Interlude:

Human Economics

There are a couple of other things, as I said, that have to be taken into account if you really want to make sense out of economics, and not just stay up there on the top floor of the ivory tower forecasting economic trends with as much accuracy as the global-warmists predict the weather. (By the way, one of the main honchos in the computer modeling of global warming has said he found out that the models have no predictive value at all. But that didn't stop President Clinton from forging ahead with the Kyoto assault on Big Business in the name of saving the planet--and you can now see why, having read the preceding chapter. Note also all the suits against the gun manufacturers for deaths due to guns. Boy! If that doesn't reinforce what I said about both the Seventh and Eighth New Commandments!)

The three functions of a firm.

You hear in economics texts that a business is in business to make a profit--which leads to some fancy footwork when it comes to accounting for non-profit organizations, not to mention businesses like Bill Buckley's National Review, which hasn't made a profit since it was founded (if my memory serves me), and still wants to keep going, judging by the appeals I get from the publishers for contributions to rescue it from its financial straits.

This is actually based on the fallacy I mentioned in the preceding chapter that people have "infinite needs" and are never satisfied; and so they're always trying to "maximize satisfaction," which in economic terms boils down to maximum return on investment.

Actually, the sociobiologists have latched onto this economic "truism" (which happens to be false), and are now trying to explain everything, including religion, as "maximization." The fact that most people (in our society, certainly, but everywhere) are pretty content with comfortable mediocrity doesn't faze them; they're really infinitely greedy, because they're "maximizing" things by giving up. When your theory can make anything into "evidence" for itself, it's a lousy theory.

Anyhow, once you reject that assumption of "maximization," and say that people have finite goals, then you can look at things more objectively. True, the firm can't run without (a) the entrepreneur, who is responsible for what the firm does in offering its services to the public--and who offers these services to get a return at least sufficient to enable him to use others' services to fulfill his (finite) goals, whatever they are. And, in the case of small businesses, which are, as everyone knows, by far the greatest number of businesses, the entrepreneur is very apt to be interested mainly in "making a living" doing, like Bill Buckley, something he thinks is worth while and which he loves to do; and if it makes a mint, fine, but if it doesn't, that's okay too.

But then there's also (b) the consumer, who, if he doesn't want the product or service, will destroy the company. And after all, the entrepreneur makes his money by providing the service. And so, even if his motivation is to make money, the firm's purpose is just as much the service to the consumer as it is profit for the entrepreneur.

And also (c), unless the firm consists only of the entrepreneur, there are the employees in it, who are necessary if it's of any size, and without which it won't function; and they won't work for it if they don't get decent pay and decent working conditions. And so a third purpose of the firm as such is to provide a means by which those without entrepreneurial skills can nonetheless serve the public indirectly through the firm and by this can get money so that they can pursue their own goals.

So it's not true that the firm "is in business to make money." It's got all three purposes, no one of which is in itself subordinate to the others; they are three coordinate purposes to the firm. And so one of them might in a given case take a back seat to the others without any inconsistency at all. In fact, in the case of non-profits, if the CEO acts as a kind of entrepreneur but is actually salaried like everyone else, you can forego this first purpose altogether, just as a firm that consists of a single person can forego the third. The one you can't get rid of completely is the second, the service to the consumer.

Now what does this mean? Basically, it follows that there is no economic law that says that return on investment must be maximized. That is, it is not economic folly or irrational to avoid doing something which maximizes your gain and which promotes one of the other functions of the firm.

There's a law in economics called the "law of diminishing returns." The idea is this: Suppose I hire you at a hundred dollars a day, and once I put you in my factory, my output is two hundred dollars greater than before I hired you. Great. I then hire Frank in addition; he costs another hundred a day, but now my output (with both you and Frank) is two hundred and fifty dollars more than before I hired either of you, which means Frank's work has added fifty dollars, because the two of you now talk to each other and each doesn't do as much work as if you were alone. When I now hire Henry, he begins to get in the way of the two of you, and so all I get is an extra hundred and ten dollars from hiring him. Diminishing returns. But now what happens when I hire Joe? I find it costs me an extra hundred dollars, but my returns go up only an extra seventy-five. So it's stupid to hire Joe, right?

