e_moon60 (e_moon60) wrote,
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Economics & Ethics (Cost/Benefit of Behaviors)

Or, why the business model gives rise to lousy long-term results in many areas of activity....

Humans are (among whatever religious beliefs you may hold) social animals, and as such have neurology hard-wired to respond in certain ways--at a fundamental individual level (common to all animals, including the solitary) and at the social level (to maintain the social structure of the species.)   Some of the hard-wiring that "works" (preserving species--and, for social species, the social structure--in a relatively steady-state natural world) includes behavior that many of us do not consider "ethical"
.   Altruism, for example, exists among nonhuman animals (more in some species than others) but many human groups have a widely expanded definition of "ethical".

From the purely economic point of view, behaviors considered unethical, immoral, and "bad" always provide a short-term gain.   If you steal, you get the goods; if you bully in order to steal, you not only get the goods, you get the hormonal rush of dominance.   (It feels good to win--the spurt of testosterone that accompanies successful dominance in both sexes positively reinforces dominating.  That's why there's a payoff to the cheater in sports and the bully in playground disputes.)   Watering the milk, sanding the sugar, chalking in the flour, giving short weight, putting the rotten fruit on the bottom of the basket, using a cheaper grade of steel or cheaper mix of concrete on the bridge...all provide a short-term tangible profit.   Trespassing (moving boundary stones in the old days) and poaching gains access to more resources.  Cheating, beating up, or killing your rivals (or having it done) hastens your own rise up the social hierarchy--your rivals aren't there any more and you might cow potential rivals.   Cheating, lying, stealing, and violent response to having one's desires curbed don't exist because humans are "just evil"---but because those behaviors bring short-term gain, and thus count as positive reinforcement. 

In a small, nearly closed social group, such behaviors directed against the group usually bring quick punishment that imposes a cost for being caught (and in a small group, the bad actors are known and usually caught.)    Groups that do not recognize the long-term costs of anti-social behaviors do not thrive unless they gain access to the means to impose their will on others--and then they usually fragment and lose power.   Such behaviors directed outside the group, however, have a longer--sometimes much longer--cost tail.  

Behaviors considered ethical or moral or "pro-social" or  "good" 
are those that provide a long-term benefit at a short-term cost or a greater benefit than cost.   You're a five year old standing in front of a candy counter.  You want that one.  If you can take it without being caught, you immediately have the candy.  And you're more likely to steal again.   Eventually, the disappearance of candy every time you go to the store will be noticed, the clerks will watch you more closely, and you'll be caught, with negative long term consequences, from immediate punishment to change of social position.   If you don't take it, you've lost that opportunity...but you aren't at risk for being caught, and your social position will be that of "non-thief."   Too often, "good" behaviors are thought to benefit only society (thus to fall entirely into the "altruistic" category)  but the long-term benefits accrue to the individual as well.   The difficulty  (for parents, for societies) is convincing individuals that the long-term benefit is real.

For the moment, I'm not going to talk about those subcultures in which the values of good and bad behavior are reversed  (where thieving gets you approval, for instance.)   The reason should become obvious.

Humans are notoriously bad at calculating the relative value of long term and short term costs and benefits--developing the thinking skills to foresee the consequences of one's own acts, one's group's acts, etc, etc. has taken a long time (all human history) and founders again with every generation.  Every parent deals with the short-term-gain problem with every child;  teaching kids to see the connection between their acts and the physical and social consequences is a long and exhausting job (and some never learn.)    The cause is neurological: all animals see the "near" as more important than the "far" (both in time and in space),  which has survival value when you're "just an animal."   The banana ripe on that tree today is food for today; leave it on the tree and some other creature may eat it.   A bush rustling half a mile away may mean a predator's there, but far more important is the bush rustling ten yards away--immediate danger.  

But the more complex the social group, and the more power the group has to alter its surroundings, the more payoff there is for thinking ahead--considering the long-term benefits and costs.   Humans began to realize that humans thrive in groups that enforce some pro-group behavior--that other behaviors damaged the group's ability to survive as a group in competition with other groups.   Stealing from the other tribe--fine.  Stealing within the tribe--got your hand cut off.    Killing the other tribe's men and stealing their women--fine.  Killing your next-door neighbor and stealing his woman--not fine.   (Note:  I'm using terminology appropriate to those cultures, in which women were considered property.  Does not mean I approve.)     It required laws--stated rules--and punishment, often severe, to impose the simplest rules on societies...and not all the rules were equally reasonable in terms of producing an actual long-term benefit.  (For example, rules restricting women's clothing and opportunities benefit men, particularly psychologically--that hormonal burst from successful dominance--but have the long-term effect of harming half the population and lessening women's contributions to such cultures, thus hampering those cultures in competition with those that make us of the talents of all their members.)  

Modern economic theory has dealt primarily with developed (first-world) societies and markets, operating in near-total ignorance of both neurology and ecology.   This has led to a concentration on short-term gains and costs--the one desirable, the other undesirable--that has bled over into other areas of thinking, including ethics in some cases.   One of the more pernicious notions to come out (not intended by the theorists, I suspect but do not know) is the idea that if you can win a conflict fast enough, all the bad consequences will land on the other guy....which is like thinking that by exploiting a resource fast enough, nothing bad will happen.   (Hence, the "We have to have that oil/gold/timber/water right now, before the other guy gets any, and we'll be fine..." mode of thought.)    Politically, there's the opposition to "regulation"  or "government interference."   (Note: I'm aware that not all regulations, or "interference," are reasonable.)   Despite the historical evidence that people do lie, cheat, steal, hurt, kill, and otherwise choose the immediate gain without regard to the long-term cost,  some claim their opposition to laws regulating commerce to prevent as much of this as possible is purely in aid of sacred liberty and people will self-regulate if only allowed to be free.   (You would think a couple of evening news segments would cure them of this fantasy, but no...they have the further fantasy that if only everyone carried firearms all the time, everyone would become polite.  That was a nice SF idea, but it's not realistic.)

