Thursday, December 6, 2012

Economic anonymity

One moral defense of the free market is that it does not discriminate. It is said anyone, no matter his race, color, or creed, can anonymously profit from his labor. Where resources are limited, people like getting the most bang out of their buck. In the long run, economic self-interest steers wealth to the most productive elements in society. Minorities therefore can overcome prejudice by being the most productive.

Aiding this process along is the ever-increasing scope of the economy. Local markets give way to regional markets give way to national markets give way to global markets. “I, Pencil” illustrates this property. Consumers, far removed from production, have no idea who or what went into what they are buying. All they know about the product is its relative quality and cost. Thus the decision to patronize a business or buy a product reduces that business owner or worker to efficiency (i.e., how much he can do with how little).

That’s the argument, anyway, which I grow more skeptical of as time wears on. There are plenty of products and services informed citizens deliberately patronize, or deliberately refuse to patronize. And usually their decisions are on anything but economic grounds. BP, Chick-fil-A, Wal-Mart, and Cuba are just a few examples of efficiency taking a backseat in consumers’ minds.

Imagine you live in a town with two hardware stores. One is owned by your friend. He goes to the same church you go to. You play pick-up games in the gym. His daughter babysits your kids when you go out for dinner with your wife. The other hardware store is owned by a real jerk. He divorced your cousin after a bitter marriage. He campaigned for a redistricting measure that would hurt property values in your neighborhood. His son plunked your son in a Little League game.

If the same merchandise at the jerk’s hardware store sold for 25% less than at your friend’s hardware store, would you patronize his business? No, you’d continue to patronize your friend’s business. Why? Because your friend shares your values, and that association is more important than the money you would save at the other hardware store.

That’s not a bad thing, by the way. Strong associations, strong enough to subsume purely financial self-interest, produce strong citizens, the kind who maintain a civil society.

The sheer quantity of products available to us to buy makes informed decisions about whose business we want to patronize very difficult. It is impractical to know the hundreds of people who lent a hand in manufacturing and bringing to market this or that. It is impractical to know anonymous businesses’ corporate cultures, such as what charities they give to. It is impractical to know the effects of anonymous businesses’ production techniques on the environment.

The only real solution for most of us is to limit our decisions and to patronize smaller markets. The larger the market, the more disconnected it is from our lives and our values. The smaller the market, the more discernible the effects on our communities, and the deeper the meaning of the proposed transaction.

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