MARKET REASONING RENDERS MORAL CONSIDERATIONS IRRELEVANT ---Episode 9

          MORE DISCUSSION OF PERVERSE INCENTIVES

    Asking a refugee fleeing persecution to hand over $50,000 may strike you as callous, yet another instance of the economist's failure to distinguish between the willingness and the ability to pay. So consider another market proposal to solve the refugee problem, one that doesn't make the refugees pay out of pocket. Peter Schuck, a law professor, proposed the following :
   
     Let an international body assign each country a yearly refugee quota, based on national wealth. Then let nations buy and sell these obligations among themselves. So, for example, if Japan is allocated twenty thousand refugees per year but doesn't want to take them, it could pay Russia, or Uganda, to take them in. According to standard market logic, everyone benefits. Russia or Uganda gains a new source of national income, Japan meets its refugee obligations by outsourcing them, and more refuges are rescued than would otherwise find asylum.
   There is something distasteful about a market in refugees, even if it leads to more refugees finding asylum. But what exactly is objectionable about it ? It has something to do with the fact that a market in refugees changes our view of who refugees are and how they should be treated. It encourages the participants ---the buyers, the sellers, and also those whose asylum is being haggled over --- to think of refugees as burdens to be unloaded or as revenue sources, rather than as human beings in peril. 
   One might acknowledge the degrading effect of a market in refugees and still concede that the scheme does more good than harm. But what the example illustrates is that markets are not mere mechanisms. They embody certain norms. They presuppose --- and promote --- certain ways of valuing the goods being exchanged. 

                                        FINES vs FEES 
   What is the difference between a fine and a fee ? It's worth pondering the distinction. Fines register moral disapproval,whereas fees are simply prices that imply no moral judgment. When we impose a fine for littering, we're saying that littering is wrong. Tossing a beer can into the Grand Canyon not only imposes cleanup costs. It reflects a bad attitude that we as a society want to discourage.  Suppose the fine is $100, and a wealthy hiker decides it's worth the convenience of not having to carry his empties out of the park. He treats the fine as a fee and tosses his beer cans into the Grand Canyon. Even though he pays up we consider that he's done something wrong. By treating the Grand Canyon as an expensive Dumpster, he has failed to appreciate it an an appropriate way. 
   Or consider parking spaces reserved for use by the physically disabled. Suppose a busy able-bodied contractor wants to park near his building site. For the convenience of parking his car in a space reserved for the disabled, he is willing to pay the rather large fine ; he considers it a cost of doing business. Although he pays the fine, don't we consider that he's doing something wrong ? He treats the fine as if it were simply an expensive parking lot fee. But this misses its moral significance. In treating the fine s a fee, he fails to respect the needs of the physically disabled and the desire of the community to accommodate them by setting aside certain parking spaces. 

                       THE  $217,000  SPEEDING TICKET 

   When people treat fines as fees, they flout the norms that fines express. Often, society strikes back. Some affluent drivers consider speeding tickets the price they pay for driving as fast as they please. In Finland, the law leans hard against that way of thinking (and driving) by basing fines on the income of the offender.  In 2003, Jussi Salonoja, the twenty-seven-year-old heir to a sausage business, was fined 170,000 euros (about $217,000 at the time ) for 
driving 80 kilometers per hour (50 mph) in a 40 km/h (25 mph) zone. Salonoja, one of the richest men in Finland, had an income of 7 million euros per year. The previous record for the most expensive speeding ticket was held by Anssi Vanjoki, an executive of Nokia, the mobile phone company. In 2002, he was fined 116,000 euros for speeding through Helsinki on his Harley-Davidson. A judge reduced the fine when Vanjoki showed that his income had dropped, due to a downturn in Nokia's profits. 
   What makes the Finnish speeding tickets fines rather than fees is not only the fact that they vary with income. It's the moral opprobrium that lies behind them --- the judgment that violating the speed limit is wrong. Progressive income taxes also vary with income, and yet they are not fines : their purpose is to raise revenue, not penalize income-producing activity. Finland's $217,000 speeding ticket shows that society nt only wants to cover the cost of risky behavior ; it also wants the punishment to fit the crime --- and the bank balance of the perpetrator.
   Notwithstanding the cavalier attitude of some fast-driving rich folk toward speed limits, the distinction between a fine and a fee is not easily effaced. In most places, being pulled over and issued a speeding ticket still carries a stigma. No one thinks the officer is simply collecting a toll, or presenting the offender with a bill for the convenience of a faster commute. Here's a bizarre proposal that makes this clear, by showing what a speeding fee rather than fine would actually look like. 