So all societies have some rules, and some rules are more effective than others in producing a society that enhances its members' lives.   Internal peace and security allows members to work more efficiently and thus contribute more to the society; reduction of conflict also directly improves health (stress from constant conflict having a bad effect on multiple organ systems.)  Regulation of commerce contributes both to health (directly, through provisions that make for a better, more reliable, food supply and indirectly through reduction of frustration and stress chemicals) and to internal peace and security (as riots in the market because the merchants were cheating lead to injuries and deaths.)   Regulation of some personal relationships (within the family, between neighbors, between employers and employees) manages conflict, and thus stress, and (if the regulations themselves consider long-term, not short-term gains) improve the quality of life for most citizens.

What about external peace and security?   Any society that's doing a good job for its own people, prospering and having happy members, is going to attract others--some to copy and some to envy and want to destroy.   What happens then depends on how the successful society is handling its long-term goals in terms of both neurology and ecology.   Because of the nature of human social structures, being successful (and rich) arouses envy in those less successful, and the generally unthinking nature of humans means that "grabbing" is going to look better than "copying skills/techniques"   to at least some of those who wish they had what the successful society has.  (Learning new things and new ways of doing things is work; grabbing can feel like fun.)   OTOH, humans are natural mimics, and copying can also be fun--it does take longer than grabbing, but is satisfying.  It takes only a moderate extension of delayed gratification to choose copying skills over grabbing loot.   However, the history of human societies has shown that successful societies do not often apply their own internal rules when dealing with outsiders...they revert to the lowest-level biological responses and grab others' stuff, using their superiority of number or technology or both.   Therein lies the "going to bite you in the butt someday" long term cost of short-term gains.  Because what outsiders see of a society is what outsiders are most likely to copy:  if they see grabbing (stealing), lying, cheating, dominating...then that's what they both resent *and copy* in their response.

Most of us (I'm being charitable here--I think all of us, because we're all human)  do not want to consider the long-term consequences of all our actions all the time...not even in relation to our own health and welfare, let alone in relation to the health and welfare of our own society, and even more let alone in relation to the health and welfare of the entire human race.   We want what we want when we want it, and we choose not to see where what we want--or when we want it--has bad long-term outcomes.   (Personal example: me and food.   I made brownies last night.   I'm eating some brownies today.   Is that "good for me?"   Will brownies extend my lifespan or make me healthier right now or prevent cancer or heart disease?   Of course not.   But I do get an immediate "Oh, yummy!" moment from each one.   "Oh, yummy!" moments are momentarily good for me--endorphins are beneficial in themselves--but not as beneficial as the other components are harmful.  Yet, though I "know better" I still make brownies once or twice a  year and eat them.)    Biologically, we'll take the easy way out (that brownie, driving two blocks rather than walking) because back in our prehistory conserving energy and grabbing the nearest food immediately were survival points.   

Successful societies are successful largely because they convince their members to put up with "opportunity costs" for foregoing disapproved activities in order to reap the larger, and farther away in time, benefits of approved activities.   If you don't kill your neighbor because you think his hanging his wash out on the line lowers your property value,  or her daughter's being elected head cheerleader materially harms your daughter, then there's time for you and your neighbor to negotiate a peaceful settlement, preserving the wellbeing of the whole.   If you don't lie and cheat in business to get ahead of those who don't--if you can trust that other liars and cheaters will lose out in the end--then you profit  by your reputation for honest dealing.   

Those who argue that the opportunity cost of behaving well--the immediate gratification you don't get if you forego the bad behavior--excuses or justifies bad behavior are basically standing up for lying, cheating, stealing, and bullying.   Of course there's a cost.   It's not always what's claimed...what the bully really gets may not be the candy, or the quarters, but the jolt of testosterone that comes with winning a dominance conflict--a purely neurological, hormonal, personal benefit (else why beat up the kid who doesn't have any lunch money?)  This becomes increasingly important to tease out when dealing with political and military ethical issues that have the potential to impact whole societies.   Proponents or defenders of acting badly choose  extreme (often imaginary) cases with exaggerated values pro and con in order to justify bad behavior across the board with false analogies.    They want to find some situation in which people will agree that killing a child or torturing a prisoner or sexually assaulting someone is "justified" by the potential damage of not doing it, not getting the supposed/claimed quick profit.   But--like the child who steals the candy, or the bully who takes lunch money from another kid, or the contractor who "shorts" on the quality of steel beams or concrete....these people are actually motivated by the bully's dominance-behavior reward--just the simple, biochemical dose of feel-good hormone that boosts ego temporarily--not by  real cost-benefit analysis of the entire situation.  These people do not look down-range far enough, and do not consider the real cost of the bad behavior.   Current (meaning recent as well) business practices are not a good guide: the focus on short-term returns on investment, on short-term profits,  is precisely what is anti-social in the larger sense and unethical as well

Discussion: Keep your comments short, pertinent, and courteous, so I don't have to freeze/remove the discussion.    Anonymous comments not allowed.  Note that any weirdness in the LJ cut is an LJ problem (tried to put everything below first cut into the cut, and then--when that failed--tried another cut that seems to have failed.  Another case of failing to consider long-term consequences of programming decisions...)












Tags: ethics, politics
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  • April Already?

    Yup, and the release of COLD WELCOME is April 11. Next week. Yeeps! For more about COLD WELCOME, visit the description (with cover!) on the…

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