Wrong. It's stupid if all I'm looking at is how much of a return I can get on my outlay. But suppose it's a time of high unemployment, and guys like Joe are out there wanting jobs. If I, as entrepreneur, am making ten thousand dollars more than the money I want in order to live my chosen lifestyle, why is making still more than that to be the prime economic consideration? The firm is more than fulfilling its function as far as I'm concerned, but it has these other functions too; so why don't I spend some of the firm's money giving employment to those who need it? Why am I being economically inconsistent if I do this? I'm not talking morals here; just the logic of the economics of the firm.

Or again, if I'm making more money than I want, why is it economic folly for me to cut prices--even if I don't have to, because I'm now selling all I produce--so that consumers can get a quality product at a lower price and have more money to spend on other things? Who's hurt by it? The firm isn't; it's doing a fine job, thank you, even though it's selling below the equilibrium price. The employees, we assume, have good working conditions and a good wage, so they're okay. So why do economists sneer at this?

Because it's stupid, it's unreal, that's not the way things work! Oh no? Then why have firms in the United States been suddenly downsizing lately? Because competition has forced them to produce better products (Oh?) at lower prices (Indeed?--sounds like a law of economics operating here, doesn't it?), and they can't do it with the personnel they've acquired over the years. But what does that mean? How did those redundant people get there in the first place, and what kept them there so many years until competition reared its ugly head? They were hired not to maximize return on investment, but because the firm was doing okay, and it seemed like a good thing at the time.

So let's really get real here. People aren't hired in practice because the stockholders, through the CEO, are looking to squeeze the last dollar out of every move the firm makes, but because somebody says, "We've got more work than we can really deal with in this department; we really need another hand here." Does the personnel director sit down with his calculator and do a cost/benefit analysis? In the real world? He wants, among other things, to keep his people happy and not go through the hassle of hiring replacements if they quit in disgust. And when he decides, "Why not? Jones is probably right," what does this personnel director look for in this extra hand? Not the one who will be most efficient--not in the real world. He looks for a "team player," which is to say, the person who he thinks is going to give him and the rest of the firm the least grief. People are motivated far more by avoiding hassles than by maximizing profit for the stockholders.

"Well they shouldn't be!" you say. They shouldn't? Why not? "Because the whole purpose of the firm is to make money for--Oh." Exactly. It's only on that assumption (which happens to be false) that you look for the person who's going to bring you back the most bucks. If you see the firm as a team that provides a service, then it's in business to make everyone happy: the entrepreneur, the employees, and the consumers; and you don't necessarily make the employees happy by bringing in Mr. Buzzsaw to create as much tension as profit.

Now everybody knows that what I've been saying goes on in practice; it's just that the economists justify it in theory by saying, "Well, of course you don't hire Mr. Buzzsaw, because the tension is going to make the workers less motivated, which is in fact going to slow production, not increase it, and so there won't be the return you were looking for." Nice try, and in some cases it might be true. But it's not the way firms actually work, because people actually work in firms, and people don't want hassles. Even if the entrepreneur wanted nothing but the maximization of his profit, as soon as the firm gets to be any size and he can't keep his eye on it, the employees are going to look to their own comfort level rather than the size of his bank account. What do they care about him? They just want a decent job that pays well.

"Well sure," say the economists, "because they're trying to maximize their own satisfaction too." Maximize, phooey! They aren't turning over rocks trying to find every little thing that'll make their life better; a job's a job, for heaven's sake, and it's not supposed to be a rose garden. They know that. No; what they really want is to avoid unpleasantness and stinginess on the part of the boss; but if the job is reasonably fun to do, then they don't get all bent out of shape if it's not perfect. It's too much trouble to be maximizing your satisfaction all the time; you've got to live a little, and loosen up.

I ask you, who's in the ivory tower, and who's got his feet planted on good old terra firma in this?