   In 2010, Eugene "Gino" DiSimone, an independent candidate for governor of Nevada, proposed an unusual way to raise money for the state budget : allow people to pay $25 per day to exceed the posted speed limit and drive ninety miles per hour on designated roads in Nevada. If you wanted the option of speeding from time to time, you woud buy a transponder and dial into your account by cell phone whenever you needed to get somewhere fast. The $25 would be charged to your credit card, and you would be free to speed for the next twenty-four hours without being pulled over. If an officer with a radar gun detected you barreling down the highway, the transponder would signal that you were a paying customer, and no ticket would be issued. DiSimone estimated that his proposal would raise at least $1.3 billion a year for the state, without raising taxes. Despite the tempting windfall to the state budget, the Nevada Highway Patrol said the plan would imperil public safety, and the candidate went down to defeat. 

MARKET REASONING RENDERS MORAL CONSIDERATIONS IRRELEVANT ---Episode 8

                                                     PERVERSE INCENTIVES

   A fellow down the street used to pay his young children $1 each time they wrote a thank-you note. { One could tell by reading the notes that they were written under duress.} This policy may or may not work in the long run. It might turn out that, by writing enough thank-you notes, the children will eventually learn the real point of them and continue to express gratitude for gifts, even when they are no longer paid to do so. It's also possible that they will absorb the wrong lesson,and regard thank-you notes as piecework, a burden to be performed for pay. In this case, the habit won't take, and they will stop writing such notes once they are no longer paid. Worse, the bribes may corrupt their moral education and make it harder for them to learn the virtue of gratitude. Even if it increases production in the short run, the bribe for thank-you notes will have failed, inculcating the wrong way of valuing the good in question. 
   A similar question arises in the case of cash for good grades : why not pay a child for getting good grades or for reading a book ? The goal is to motivate the child to study or to read. The payment is an incentive to promote that end. Economics teaches that people respond to incentives. And while some children may be motivated to read books for the love of learning, others may not. So why not use money as a further incentive ?
   
