Hogging the resources: Questions for you

economics justice Social Issues

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The following is a scenario in an imaginary world:

A seller is selling all the diamond rings in the world, and the world consists of him and ten other people. All ten potential buyers would like diamond rings, but every time a diamond ring is offered for sale and everyone makes an offer to buy a ring, two of those ten people offer more. This results in a bidding war until the other eight people can no longer afford to buy the ring. Consequently, all the diamond rings go to just two people.

But at the end of the day, these are diamond rings. Who really cares? They could never be considered essential for living the good life.

Also in this world: A seller is selling all the food in the world. In advance, we will rule out “but you can produce enough food for yourself without the seller,” by declaring, as part of the thought experiment, that this would require so much time that people could not work for a living, and it would in many cases require resources (such as suitable land) that people do not have. So this is ruled out.

Again, there are ten people who need food, and they each have a fixed level of purchasing power. The purchasing power of everyone is such that, if they were motivated to create this outcome, everyone could afford enough food for himself or herself to eat and not be hungry. There is enough food for sale to serve this end. Every time an item of food is offered for sale, however, and everyone makes an offer to buy it, two people offer more than the others, which triggers a bidding war, until the point is reached where the other eight people can no longer afford the item of food. This continues every day, using up the food supply. Days turn into weeks, so that literally all the food goes to the same two people and the remaining eight people have no food.

Food isn’t like diamond rings, because food is an essential for living the good life (or indeed, any life), not a luxury.

Now, note the following facts about this scenario:

  • Nobody is preventing the remaining eight people from making whatever offer they are able to make to buy food.
  • The seller is able to accept the offer of any of the eight people and sell food to them, but they want to make as much money as possible to they choose to sell to one of the two people making the higher offer.
  • Nobody is forcing the seller to agree to sell to the two people who are buying all the food.
  • The two people buying all the food are not deceiving anyone, nor are they engaging in physical force against anyone (unless somebody tries to take the food they have purchased, in which case they will appeal to their property rights and physical stop people from taking the food from them).

All the moral rules that apply in our world also apply in this imaginary world.

Disclosure: The above thought experiment was prompted by the current situation in the housing market in New Zealand. However, I want you to answer these questions based only on the scenario I have described above. I am asking you about this scenario, not about the housing situation.

Here are my questions:

  1. Are the two buyers doing anything immoral?
  2. Is the seller doing anything immoral?
  3. If there were an authority figure who could successfully command the seller and the buyers to do anything differently, what might they tell them to do?
  4. If this scenario were taking place within a society with laws and government (inflate the numbers from ten to ten million if you like), would it be OK for laws to be passed to force a change in the behaviour that is taking place in this scenario?
  5. If your answer to the previous question is yes, what should be done in situations where the person in the situation refused to comply with the legal requirement(s)?

I would love to see what readers think.

Glenn Peoples

 

Yes – I know I am supposed to be writing some blog entries about some passages of Scripture about women. There are reasons why I haven’t been doing serious blogging for a while, and I still intend to write these.

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{ 18 comments… add one }
  • David Hillary November 16, 2017, 4:16 pm

    The main problem here is that the real world scenario is so different from the imagined one that the useful of the scenario as an analogue is probably destroyed.

    Goods are subject to the concept of diminishing marginal utility, and almost by definition, essential goods are goods that everyone consumes at some level. The poorer one is, the lower the consumption level, and the higher the price, the less income the poor have for other goods. But they are generally not expected to have a zero level of consumption of essential goods, even if richer people consume a whole lot more.

    The analogue to the housing market is not particularly good, because people can be housed without having to own the house, they can rent (if this is the application). And yes, even some people have trouble affording the quality and quantity of rental housing they might want.

    The buyers and sellers might or might not be acting immorally. Probably acting immorally, to the extent that they are aware of what they are doing and what is going on, but again, in the real world, the population is so large and the economic system is so complex that awareness of what they are doing might not be assumed, and the potential for a single individual to materially change the result by acting differently may not exist.

    The model also lacks any household sector, where institutions such as family, marriage etc. can distribute resources within households on a different basis of responsibility and care than the market sector. In the same way it lacks any other relevant institutional structure such as labour and factor markets in which agents have alternative ways of earning income, given that income is the critical point for who misses out and who gets resources in this model. It does not ask or explain why only two people earn enough income to purchase, at market prices, all the supply.