And the point, as I said, is not that it's possible for a firm to be moral if it seeks a reasonable profit for the entrepreneur and a quality product at a low price for the consumer and good working conditions and pay for the employees. It's being consistent with the economics of what a firm is. It's the economists who are being "normative" when they say that the firm is "really" trying just to maximize profits, and therefore, things that don't aren't economically sound.

And what this shows is that there's nothing in capitalism that demands greed and exploitation; in fact, it's inconsistent with the multiple coordinate purposes of a firm. It's just that economic theorists have had the notion that self-interest is the motivator and therefore the purpose of the firm, and that self-interest knows no bounds. But all the time, these same people know that they do lots of things not for the sake of using others for their own gain, but because they care about others too--and while they wouldn't want to suffer for others' benefit, they see nothing wrong with doing something that helps them along too.

Hell, you go down to the bar and you're there with a guy and his glass gets empty. So you buy him a drink. Why? So that he'll buy you two next time? No, because, like Mount Everest, he's there. What's the big mystery? (Actually, it is a big mystery, the mystery of love, if you analyze it deeply enough; but the point is that when you analyze it from the cost/benefit point of view, you start making up all these hidden selfish motives that just aren't there.)

And, as I say, this sort of cooperativeness goes on all the time in small firms, where the members know each other. Look at Larry and Bud, the contractors I talked about. They weren't trying to extract the last ounce of "maximization" from each other; they just had a job to do, and the three of them could do it better than just the partners; and all of them were constantly chatting and joking while they were sawing away and plastering.

The fly in the ointment.

But it all still sounds a bit like utopia (which, by the way, means "nowhere"), doesn't it? I said that in transactions, both parties gain, because each gives up less than he gets or there's no transaction; and firms aren't just really just looking to get the greatest possible profit at the least possible cost. Yeah, but then why isn't everybody just full of bliss?

So now I'm going to give you what I promised earlier, which is the Great Blairian Contribution to economic theory. Values are not the same as necessities, as I mentioned earlier, and values do not function economically the way necessities do. And unless the distinction between the two is taken into account (and it hasn't been in economic theory), economics can't be made to make sense when put into practice.

Here's the difference: (1) Values lead to freely-chosen goals, defined by the choice of the person who has them; necessities are those things without which we can't live a minimally human life--and a "minimally human" life doesn't depend on our choice, but on the genetic potential we have, which is something objective. Thus, if you're deprived of a value, you may be disappointed, but if you're deprived of a necessity, you're objectively harmed and dehumanized.

Put it this way: There's a zero-point in humanity (considered as the ability to perform human acts): the point at which a person can do what "practically everyone human can be expected to do." Below this, in the area of negative humanity, so to speak--as in blindness, you're a human being, but you can't do what a human being can be expected to do just because he's human, and so there's a kind of contradiction in you--which is what we mean by "harm." Staying out of this is the realm of necessities. Above this zero lie the different lifestyles of humanity, and among these you're free to choose depending on your interests, your whims, and your ambitions. This is the realm of values.

(2) Since the goals values lead to are free, you can give up values and their goals if you want to. But you can't choose to give up necessities without wanting to harm yourself--which is inconsistent with yourself as a human being, and is therefore immoral. It follows from this that if you have a choice between giving up a value or a necessity, you have to give up the value; in fact, if the necessity is an absolute necessity (such that without it you die), you would morally have to give up all values to get it.

That is, if you're in the desert, and you're dying of thirst, and Darth Vader has a gallon of water, which will tide you over till you get out, and he says, "I'll give you this if you give me all your money plus your house and your car," you'll not only give it to him (because what's the money and the house and the car if you're a corpse?), but morally speaking, you have to give it to him, if this is the only way you can survive, or you'll be killing yourself.

A corollary to this point is that one value is given up for another insofar as the second leads you closer to your chosen goal than the first. In other words, you give up one for the other because (by your subjective standards) you're better off with the second. But with necessities, you give one up only when (a) you can't have both, and (b) you're worse off without the one you take than the one you gave up.

That is, when you're dealing with necessities, you're using the Principle of the Double Effect, and not choosing the giving up, but permitting it because otherwise you're doing greater damage to yourself. So, for instance, you may put up with allergies here in Cincinnati rather than move to Phoenix and have to give up your job and your family ties and so on. It's isn't (in this respect) that you're better off here; it's that you'd be worse off there.

