The Trolley Problem was first introduced by the British philosopher Phillipa Foot in 1967. Many versions of this problem have been used to elucidate some tricky issues surrounding morality. The Sophie’s Choice-like decision that must be made in the Trolley Problem boils down to one or another aspect of: is it permissible to kill one person to save five? A strict Utilitarian would say yes because five lives are more valuable than one. An Intuitive Moralist would find it unacceptable or at least uncomfortable to take an innocent life even if five lives are saved as a result. Could it be that the political conundrums we see in 2016 are a type of Trolley Problem?
It’s clear that Presidential candidates Donald Trump and Bernie Sanders are on to something big. Regardless of your opinion of either, there is no disputing that each has struck a chord with a major slice of the American electorate, particularly the young and those down and out on their luck. Why?
Since 1817 when David Ricardo worked out his theory of comparative advantage, nearly all economists have touted the benefits of free trade. When I studied and taught economics in college, I sided with the majority. The benefits to free trade are easily understood once presented in simple form. An ethical problem arises if those benefits are not shared equitably. They aren’t, of course. Some businesses may fail, some people may lose their jobs while others may benefit greatly even if we all benefit from the lower prices and greater variety of choice that trade provides.
There is a concept called Pareto optimality that economists use to determine if an economy is functioning well. It refers to a situation where the economy is such that it is impossible to make any one person better off without making another worse off. If a change in the allocation of resources can make someone better off WITHOUT making anyone worse off, we should welcome that change. But trade is not like that nor are the benefits resulting from immigration. Some people lose, some people gain.
If some are made worse off, suppose we could share the benefits to make it up to them. If the benefits to those who are made better off are sufficient to compensate those who are disadvantaged by the change, everyone can gain. That seems like a reasonable solution, and it is. But it requires actual compensation to the injured parties or it’s just hot air. The compensation is the sticky part. It has seldom been pursued. When horse and buggy companies where forced out of business by the auto industry, the employers and employees of these businesses suffered. When robots replaced assembly line workers, the workers lost their jobs. Such fluctuations in fortunes and lives have been with us long before the Luddites. Joseph Schumpeter called the process “creative destruction,” an idea he borrowed from Karl Marx. Capitalism, most of the time, puts up with it, even venerates it as the source of innovation and economic growth in a vibrant economy. But, when the pain becomes widespread and too much to bear, the injured parties revolt.
The political discontent we see in this election year revolves around two valid concerns: immigration and trade policy. Immigration and trade have strengthened the American economy throughout much of our history but in the last several years there is evidence building that both are tearing the country apart.
The glue that holds our democracy together is forged out of a sense of fairness, equal opportunity, and optimism about the future. The glue has always been far from perfect. Slavery, exploitation of labor, greed, political corruption, our treatment of the mentally ill, on and on—the failures are legion. However, we’ve muddled through most of the time, survived and even thrived. But now one of those revolts is no longer imminent, it’s here in our midst.
There is a widespread perception that fairness, equality of opportunity, and optimism have declined in a way that threatens to unwind society as we know it. Economists are beginning to realize that the benefits of free trade and even capitalism itself as currently practiced are no longer widely shared. Inequality has become a popular subject in coffee shops and academia.
The demographics are changing, and some of that change is the result of darker trends compounded by the weakening of the glue.
In essence, we’ve chosen to sacrifice the few for the many or the many for the few depending on your frame of reference. In the Trolley Problem we’ve sided with the Utilitarians and against the Moral Intuitionists. We’ve decided it’s okay to throw the poor, the unemployed, the marginal under the bus to maintain the low prices at Walmart and Costco.
Unlike in the Trolley Problem, we have a choice. We can be utilitarian and intuitively moral at the same time. We don’t have to kill one to save five. We don’t have to close our borders. We don’t have to stop trading with the rest of the world. If we allocate adequate resources for education and retraining of workers who have lost their jobs, if we provide strong encouragement for people to improve their skills, if we help them financially during the transition, if we give them hope, if we create good jobs by investing in much needed infrastructure improvements at today’s low interest rates as several prominent economists recommend, the Trolley Problem goes away.
There is nothing naïve or new here. The winter of our discontent has been with us for a long time. It will take work and time to change the negative trends. And it will take money. The obvious and proper way to pay for these suggestions is to invoke the compensation principal, a crucial but too often neglected requirement to make a Pareto Optimality optimal. Those who benefit from the changes capitalism brings should share the benefits with those who lose through no fault of their own. They should compensate them for their losses. And, if that can’t be done, then we don’t have a Pareto Optimal situation. We have exploitation, we have deception and we have hornswoggling. And that won’t do.