should have the right to make choices, it is that, but it’s also that the right kind of life for you doesn’t have to be the same right kind of life for me.

0:38:35.9 James Otteson: And that’s okay. I think that’s something of a live and let live philosophy, but it’s really grounded in this unique dignity that every single human being has in there, and by calling it unique, I mean that literally each person is different from everybody else.

0:38:54.1 Trevor Burrus: Which gets to sort of a… I mean, this in a complimentary way, that it’s the simple case for human liberty resting on human dignity and the thriving for exploring and being able to try and construct your own life and personality. So that gets into things like privacy, which you mentioned in the book, but at some level, yes, it doesn’t answer environmental questions, externalities, a bunch of things like this. But at its heart if you have the equal dignity role and you respect other people’s judgments, you get most of a liberal society focused on flourishing individuals as individuals.

0:39:38.6 James Otteson: Yeah, and I think that’s one of the… I’ll adopt the position of a critic of my own work, I think that’s one of the ways that somebody might say, “Well, it looks like we’re just focusing on all of us as sort of atomised individuals, you lead your life and I lead my life, and we are not… Not only are we not connected in any kind of deep way, but how do we ever get to a shared sense of purpose.”

0:40:03.3 Trevor Burrus: That was my next question anyway, so answer that.

0:40:06.4 James Otteson: Yeah, well, I think you’re right to be asking about that and right to be worried about it. Yeah, so I think we can have two things at the same time. So on the one hand, I think it is the case that each of us is a unique and distinct individual, but on the other hand, it’s also true that we are social animals. This is something that… Going all the way back to Adam Smith and before Aristotle, human beings are social animals. So it’s probably impossible for any human being to achieve your unique good in life on your own. You have to do it in friendship, collaboration, solidarity with other people. So that raises the question, which I think is the one you’re thinking of, that raises the question of, “Well, is it enough to just focus on my individual life, do I have to think about our social life as well?” And I think we can do that too, and I think economics can help with that as well, so it’s not… So the two things that I said that I think are both true, are that, yes, we are individuals, but we are also social preachers. And if we think about this, relating this back to the concept of what it means to lead a deeply happy life, so not just seeking pleasure or contentment, but if you think about happiness in the sense of true flourishing, that’s only going to happen if we are living with other human beings under institutions that allows us to construct lives of meaning and purpose.

0:41:37.1 James Otteson: So I think that’s largely consistent with a liberal system of political economy, liberal in the sense of the classical liberals sort of Adam Smith and David Hume, that allows a great deal of freedom for individuals, but also encourages individuals to construct and form communities with one another. And those communities don’t all have to be the same for everybody, they can be different kinds of communities, that’s one of the things also that I think increasing wealth enables and it enables yet ever more different kinds of communities. But, and I will say one of the dangers of this or one of the worries of it, is that we can become sort of fractured. We have each of us joins our little click or club, we associate only with people who already agree with us about everything, we can become divided and more polarized, and I think that is a worry. Now, how do we address that? That’s a big question. And I would say the kind of political economy that I argue for in my book suggests, well, heaven on earth is not possible. So human beings are imperfect. There will always be problems in any set of political or economic institutions in any human society, there will always be problems. We’re not perfect.

0:43:00.3 James Otteson: So what I think that means we have to do is to think about, well, among the available alternatives, among the different sets of political economy, which of them is relatively better or maybe which of them is less bad than others, and maybe what’s the least bad set of institutions. And there I think that enables us to start comparing. We can look at, say, a classical liberal society or the kinds of institutions that that would provide, what are the benefits of it and what are the liabilities or limitations of it, and compare that to other kinds of societies and do the same thing. So the actually available alternatives, what are their actual benefits and not their hypothetical benefits but the actual benefits, and what are their actual limitations and liabilities. If we assume that perfection is not on order that that’s not possible, then I think you can begin to make an argument that a certain set of liberal institutions tends to do better on many of the variables that matter to human beings than lots of other kinds of institutions. Still not perfect, still will have difficulties that we have to face, and then have to address and they will… Forever we’ll always have to address difficulties. But I think an argument can be made that compared to the available alternatives, it might be relatively bad.

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0:44:32.8 Trevor Burrus: Thanks for listening, if you enjoy Free Thoughts make sure to rate and review us in Apple Podcasts or in your favorite podcast app. Free Thoughts is produced by Landry Ayres. If you’d like to learn more about Libertarianism, visit us on the web at Lib​er​tar​i​an​ism​.org.