Ethics and Poverty: More Than Warm Feelings

"The penury of these miserable masses of - in the main colored - people is not caused by capitalism, but by the absense of capitalism."
-Ludwig von Mises, Human Action 

 

From “Bangladeshi Garment Workers and the Perversion of Ethics” by Mario Rizzo:

I am not saying that we should not have compassion for these people. What I am saying is that the whole of morality is not about feeling good. It is about doing good. And doing good is a complex affair. It requires attention to the unseen."

 

Whether it is about people not having health insurance or about people having to work in dangerous conditions, the human cooperation on the market is not about making what our feelings want to be. It's about serving human desires with limited resources, and ensuring those limited resources go to the most urgent ones as expressed by the price-system. Poverty exists, and as such human decisions about what is the most urgent desire must be made. The market-order will at times show us the great tragedy of such decisions having to be made, but that doesn't mean such decisions don't have to be made.

 

We simply do no favors to people when we make the costs of cooperating with them higher, even if we may feel better about it from the security of our arm chairs. When we make people have health-insurance, people on the margins will decide not to cooperate with some people based on the increased costs. When we make it such that employers have to invest in safety equipment in a third-world factory, some those employers will on the margins decide that they do not want to do business in that country. 

Indeed, we may feel better about ourselves forcing all that to be done, but by preventing people access to cooperation in the market-economy, we greatly harm their welfare. The market-economy is simply the greatest mechanism ever in the history of this world of exploiting the gains to social cooperation. The path out of poverty is not paved with the feelings of wealthy, as we in the first world are from a global perspective, do-gooders, but by human cooperation guided by abstract prices.

 

Countries are poor because they are not productive. Even though we may back away from saying the same thing about people who are poor (ignoring p=mc and the identity of wages as the first derivative of the production function with respect to labor when we do so), we cannot do so when we talk about wages. The only way to not be a poor country is to be a productive country. The only way to be a productive country is to exploit the gains from cooperation made possible by human cooperation guided by prices and, participating in the international division of labor.

 

One of many manifestations of Deidre McCloskey's Great Fact. 

Fundamentally, the jump in material welfare over the past two centuries was not made possible by people wishing better standards of living upon the poor, but by the poor having access to productive modes of social cooperation. It is social cooperation, and the hard decisions that come with making oneself an attractive person to cooperate with, that made the hockey stick possible, not warm feelings about another person's welfare. 

If we truly care about the destitute of the world, of those unfortunate enough to be born in societies in which they could not exploit the gains to social cooperation as we can, we must not saddle them with costs that make cooperating with them less attractive than it was before. Instead, we should allow the capitalistic ethos of free trade and free contracts to emerge in societies across the world, and be content with the knowledge that eventually things will get better. Neither Rome nor New York City were built in a day.