Sunday, April 9, 2017

Ethics: What role does ethics play in economic decision making and governance?

Last week during the SWEET meeting we were discussing the future of Economics at UAF. At some point during the discussion the role of ethics in economic decision making was mentioned which started a somewhat explosive tangent. This week, I would like to expand on the role of ethics in economic decision making and how sometimes ideology can lead policymakers astray. 
I think we all know that economics is not just a discipline used to boost the bottom line of businesses and corporations. Some in the SWEET discussion group who will go unnamed here (you know who you are) would argue that ethics is subjective and therefore should consulted based on the whim of the people making decisions. This of course means that key policy makers could just decide to completely disregard or at the very least reduce the ethical concerns and legitimate consequences of externalities to mere tertiary consideration. I would like to offer the position that this ideology of what I call ‘Free Market Fundamentalism’ is very dangerous for politicians and other government officials to have because it means that the government is corrupted to favor the interests of corporations and other big businesses over the people they are elected to represent. 

Here are a few articles that look at the ethics of past and present economic decisions rather than just the bottom line: 

Based off of that reading, consider the following questions: 

1. What role does ethics play in economics and governance if any

2. What is the role of government in terms of regulation and how does that relate to ethics? 

3. If we lived in an Anarchic society with no government, what kind of recourse could people expect? Would it really be as efficient or more efficient than our current legal system? 

4. To continue from question 3, what would recourse in this hypothetical society be predicated on? Wealth? Survival of the fittest (most heavily armed)? 

5. Is there any meaningful way to reform the government? Or are the incentives for corruption too strong to overcome for public officials? 

—Isaac Gage


  1. 1. It’s clear that social mores are often legislated. For instance, it’s generally agreed upon that it is unethical for me to murder my classmates without any sort of provocation. Not surprisingly, we find that there is significant attention given to the killing of other people in the legal codes. We find that most things people agree as being “unethical” are dealt with by the laws that govern a society.
    However, things are a little more “grey” when we bring in economics. I have sat and listened to people supporting or suggesting what I, and many others, would consider unethical actions. The reason for this is because people seem to be less focused on doing what is “right” vs. doing what is “less wrong”. For instance, we had a vigorous, interesting conversation about sweat shops a few weeks back. Most everyone agreed that sweat shops are dangerous, relatively low-paying, and often employ children who are stitching together clothing instead of getting an education. No one at our meeting was interested in working at a sweat shop. However, most everyone at the end of the meeting was also pretty sold on the idea that the companies that run these sweat shops aren’t really so bad because things are worse around the sweat shops. “Less wrong” had become palatable, even desired.
    I think there are ethical choices, there are economic choices, and there are legal choices. I would argue that it isn’t very common for a choice of import to be all three.

    2. Regulation should be done in a manner which should be ethical and economical. For instance, there are many regulations concerning blood donations and blood banks. Blood is a valuable commodity. It would be economical to make choices that increases our nation’s blood supply. However, the constraints are the laws which limit what we can do to increase our blood supply.

    3. Anarchy, as far as I understand, means that the rule of law has dissolved. There would be no reliable recourse beyond what a person would be capable of generating. This would create very little consistency in consequences for harms inflicted on others. The weak, disabled, and disadvantaged would become easy targets for any number of crimes. Anarchy was humankind’s natural primitive state, and yet cultures have generally found it prudent to establish rules to guide interactions and daily life. I would expect rules and laws to quickly come back after a period of anarchy.

    4. Recourses would be predicated on a person’s general ability to project their desires into the space around them. This would involve money, favors, guns, whatever.

    5. I read the article on Canadian oil sands and couldn’t help but think how applicable most of the concerns are/were to Alaska. We absolutely lived worry-free on oil revenue for a long time. Alaska’s government knew who paid the bills, and that created a situation where Juneau became more and more warped in favor of our oil producers. Some politicians even went straight from the oil industry to “public service”, then back to the oil industry. While I’d argue that some of these changes were necessary to maintain interest in Alaska, some probably were not.
    There are ways to reform the government. Distancing the influence of big money from government is always the first step.

  2. What a great way to end the semester! This is a great topic and I'm glad it was chosen to discuss.

    I think ethics plays a role in economics as both a restriction and as an incentive. Some people do things ethically because it is the best decision to make, or in utilitarian ethics, it is the choice that yields the best outcomes. Ethics are the moral incentives of life, in my opinion. It is what drives people to do certain things under a law that has no tangible value. In that way, ethics and incentives are similar. As far as ethics in governance goes, however, I feel like it is less of a guide for people's decisions and more of a boundary for them. A lot of governance has to meet certain ethical standards, but as we could see from our discussion, sometimes that area is cloudy and hard to distinguish.

    In that sense, governance must regulate certain ethical standards in order to better guarantee they will be followed. Some governance includes different areas such as sweatshops, child labor, and animal rights.

    I agree with Will in that anarchy would lead inconsistent repercussions and eventually would dissolve.

    I think this society would favor the rich and able-bodied, as they can better support and defend themselves financially and physically.

    I do think there are ways to reform the government, but it would be hard to overcome given the strong incentives that are paired with corruption, as you mentioned.

    Thanks for the great topic!

  3. 1. I don't think that a strict code of ethics has any real role in economics or governance. The job of a member of the government is to do two things—represent their constituents and to use facts and research when making decisions. They must balance these two things against each other, but that leaves no room for close-mindedness.
    2. In terms of regulation I think that the role of government is only to only regulate things that would have difficulty being regulated themselves or that do not have much of an incentive to. I think there are far fewer of these examples than currently people make out to be. However, I do think that there are cases—particularly some environmental cases where regulation is useful to increase productivity.
    3. In an anarchic society people are still going to have friends and family that they can use to rely on—humans have a natural instinct to value relatives and close friends—these are people who will form safety nets for each other. In terms of justice, I don’t think that I know enough to speculate exactly what would happen.
    4. In this society, I think that wealth and being very self-reliant will definitely increase an individual’s ability to enact justice or just to protect their own property. However, I do not think that this means that all non-biased justice will go out the window. Non-biased justice is probably always going to be valued by society and there would be people trying to create this good which people would be interested in participating in.
    5. I’m not sure what the most meaningful way to reform government is, but I definitely don’t think that the incentives for corruption make it so that government will never work. I think that with a smaller government and a citizenry that values things like education and information, there would be less incentive (or maybe more disincentive) to act in a corrupt manner.