(3) It follows from this that (a) we have no right to values, and (b) we have a human right to necessities--insofar as deliberately refusing to supply them is the equivalent of actually doing harm. Take the case of Darth Vader in the desert. I'm assuming that he's got plenty of water for himself, so there's no deprivation if he just gives you the gallon of water. If you say, "I won't pay hundreds of thousands of dollars for that! It's outrageous!" and he says, "Die, then." Isn't he in effect killing you?

Conservative economists bristle at this, because it's his water after all, and he can do what he wants with it. But it's not that simple. Take your two-year-old kid. It's your food and your water and so on, and if you refuse to feed him, aren't you killing him? Sure you are. Don't get sidetracked now with "But he's your responsibility!" The point I'm making is the general one that harming someone need not necessarily consist in doing something that damages him. It can also be that refusing necessities to someone who is harmed without them is in effect the same as being willing to harm the person.

The only way you can get around this is by using the Principle of the Double effect and not choosing the harm that comes by the refusal. If you and Darth Vader are both in the desert, and all he has is a canteen that will enable one of you to survive, and you ask for a drink and he refuses, that can be moral, even if you die by it. Think it through: (1) The act of refusing is okay, since if you had or found water, there'd be no problem. (2) Darth lives on, which is good. (3) It isn't your death that keeps him alive (because if you do find water an hour after the refusal, the good effect occurs without the evil one). (4) He doesn't want you dead; he just wants to live himself; and (5) it's a life for a life; he chooses his life, not your death. Notice that in the situation as I outlined it, if he shares the canteen with you, both will die; so he can either give the whole thing to you, choosing your life, or keep it, choosing his; but morally, he can't do "the compassionate thing" and share it.

On the other hand, if you see a blind man walking down the street, and he's about to fall into a construction pit he can't see and kill or hurt himself, and all you have to do is shout to warn him, and you just sit there and watch him go over the edge, then you're willing to have the harm come to him, and this is the moral equivalent of pushing him over. It doesn't matter that you have no connection with him; he's a fellow human being, and has a right not to be harmed--and you've deprived him of this right.

I rest my case on this point.

(4) But the implications of this lead to the fourth difference: Values are incommensurate with necessities. They're not on the same scale, because one is increase of benefit, and the other is avoidance of damage. Here is the thing that's overlooked by economists, because they assume that they are somehow on a continuum. For Marxists, values are just not-very-necessary necessities, and for capitalist economists, necessities are just very valuable values. But that's a distortion of the way things really are.

Since necessities are what can be expected just because we're human beings, and therefore what we have a right to (they're the means toward doing the minimum our humanity gives us reason for expecting to be able to do), then when we have them, we rightly take them for granted, and don't want them at all. You don't set as a goal for yourself breathing or being hydrated. Humans breathe and drink water; and so when there's air around and water in the well, you consider--correctly--that this is something you've got a right to just because you're human; because to deprive you of it is to do harm to you.

So necessities are beneath any value, when we have the necessities. They're presupposed, not something that we set as a goal for ourselves. But when you don't have a necessity, as I said, it's greater than any and even all values; you have to have it; you don't want it, and you have to give up all values required to get it.

So necessities have zero value if you have them and infinite value if you don't. Which is another way of saying that they're not in the same category as values; they only look as if they were. You can compare two values with each other and figure out what you want to give up to get the other one. You can't morally compare values with necessities, because you can't do harm to yourself for the sake of a benefit.

Notice this: the foregoing of a benefit is not a harm, and the lessening of a harm is not a benefit. That's the fallacy. You are not badly off if you sent in your envelope to Publishers' Clearing House (You may already be a winner!) and they didn't reply. You're not ten million dollars poorer; you're just not ten million dollars richer; but you're still what you were before you sent in the money. (Okay, so you're thirty-four cents poorer, because of the stamp on the envelope, which is why I can't be bothered with these things. But what's thirty-four cents in your life?)