    The proposed authority figure is problematic on a number of levels. Firstly, there is a presupposition of a centralised authority, which can act in a single manner, according to policy or design or organisational and practical or incentive conditions. Secondly, centralised authorities are always coercive, in that they always resort to some level of coercion to uphold their authority and to impose their authority on their subjects. Such authorities therefore tend to be controlled by those who are most effective and acquiring coercive power, and are those who have the most financial gain from such control. That is to say, the central coercive authority envisioned becomes a tax-state, where the coercive power of the authority is primarily used to collect tax revenue and make that revenue available to those with the most effectiveness in controlling that tax collection power. Applying that model to the case at hand, we would expect it to tax income or sales, those forms of tax being the most effective at raising high revenue without distorting the factor and product markets too badly, and then sharing that income with those who are the most effective at controlling the tax collection power (e.g. median voters, most well connected factions, most ruthless thug depending on the particulars of the case). If the two richest people could control the authority, they would tax the poor, if the poorest 6 controlled it, it would tax the richer 4 and distribute it among the others, on net terms.

    Moralising about what the central coercive authority should optimally do is wrong on so many levels.

  • David Hillary November 16, 2017, 4:25 pm

    Moralising about what the central coercive authority should optimally do is wrong on so many levels. True morality is the critique and rejection of the coercive means of action and the coercive kind of authority.

    Your last question lets the cat out of the bag. There is obviously only one answer: the resort to coercion. This is implicit in the concept of authority being discussed as to what it should do.

    It is my hope that you might submit your mind and your politics to the Lord Jesus Christ, who abolished death, who condemned the ministry of death and brought it to a cataclysmic end, at the end of the age in AD 70. If we want to enter the sanctuary, we need to eschew the coercive way of the Prostitute, the Great City, spiritually Egypt and Sodom, that filled up the measure of her sin and turned to the revolutionary sword. That produced lawlessness and resulted in holocaust. Jesus warned his followers to leave that city, before the plagues would fall. If we are his followers we will not go back that way.

  • Glenn November 16, 2017, 4:29 pm

    “Moralising about what the central coercive authority should optimally do is wrong on so many levels.”

    Well David, question four invites the reader to simply say no – no restrictions should be placed on behaviour. There’s no cat in any bag. If a reader believes the answer to question four is “yes,” then I want to know what they would propose, which is what question five is there for.

    (Also, the character limit is there to prevent essays, not to invite people to break them down into episodes. 🙂 )

  • David Hillary November 16, 2017, 4:45 pm

    We need to say no to the model of economic scarcity, income and product markets as you ask us to imagine. That model that characterises the world as in apparent need for the coercive authority you then use to propose your questions, which have the implied answer around how such a coercive authority might be managed and administered. Sure you can answer no, but the question is loaded to suggest a yes is in order.

    Like this: if you are stranded and find someone’s house and you are starving to death, is it OK to break in and get the food in the house? Now generally we have this idea about respecting property rights, but here we want to say yes, you can take what you need and deal with any problems that might bring later on down the track. But the point of the example is to extract a concession that it is OK, under some circumstances, to do it. Then we maybe open up a principle, a theory, that asks what else is needed and that can justify doing things that otherwise might not be acceptable. So we have to wonder if there is some hidden agenda in proposing that scenario and asking for a moral ruling. And there is a legal rule against it too: hard cases make bad law.

    The converse is also true: easy cases make good law. The easy cases are the most common, good cases, the proper basis for generalising. So, if we don’t understand the nature of the world and of human society and conflict and opportunity and so on, we are doomed to make bad law.

    We believe in the law of Christ, that Jesus Christ is the Lord, the sovereign, and that his kingdom is normative and His laws are obligatory for us. Jesus spoke little about property rights, but a whole lot about remedy law. He talked a lot about litigation, responses to evil, discipline of sin and sinners, judging for oneself, debtor’s prison, impressment, taxation, rebellion, revolution, dealing with enemies, dealing with persecution and the like. He spoke of gentleness and forgiveness a whole lot.

    Why don’t see see you discuss what he focused on more? And why don’t we see you developing and defending his teaching, rather than being an apologist for ‘righteous’ coercion? You are the friend of the gun, the means of legal coercion. Why?

  • Glenn November 16, 2017, 4:51 pm

    “You are the friend of the gun, the means of legal coercion.”

    Nonsense. Asking people if they would support coercion in a particular scenario offers no good grounds for this assessment.

    “Why don’t see see you discuss what he focused on more?”

    Maybe you haven’t read the rest of what’s at this blog. But since I know you have, I can only wonder at why you’d say this.

  • Cody Bancroft November 16, 2017, 6:39 pm

    1. Are the two buyers doing something wrong?
    A. Intrinsically, no. However, though not coerced to do so, under these circumstances these two buyers, let’s call them the 20% (or 1%) under a Christian worldview, should be more than open to voluntarily sharing their goods (food, diamonds) with the 80% in order to ensure the redemptive survival and wellbeing of all of humanity (the 80%).