   It may turn out--- as economic reasoning suggests --- that two incentives work better than one. But it could also turn out that the monetary incentive undermines the intrinsic one, leading to less reading rather than more. Or to more reading in the short run but fr the wrong reason.
   In this scenario, the market is an instrument, but not an innocent one. What begins as a market mechanism becomes a market norm. The obvious worry is that payment may habituate children to think of reading books as a way of making money, and so erode, or crowd out, or corrupt the love of reading for its own sake.
   The use of cash incentives to get people to lose weight or read books or be sterilized reflects the logic of the economic approach to life, but also extends it. When Gary Becker wrote, in the mid-1970s, that everything we do can be explained by assuming that we calculate costs and benefits, he referred to "shadow prices"--- the imaginary prices said to be implicit in the alternatives we face and the choices we make. So, for example, when a person decides to stay married rather than get a divorce, no prices are posted ; rather, the person considers the implicit price of a breakup --- the financial price and the emotional price --- and decides the benefits aren't worth it.
   But the incentive schemes that abound today go further. By putting an actual, explicit price on activities far removed from material pursuits, they take Becker's shadow prices out of the shadows and make them real. They enact his suggestion that all human relations are, ultimately, market relations. 
   Becker himself made a striking proposal along these lines, a market solution to the contentious debate over immigration policy : the United States should scrap its complex system of quotas, point systems, family preferences, and queues and simply sell the right to immigrate. Given the demand, Becker suggests setting the price of admission at $50,000, or perhaps higher.
   Immigrants willing to pay a large entrance fee, Becker reasons, would automatically have desirable characteristics. They would likely be young, ambitious, hardworking, and unlikely to make use of welfare or unemployment benefits. When Becker first proposed selling the right to immigrate in 1987, many considered the notion far-fetched. But to those steeped in economic thinking, it was a sensible, even obvious way of bringing market reasoning to bear on an otherwise thorny question : How should we decide which immigrants to admit ?
   Julian L. Simon, another economist, proposed a similar plan at about the same time. He suggested setting a yearly quota of immigrants to be admitted, and auctioning admission to the highest bidders until the quota was filled. Selling the right to immigrate is fair, Simon argued, "because it discriminates according to the standard of a market-oriented society : ability and willingness to pay." To address the objection that this plan would allow only the wealthy to enter (Osama bin Laden was rich.) , Simon suggested allowing the winning bidders to borrow some of their entry fee from the government and pay it back with their income tax. If they were unable to repay, he observed, they could always be deported.
   The idea of selling the right to immigrate was offensive to some. But in an age of rising market faith, the gist of the Becker-Simon proposal soon found its way into the law. In 1990, Congress provided that foreigners who invested $500,000 in the United States could immigrate, with their families, for two years, after which they could receive a permanent green card if the investment created at least ten jobs. The cash-for-green-card plan was the ultimate queue-jumping scheme, a fast track to citizenship. In 2011, two senators proposed a bill offering a similar cash incentive to boost the high-end housing market, which was still weak in the aftermath of the financial crisis. Any foreigner who bought a $500,000 house would receive a visa allowing the buyer, spouse, and minor children to live in the United States as long as they owned the property. A headline in The Wall Street Journal summed up the deal : BUY HOUSE, GET A VISA.
   Becker even proposed charging admission to refugees fleeing persecution. The free market, he claimed, would make it easy to decide which refugees to accept --- those sufficiently motivated to pay the price : "For obvious reasons, political refugees and those persecuted in their own countries would be willing to pay a sizable fee to gain admission to a free nation. So a fee system would automatically avoid time-consuming hearings about whether they are really in physical danger if they were forced to return home." 

MARKET REASONING RENDERS MORAL CONSIDERATIONS IRRELEVANT --- Episode 7

                 THE ECONOMIC APPROACH TO LIFE

                                  HEALTH BRIBES

    Health care is another area where cash incentives are in vogue. Increasingly, doctors, insurance companies, and employers are paying people to be healthy --- to take their medications, to quit smoking, to lose weight. You might think that avoiding disease or life-threatening ailments would be motivation enough. But, surprisingly, that's often not the case. One-third to one-half of patients fail to take their medications, as prescribed. When their conditions worsen, the overall result is billions of dollars a year in additional medical costs. So doctors and insurers are offering cash incentives to motivate patients to take their meds.
   In Philadelphia, patients prescribed warfarin, an anti-blood clot medication, can win cash rewards ranging from $10 to $100 for taking the drug. { A computerized pillbox records whether they take the drug and tells them whether they won that day. } Participants in the incentive scheme make an average of $90 per month for adhering to their prescriptions. In Britain, some patients with bipolar disorder or schizophrenia are paid 15 lbs (about $22) to show up for their monthly injection of antipsychotic drugs. Teenage girls are offered 45 lbs (about $68) in shopping vouchers to receive vaccinations that protect against a sexually transmitted virus that can cause cervical cancer. 
   Smoking imposes big costs on companies that provide health insurance to their workers. So in 2009, General Electric began paying some of its employees to quit smoking---$750 if they could quit for as long as a year. The results were so promising that GE extended the offer to all its U.S. employees. The Safeway grocery store chain offers lower health-insurance premiums to workers who don't smoke and who keep their weight, blood pressure, and cholesterol under control. A growing number of companies use some combination of carrots and sticks to motivate employees to improve their health. Eighty percent of big U.S. companies now offer financial incentives for those who participate in wellness programs. And almost haf penalize workers for unhealthy habits, typically by charging them more for health insurance. 
   Weight loss is the most alluring if intractable target of cash incentive experiments. The NBC reality show The Biggest Loser dramatizes the current craze of paying people to slim down. It offers $250,000 to the contestant who achieves the biggest proportional weight loss during the season. 
   Doctors, researchers, and employers have tried offering more modest incentives. In one U.S. study, a reward of a few hundred dollars motivated obese participants to shed about fourteen pounds in four months. (Unfortunately, the weight losses proved temporary.) In Britain, where the National Health Service spends 5 percent of its budget treating obesity-related diseases, the NHS tried paying overweight people up to 425 lbs (about $612) to lose weight and keep it off for two years. The scheme is called Pounds for Pounds.
   