Similarly, if I cut your arm off and then give you a hundred thousand dollars "in compensation," have I restored your ability to pick up things? No. I've given you benefits, but they don't really undo the harm I've done. Nothing can ever give you back that arm--well, short of some miracle of surgery. But even then, I can't give you back what you could have done with it before the surgeon sewed it back on.

Have I made my point? Values are not necessities, and they don't function economically in the same way. When you're faced with the "loss" of a value, you're just not going to be as far ahead as you want to be; but if you're faced with the loss of a necessity, you're under a real threat.

What this amounts to is that someone who is supplying a necessity to another person has him under a threat of harm (objectively speaking), while someone supplying a value is doing no harm in withholding it.

So, if you're a doctor and a patient comes to you and you find that he's got a brain tumor, and you tell him, "That will have to be operated on, and soon, or you'll die," you have informed him that he's under the threat of death. True, you aren't saying you'll kill him, you're just informing him of what the facts are; but from his point of view, he's under a threat of death.

Now if he asks you, "Well, what does that mean? What's it going to cost?" he's asking you how to get out from under that threat; he's not asking what benefit is going to come to him from your service. He's asking how much he has to give up to get back to zero in his humanity--so he can weigh the two damages using the Double Effect, and choose the lesser of the two evils.

You tell him, "Operations like this run about thirty thousand dollars," and he says, "(Gulp!) Okay. It'll take half of what I have in the bank, but what can I do? Go ahead, and the sooner the better." And when the operation is over, he thanks you profusely as he hands over the check, because you've saved his life. And you have. And he may even say, "It was worth it."

But here's the secret. It wasn't. He had to have the operation; it wasn't worth anything. He's no better off with it than he had a right to expect as human. All you did was get him back to zero, you didn't give him a value at all, since values deal with the kind of life you choose to lead, not with life as such as opposed to death.

Before you scream at this, think of it carefully from his point of view. His situation is really no different from that of a person who gets mugged, with the robber holding a gun to his head and saying, "Give me your wallet, or you're dead." You hand it over, and the robber has done you a favor? Well, you're not dead.

"Yes, but," you say, "The robber was going to do him harm; the surgeon did something that removed the harm he had nothing to do with putting there!" True. And that's why I said, "from his (the patient's) point of view." From his point of view, it doesn't matter how the harm got there; he's under a threat of death, and the threat is removed. So he's back where he was before he found out about the tumor (or before he got it, really). So neither the robber nor the surgeon did an actual favor to him (benefitted him) in letting him live. Think about it. Think, don't just react, because I'm just about to take care of your difficulty.

Transactions involving necessities.

The difficulty is that the surgeon had to use up his own activity to remove this threat from the patient. That is, the surgeon was performing a service--which happened to be a necessity, but it was a service nonetheless--and so he deserves compensation for his service, or he's nothing but a slave, and that's dehumanizing. In other words, if he serves the patient for free, then he's lessening himself (doing a kind of damage to himself) for the patient's sake.

Now he can do this, using the Double Effect, since it isn't the lessening of the surgeon's ability to pursue his goals while he's at the operating table that saves the patient; it's the activity he performs. And let's face it, the "damage" here to the doctor is so insignificant that it really has to be put in quotes. But if he does so, choosing the patient's life and ignoring his own inconvenience, this is an act of love. But the surgeon has a right to be compensated for his service to others.

So there are two rights involved here: the right of the patient not to be killed by the tumor (because as human, he has a right to life), and the right of the surgeon to compensation.

The problem is that if the surgeon refuses to operate, just on the grounds that it's inconvenient, then he can't really justify this on the Principle of the Double Effect (supposing him now to be the only surgeon available). (1) The act of refusing in itself is okay; (2) it has a good effect; the surgeon is not inconvenienced; (3) it isn't the patient's death that prevents the surgeon from being inconvenienced, since if the surgeon doesn't operate and the patient spontaneously recovers, the good effect could occur without the bad one; (4) the surgeon doesn't really want the patient dead; but (5) that's a bit of a sophism, because you can't compare the inconvenience of three hours' work at your profession with the death of another person.

