Thursday, January 15, 2009

Misunderstanding Self-Interest

Brad DeLong is the author of a popular economic blog called: Grasping Reality. If only his grip were a little tighter. He believes in pragmatism. That somehow the answer to economic problems is found in the middle. Surely, if Bob thinks that 1+1 = 2 and Bill thinks it's 3, that the true answer is around 2 1/2, eh? As dismissive of him as I am, he is more so in his attempt to disparage modern libertarianism.

His quote:

"...a truly self-interested butcher would not trade you his meat for your money but instead slaughter you and sell you as long pig."

This is ridiculous, but the basic premise is endemic to those who distrust free markets. They have a deep seeded distrust of other human beings.

His comment is also a fundamental misunderstanding of self-interest and human nature. It is apparently Mr. Delong’s belief that we are all psychopathic killers and cannibals, held back only by the force of law. Of course, his logic falls on its face, for if we are all psychopaths, how did law and order ever evolve? How did the human race ever come to be? How do animals survive at all without the intellect and advanced moral systems that we have?

Self-interest is more than just satiating our current desires and be damned the long-term consequences. This would imply that humans have no intellect and no capacity for reason. If I found myself on a desert island with only one companion, how would it serve me to cannibalize him? While I might be able to survive a few more days, it ignores the possibility of another arrangement: Specialization and Exchange.

Specialization and exchange allows us to use our diverse talents to maximize production. Were we both to try to survive on our own output, consumption and life spans would be lessened. Not killing him and coopearting allows the possibility of satiating more desires over a longer period. Clearly, this is the path that the vast majority of mankind, and even the animal world, has taken.

Now, reimagine Mr. Delong’s scenario as three men on an island, each having a gun. We land on the shore,Tom pulls out his gun, shoots Jim, and says, “Let’s eat!” Mr. Delong would ridiculously claim that he acted in his self interest. This ignores my incentive as the other island resident. If I acted in my own self-interest, I would immediately shoot Tom. How could I hope to survive the night if Tom has revealed his utter lack of willingness to negotiate an alternative production maximizing solution and his lack of hesitation at killing another human being? To maximize my lifespan, Tom has to go.

We all know this. If we tell a lie and are caught, we lose the trust of numerous people. If we steal and are caught, we lose the trust of even more. This is why with even minor offenses most of us keep these behaviors to a rarity, and some of us strive to never commit them. Any rational, self-interested person would kill Tom and kill Delong’s butcher, just like one would shoot a rabid dog. Revealing that one is capable of murder destroys the most fundamental form of trust in all human relationships: You don't kill me and I don't kill you.

It is even disconcerting to me that Brad Delong considers that murder could serve one’s self interest. Given that I do not consider self-defense as murder, I cannot conceive of a situation in which murder would serve my interest. If you can, I would wager that you are mistaken.


Brian Phillips said...

Good post. The perverted view of self-interest is the result of altuism, which holds that either we sacrifice ourself to others, or sacrifice others to ourself. As you point out, another alternative exists.

Brian Shelley said...

Thanks. It especially amuses me when some people are so dogmatically "scientific", yet believe in ethereal values of fairness and collectivism.