   Two questions can be asked about paying people for healthy behavior : Does it work ? and, Is it objectionable ?

   From an economic point of view, the case for paying people for good health is a simple matter of costs and benefits. The only real question is whether incentive schemes work. If money motivates people to take their meds, quit smoking, or join a gym, thus reducing the need for expensive care later, why object ?
   And yet many do object.The use of cash incentives to promote healthy behavior generates fierce moral controversy. One objection is about fairness, the other about bribery. The fairness objection is voiced, in different ways, on both sides of the political spectrum. Some conservatives argue that overweight people should trim down on their own ; paying them to do so (especially with taxpayer funds) unfairly rewards slothful behavior. These critics see cash incentives as a "reward for indulgence rather than a form of treatment." Underlying this objection is the idea that "we can all control our own weight," so it's unfair to pay those who have failed to do so on their own---especially if the payments come, as they sometimes do in Britain, from the National Health Service. "Paying someone to ditch bad habits is the ultimate in nanny state mentality, absolving them of any responsibility for their health."
   Some liberals voice the opposite worry : that financial rewards for good health (and penalties for bad health) can unfairly disadvantage people for medical conditions beyond their control. Allowing companies or health insurers to discriminate between the healthy and the unhealthy in setting insurance premiums is unfair to those who, through no fault of their own, are less healthy and so at greater risk. It is one thing to give everyone a discount for joining a gym, but something else to set insurance rates based on health outcomes that many people can't control. 
   The bribery objection is more elusive. The press commonly calls health incentives bribes. But are they ? In the cash for sterilization scheme, the bribery is clear. { Giving heroin-addicted women monetary payments for voluntarily agreeing to undergo sterilization. You lawyers remember Buck v. Bell } Women are paid to relinquish their reproductive capacity not for their own good but for the sake of an external end --- preventing more drug-addicted babies. They are being paid to act, in many cases at least, against their interest.
   But the same can't be said of cash incentives to help people stop smoking or lose weight. Whatever external ends may be served (such as reducing health costs for companies or a national health service), the money encourages behavior that promotes the health of the recipient. So how is it a bribe ? Or, to ask a slightly differently question, why does the charge of bribery seem to fit, even though healthy behavior is in the interest of the person being bribed ?
   It fits, I think, because we suspect that the monetary motive crowds out other, better motives. Here's how : Good health is not only about achieving the right cholesterol level and body mass index. It is also about developing the right attitude to our physical well-being and treating our bodies with care and respect. Paying people to take their meds does little to develop such attitudes and may even undermine them. 
   This is because bribes are manipulative. They bypass persuasion and substitute an external reason for an intrinsic one. "You don't care enough about your own well-being to quit smoking or lose weight ? Then do it because I'll pay you $750." 
   Health bribes trick us into doing something we should be doing anyhow. They induce us to do the right thing for the wrong reason. Sometimes, it helps us to be tricked. It isn't easy to quit smoking or lose weight on our own. But eventually, we should rise above manipulation. Otherwise, the bribe may become habit forming.
   If health bribes work, worries about corrupting good attitudes toward health may seem hopelessly high-minded. If cash can cure us of obesity, why quibble about manipulation ? One answer is that a proper concern for our physical well-being is a part of self-respect. Another answer is more practical : absent the attitudes that sustain good health, the pounds may return when the incentives end.
   This seems to have happened in the paid weight-loss schemes that have been studied so far. Cash to quit smoking has shown a glimmer of hope. But even the most encouraging study found that more than 90 percent of smokers who were paid for kicking the habit were back to smoking six months after the incentives ended. In general, cash incentives seem to work better at getting people to show up for a specific event --- a doctor's appointment or an injection --- than at changing long-term habits and behaviors.
   Paying people to be healthy can backfire, by failing to cultivate the values that sustain good health. If this is true, the economist's question { "Do cash incentives work?" } and the moralist's question { "Are they objectionable ?"} are more closely connected than first appears. Whether an incentive "works" depends on goal. And the goal, properly conceived, may include values and attitudes that cash incentives undermine. 