Of course, if there are plenty of other surgeons, then the refusal is not the equivalent of killing the patient. Also, if the surgeon is dead tired from all the work of operating on other people (as during a plague or in the army or something), and he'd be seriously harming his health and his ability to operate on others, then there would be justification for refusing this patient using the Double Effect.

But the point really is that the surgeon has deliberately gotten himself into the business of supplying this necessary service to others; so he has more of an obligation to help such people than just the ordinary Joe does. What did you study to become a surgeon for, if you can't be bothered operating on people who might die if you refuse?

But this doesn't alter the fact that the surgeon's service has a value. There is a transaction going on here. The surgeon's service has a seller-value; it's just that in this case, there's no buyer-value for the service, because it's a necessity, not a value, and so the "value" is infinite. And you can see this. It doesn't matter what the surgeon charges; the patient will accept it. He has to. Even if he has to go hopelessly into debt for the rest of his life, he'll agree, because what's the point of hanging onto your money if you're dead?

Transactions involving necessities on one side and values on the other are one-value transactions, and so they don't function economically the way two-value transactions do, where haggling can arrive at a compromise. In the case we're considering, where the value is the seller-value and the necessity is on the buyer's side, economists say that "the demand is inelastic": that is, the service will be taken no matter what the price asked. That's usually why there is such a thing as "inelastic demand," in fact; because the people on the demand side have to have the object in question, and the price isn't a consideration for them.

It follows from this that, if the transaction is treated like a two-value transaction, then the value-side has power over the necessity side, and can quote a price wildly at variance with the (only) value (his), and will get it, because there is no value on the other side, but the threat of harm instead. The necessity is not a very valuable value; it is something that can't be compared with a value. And therefore, it's taking advantage of the person who needs the necessity to act as if he's in a position to haggle, and when he agrees on the price, it's "worth it" to him, and he's "freely" agreed to it. He hasn't freely agreed to it any more than the victim freely agrees to hand over his wallet to the mugger.

But still, the surgeon deserves compensation for his service. Precisely. There is a value here, and it's the only value. But this means that the surgeon must be honest in assessing what he's giving up in performing this operation, and ask for no more compensation than this.

That is, if economics is going to be consistent with the reality of the situation, then surgeons can't justify their fees by "what the market will bear," because in this case, it will bear an infinite amount, and they are taking advantage of the threat the patient is under. And suppose the patient is under the knife for three hours. The surgeon then has to ask himself, "Is my service worth ten thousand dollars an hour?" Not to the patient, because to the patient it's worth infinity. What this has to mean is, "Am I giving up something that would cost me ten thousand dollars during this hour I'm wasting rooting around in his brain? Would I be doing something that cost ten thousand dollars if I weren't doing this?"

I submit that to ask the question in this form is to answer it. But in this case, that's the only value involved, and so the surgeon is taking advantage of the patient if he charges the ten thousand dollars an hour.

So in this case, what the surgeon (or anyone supplying a necessity, like producers of heating oil, electricity, telephone, lawyers, and on and on) has to do is this: He has to figure out, as I said earlier, "What is the yearly income I need to be able to live (in my spare time) the kind of life I want to live?" and divide up that income by the number of patients he expects to see (plus their ability to pay), and charge no more to the patients than that amount. Then he's charging the value of his service, which is the only value involved, and isn't just taking whatever he can extort from the patient just because the patient is under a threat.

There's an added caveat here, however. Since the surgeon or anyone like him is supplying a necessity, which in the abstract the patient or client has a right to have for nothing (since without it he's harmed), then the supplier has an obligation not to set his goals so high that he's in effect economically super-human. That is, if the surgeon "just can't consider life" without a second Ferrari in the garage and the summer villa on a hundred acres in Mar del Plata, then he's saying that his idea of life is greater than 99.9999% of the human race can actually live at; and that's unrealistic. The fact that he can live that way because he can force his patients to support this lifestyle means that he's no better than a Mafia boss who lives the same way by running a "protection" ring.

A surgeon or a supplier of a necessity in general has a right to a decent living from his service, but not to an extravagant one, precisely because his services are not really worth anything to the recipients. So he can't look at how "valuable" his services are to the recipient; because that term is economically meaningless. The fact that he's studied long and hard is also irrelevant in determining the value of his service; the value of his service is the lifestyle he is giving up in performing it.