    2. Is the seller doing anything immoral?
    A. Intrinsically, again, no. He voluntarily is selling his goods and services to the highest bidder. He, however, also has a voluntary choice to sell the same goods (food) for a cheaper price in order to ensure no person goes unfed. That including himself and his family. Starving members of society is not beneficial to said society.

    3. If there were an authority figure…
    A. If there were an authority figure, said figure would be just as susceptible to humanity (sin, greed, power) as the buyer or seller. Making his position or authority absurd. Let’s say we multiply said authoritarian to 468 seats? Those authoritarians would obviously prefer the 20% over the 80% thus leaving them untrustworthy.

    4. Would it be okay for laws to be passed to force a change?
    A. Referring to the answer above it would be wrong for the 20% to decide the fate of the 80%. Not knowing their experiences. How can laws establish morality? They can not. It needs to be voluntary.

    5. How should a person comply?
    A. Well they should not be forced to.

    Okay, i’ll break it down. I’m not calling for a Theocracy however I’m calling for voluntary Christian action. As a Christian voluntaryist I pressuppose that within this examples society the only answer is the Church! For those who can afford the 20% I think God and Scripture call them to serve the 80%, which is why in the U.S. before socialism, the Church built the majority of hospitals. (Hence St. Peters). But government pushed the Church out and socialized the majority. Leaving us in the dust, historically.

    No political theory can replace servanthood. We should choose to serve each other and not be forced to by men (government) who choose not to.

  • Giles November 16, 2017, 7:46 pm

    1 Unless they are taking steps to prevent the others starving then yes.
    2 Ditto. Absence of coercion is irrelevant biblically. See the prohibitions on usury and freehold ownership of arable land.
    3 Tax the land to buy food for the starving, taking care not to impose mean tests that claw back more than say 50% of any earnings of the hungry (lest they idle)
    4 If the land site value is taxed at a proportional rate no one has a right to complain as no one has made land
    5 Seizure of land if the taxes are not paid.

  • John Quin November 16, 2017, 8:04 pm

    I too have issues with the scenario but I will try to make it work.
    I’ll answer with respect to food being the commodity.

    *Are the two buyers doing anything immoral?

    It depends. Intrinsically no but it could be yes if they have perverse intentions such as deliberately making people starve for no good reason.

    *Is the seller doing anything immoral?

    No but if they found out that the buyers had perverse motivations then quite possibly yes.

    *If there were an authority figure who could successfully command the seller and the buyers to do anything differently, what might they tell them to do?

    This is where the whole thing breaks down because libertarians would claim that strange economic circumstances like the example occur precisely because of a government regulation. In the case of land (at least in South Australia) the government moderate the release of land and control the price. In the case of food the eight people starve which is likely not in everyone’s interest. But on face value yes a power third party could force an equitable redistribution of resources.

    *If this scenario were taking place within a society with laws and government (inflate the numbers from ten to ten million if you like), would it be OK for laws to be passed to force a change in the behaviour that is taking place in this scenario?

    If the would be significant improvement in society from the laws then yes but then a libertarian would tell you that you are kidding yourself i.e. rent control ends up with perverse outcomes such as a shortage of accommodation.

    *If your answer to the previous question is yes, what should be done in situations where the person in the situation refused to comply with the legal requirement(s)?

    Same a normal i.e. fines, financial penalties perhaps incarceration in extreme cases but that would probably be from secondary and worse crimes such as fraud.

  • Glenn November 17, 2017, 12:45 am

    “I hope it is a good sign of discovery of the law of Christ”

    I deleted your ungracious, irrelevant and insulting comment. I won’t name the person who said it.

  • Glenn November 17, 2017, 12:49 am

    John:

    “such as deliberately making people starve for no good reason.”

    What about just knowingly making people starve because they really want to have all the food?

    “This is where the whole thing breaks down because libertarians would claim that strange economic circumstances like the example occur precisely because of a government regulation.”

    That doesn’t mean the scenario breaks down. This situation has occurred. It didn’t occur because of government regulations, and given that it has occurred, I am asking these questions. If the libertarian opines that this situation arose because of government regulations, then he or she is wrong.

  • Glenn November 17, 2017, 12:51 am

    “A. Intrinsically, no.”

    So to make it crystal clear, Cody, do you believe that knowingly creating circumstances under which people will starve to death when you have no need to do so and you could easily avoid it – that’s not wrong. Is this what you’re saying?

  • Jonathan Sedlak November 17, 2017, 8:05 am

    1) Are the two buyers doing anything immoral? My first thought was to question whether the emphasis is upon the “anything” or the “buying”. If the question is intended merely to address the act of buying, then I would say there is nothing immoral about the actions presented. If, however, the emphasis is upon the “anything” that would open up a more complex response. What are their motives and goals for buying all the food? Are they buying it all to build their own empire, and to create perpetual serfs out of everyone else? Are they buying up all the food because the other eight people are self-centered, self-aggrandizing, and demonstrably irresponsible?