Now it is true that the surgeon is an educated person, and so presumably has learned that life does not consist in Big Macs, chips, and beer while watching wrestling on the Tube. He's found out that symphonic music is actually more significant music than what Snoop Doggy Dogg produces; and the things to eat, see, hear, and so on that aren't positively bad turn out to be expensive. Furthermore, a surgeon's job is messy and dangerous; and so he's not only giving up listening to Beethoven, but he's giving up not having to muck about in bloody and stinking brains for hours at a time, where the least slip means that the patient dies. So the surgeon's activity does have more value than, say, your average garbage man's--though his service is a necessity too, from the homeowner's point of view.

I would think a surgeon would have no moral problem whatever in saying that he has a right to live on the equivalent of an eighty-thousand-dollar a year salary, or even perhaps a hundred thousand a year (in, say, 2000 dollars). The reason I say "equivalent" is that if he's in an office, he has to actually get more, because he's got to pay the staff and so on. But once he gets above the equivalent of a couple hundred thousand, I think he should begin having moral qualms, and if he makes a million a year, he definitely has a moral problem.

Notice that Michael Jordan could make forty million a year without any moral difficulty, since no one had to go watch him dunk basketballs. If people want to pay the price of the tickets, then that's because they think that what they're getting for the price is greater than what they're giving up; and so if Michael Jordan can make himself fabulously wealthy by supplying this value, more power to him.

But the surgeon's not in the same situation. True, what Michael Jordan does for people can't be compared with what the surgeon does; but that's the whole point. It doesn't mean that the surgeon's service is more valuable. It isn't valuable at all; it's necessary. No one goes to him to be better off; they go to him to get out of trouble. Of course, if he's a plastic surgeon who does cosmetic surgery, then he's supplying a value, not a necessity, and then if he wants his villa in Corfu, there's no moral difficulty.

Now I personally think that until suppliers of necessities become convinced of what I've been saying, there's no solution to the problems we have, whether the economic system is capitalism or Communism, or whatever. And the reason is simply that since the suppliers are providing necessities, then they can get together and simply refuse to perform their services unless they get paid exorbitant sums for it--and whether the one who pays is the patient (or client) or the government, it will get paid, because the consumer has to have the service, whatever the cost. They have people by the throat, and can extort whatever they want.

So socializing medicine is not the answer; until doctors get back to the notion that their main purpose in life is helping people, and that all this gives them is the right to a decent living, not an extravagant one, we're lost. And don't say it can't happen. Teachers, for instance, are also supplying necessities, and there are still plenty of teachers, even though the pay is not all that humongous.

Now I've given the impression that the necessity is always on the consumer side. But this isn't the case. I mentioned that not everyone has the skills to make it as an entrepreneur; and so some people--by far the majority--can't make it unless they work for someone else. But that means that if they don't work, they starve. Necessity.

And what that means is that employers can offer pay just this side of starvation, and working conditions just this side of horrible, and people will take it--not because they're willing, but, by using the Double Effect, because they have to or die.

And, thank God, because of unions and people like Charles Dickens (and even Marx) who "raised consciousness" on this issue, in the "developed" nations we've pretty much solved this problem. We've got laws that prevent blatant exploitation of workers, and have come to realize that it really doesn't make economic as well as moral sense to exploit them.

All I'm saying here is that it's the same situation. When the supplier has to supply the service or be harmed, then the value is all on the employer's side; and so the employer must not offer simply "what the market will bear," but must take into account the humanity of the employee, and not simply exploit him because he can get away with it. In the last analysis, the firm needs employees; and they are human beings, not "commodities"; and it is inconsistent with the economics of the firm and of transactions to dehumanize people in hiring them just because they'd be more dehumanized if they couldn't find any work.

Why capitalism works, and socialism doesn't.

To go into more detail would be to write a book on just this subject, and so I'll have to refer you to my textbook The Moral Dimension of Human Economic Life or Chapter 2 of Part Five of Modes of the Finite.