    2) Focusing again on “anything”, one has to wonder, again, what the motives are. It appears that you have given us what the seller’s motives are, when saying that “they want to make as much money as possible [so] they choose to sell to one of the two people making the higher offer.” Apart from the slight ambiguity of who “they” are in that quote, there seems to be a focus upon the one person selling all the food to the highest bidders. And in that case, I would want to know what the seller is going to do with all of his money? For it is certainly possible that he would take all of that money and give it to the poor in order to buy divided and subdivided portions of the food for reasonable prices. However, since the scenario is rigged by having specific factors ruled out, then I think the whatever immorality is to be found, it would be found with not being willing to sacrifice one’s own well-being for another, less-fortunate person. In other words, it would be immoral for the singular seller to perpetuate the starvation of eight people, when that could be avoided entirely by selling to all bidders, or just giving generous portions of food charitably, while also collecting from the highest bidders.

    3) One might consider suggesting that the Seller maintains an eye on the scarcity of such goods, and the well being of those most unfortunate as a result of *always* selling to the highest buyers. One might even suggest that if the Seller remains obstinate from more balanced commands toward charity and profitability, and *will not* distribute food to those starving, then the Seller might be charged with intentional starvation, a consequence of which might be to give his food business to those he is guilty of unjustly starving. One would hope that incentives would be offered to the seller, to prevent such unjust temptations (to starve others) from being perpetuated. The Buyers might also be warned against not being charitable themselves, and penalized for not being considerate. But it would be to the benefit of the poor starving people and the buyers to receive incentives for being charitable, where it would be beneficial to the whole of society to help the poor enjoy life.

    4) Yes, it would be “OK” for laws to be passed to force a change in the behavior of people, as long as the “force” being used is for just changes, and not nebulous ideologies in defense of “equal opportunity.” It would also be “OK” to adapt laws as necessary to unforeseen injustices which result of human limitations. The human laws themselves ought not become the final arbiter, but rather the rule of charity ought to be.

    5) What should be done if the person refused to comply with the legal requirements? I guess that would all depend on whose voices are represented in the making of such laws. Do the poor have a…

  • Rob Papesch November 17, 2017, 10:31 am

    There is a word that applies here (and it’s quite central to the Gospel as well IMHO) and that’s COMMUNITY. In our highly commercialised capitalist society we (especially men) have lost this essential part of our humanity that connects us to our neighbours and knits society together. In light of this my answers follow

    1: Yes it is deeply immoral to price others out of an essential for living when you yourself have a surplus
    2: Yes it is unethical of the vendor to prefer those offering stupid amounts of money when other are starving
    3: The authority (e.g. Commerce Commission) should create a system that penalises behaviour that skews the market. Hoarding and speculating should trigger severe sanctions.
    4: Yes, the purpose of law and government is to order society. When one segment of society is damaging others, they need to be regulated to protect the integrity of the whole
    5: Fines, then forfeiture of assets, and then imprisonment. Put the bad actors in the shoes of their victims for a while

  • John Quin November 17, 2017, 1:04 pm

    Glenn:
    What about just knowingly making people starve because they really want to have all the food?
    * Sure if your gluttony causes starvation then yes it would be wrong. I don’t know this transfers easily to housing.

    That doesn’t mean the scenario breaks down. This situation has occurred. It didn’t occur because of government regulations, and given that it has occurred, I am asking these questions. If the libertarian opines that this situation arose because of government regulations, then he or she is wrong.

    * So what is breaking down such that higher prices won’t attract developers of new housing estates?

  • Jeremy November 17, 2017, 1:46 pm

    buying and selling are not intrinsically immoral actions, but we are our brothers keeper, we are at fault if through our actions or inactions we cause our brother harm. you will be familiar with seeking forgiveness for sins of comission and omission as part of Anglican liturgy. further from a Christian point of view, everything we have is given to us by God and we hold it as stewards to share and give as necessary, not to store up for ourselves.

  • Glenn November 18, 2017, 12:18 am

    John, you’re giving into the temptation to look over your shoulder, perhaps concerned about what your comments about food might imply about housing. The questions are just about the food situation in the world I described.

  • John Quin November 18, 2017, 12:27 am

    Glenn: Ok then I guess I’ve answered most of the food only questions.
    It did occur to me that there is no guarantee that the buyers know that there are others that are missing out. In that pathological case the buyers are not morally culpable.

  • Glenn November 27, 2017, 2:53 pm

    “In that pathological case the buyers are not morally culpable.”

    Agreed. I intended this to be something like an auction situation where everyone can see the outcome of each bid, and those who win bids can see that others in the room are winning none.

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