But, at the risk of making this chapter overlong, there are a couple of remarks that I think need to be made about capitalism as opposed to socialism. Capitalism (i.e. a free-market system) basically brings prosperity--though it needs to be fixed up by taking account of necessities--and socialism brings misery. Why is that?

Because, first of all, there are two motivators for doing things: fear and ambition. When fear of punishment is the motivator, you will do the minimum you can get away with and avoid punishment. When ambition is the motivator, you will do more the more you are rewarded for what you do.

Now in socialism, the government runs things. But the government runs things by passing laws--and therefore, in the last analysis, by threatening punishment if you don't obey them. Therefore, people will do as little as they can get away with, and the result is economic stagnation and regression. You can "motivate" them with propaganda about how you're all sacrificing together for the glorious future, but people aren't fools. They say, "Why should I suffer for generations yet unborn? Let them see to their own problems."

On the other hand, if you say, "If you do this, I'll pay you; and if you do twice as much, I'll pay you twice as much," you're very apt to find twice as much done. And, of course, that's the basis of capitalism. When I perform a service, the recipient pays me according to how valuable it is to him, and I get paid more the more value he sees in it. So what's this going to do? Give me a reason for (a) figuring out what he considers valuable, and (b) doing more and more of it. And who gains? He does, and so do I. We both move ahead, faster and faster.

But you see, the New Morality hates Big Business (actually any business) because of this selfish motive, and it loves government because government is there precisely to help people. But New Moralists ignore what I just said, which works out to be the exact opposite of what you'd expect in the abstract.

The "selfish" businessman is always looking to what the consumer wants, because the happier he can make the consumer, the more the consumer is going to pay him. And so, in spite of the fact that he may be motivated by selfishness (though even in capitalism, as I said, he doesn't have to be), it's going to work out that the consumer is even more of a beneficiary than he is.

On the other hand, people who want to help other people don't want to suffer in doing it. So government bureaucrats are going to see to it that their lifestyles are not curtailed by what they do for the public. And since the money that pays them is from taxes, which the people have to pay, they've got an unlimited supply of it, which they think they're dispersing to help the people they've just extorted the taxes from. So what this boils down to is that a great part of any governmental program consists in welfare for the bureaucrats: insurance that they never lose their jobs, that the "problems" they are "solving" never go away, but only get worse (making their helping activities more needed than ever), and that they can go home to their Select Comfort mattresses and HDTV sets in the bedroom after a hard day of doing the People's Work.

So it's the selfish-in-theory who turn out to be the altruists-in-practice, and the altruists-in-theory, in good Clinton First New Commandment fashion, who turn out to be the selfish-in-practice.

But you see, the New Moralists care, they're trying. And they can show how wonderful and good and kind they are by taxing the evil businessmen and redistributing it to those who deserve it--first and foremost, of course, to the redistributors. If only a pittance gets to the people that are supposed to be the recipients, well, that's a detail we can safely ignore, because we know we care.

(What is it? We spent something like five trillion dollars on the War on Poverty over the years--enough to have given every single one of the poor when it started a million dollars apiece--and all we've got to show for this governmental effort at compassion is five times as many poor, and a lot of well-off bureaucrats. There's the beauty of socialism for you.)

Let me just mention, however, that, since government is the society in which people cooperate to see that no one's rights are violated, then government does have the right to tax the well-to-do to supply necessities to those who can't get them by their own efforts. But it has the obligation to do the minimum of this, or it's demanding more than is necessary from the affluent (making necessary--because of the demand--more than what is necessary--which is a contradiction, in case you hadn't noticed), and creating an incentive for the people who can make it on their own but can't be bothered to get off their tails, to sit and let government take care of them. And that's dehumanizing even to the poor.

So there are wheels within wheels here, not surprisingly. If it were all perfectly simple, we'd have solved all our economic problems ages ago. All I'm trying to say in this chapter is that the foundations of capitalist economics are solid--though the theory needs tinkering--and that this country, as founded, was on the right track. It is indeed the greatest country in the world, for all its flaws; don't let the New Moralists bamboozle you into thinking it isn't.