MARKET REASON(NG RENDERS MORAL CO+NSIDERATIONS IRRELEVANT---Episode 6

                      USING MONETARY INCENTIVES 
                      TO SOLVE SOCIAL PROBLEMS 

   Paying people to be sterilized is one brazen example. Here's another : school districts across the United States now try to improve academic performance by paying children for getting good grades or high scores on standardized tests. The idea that cash incentives can cure what ails our schools looms large in the movement for educational reform. 
   Back in the 1950s, I heard of kids being paid by their parents for every A on their report card. Some considered this slightly scandalous. But it never occurred to anyone that the school itself might pay for good grades. I remember hearing that some major league baseball team had a promotion in those years that gave away free tickets to high school students who made the honor roll. This was of no value to Kilgore youngsters who made the honor roll, being as the closest major league baseball team was in St. Louis. Despite that, I don't think any of my friends thought of this as an incentive --- it was more of a publicity move. 
   Things are different now. More and more, financial incentives are seen as a key to educational improvement, especially for students in poorly performing urban schools. 
   A recent Time magazine cover put the question bluntly :"Should Schools Bribe Kids?" Some say it all depends on whether the bribes work. 
   Roland Fryer, Jr., an economics professor at Harvard, is trying to find out. Fryer, an African American who grew up in tough neighborhoods in Florida and Texas, believes that cash incentives may help motivate kids in the inner-city schools. Backed by foundation funding, he has tested his idea in several of the largest school districts in the United States. Beginning in 2007, his project paid out $6.3 million to students in 261 urban schools with predominantly African American and Hispanic populations from low-income families. Different incentive schemes were used in each city. 

* In New York City, participating schools paid fourth graders $25 to score well on standardized tests. Seventh graders could earn $50 per test. The average seventh grader made a total of $231.55. 

*In Washington, D.C., schools paid middle school students cash rewards for attendance, good behavior, and turning in their homework. Conscientious kids could make up to $100 every two weeks. The average student collected about $40 in the biweekly payoff and a total of $532.85 for the school year.

*In Chicago, they offered ninth graders cash for getting good grades in their courses : $50 for an A, $35 for a B, and $20 for a C. The top student made a handsome haul of $1,875 for the school year.

*In Dallas, they pay second graders $2 for each book they read. To collect, students have to take a computerized test to prove they've read the book. { The results of Fryer's studies are summarized in an article by Amanda Ripley, "Should Kids Be Bribed to Do Well in School?" Time, April 9, 2010 }. 

   The cash payments yielded mixed results. In New York City, paying kids for good test scores did nothing to improve their academic performance. The cash for good grades in Chicago led to better attendance but no improvement on standardized tests. In Washington, the payments helped some students { Hispanics, boys, and students with behavior problems } achieve higher reading scores. The cash worked best with the Dallas second graders ; the kids who got paid $2 per book wound up with higher reading comprehension scores at the end of the year. { Fryer, "Financial Incentives and Student Achievement" ; Bill Turque, "D.C. Students Respond To Cash Awards, Harvard Study Shows," Washington Post, April 10, 2010.} 
   Fryer's project is one of many recent attempts to pay kids to do better in school. Another such program offers cash for good scores on Advanced Placement exams. AP courses expose students to challenging college-level material in math, history, science, English and other subjects. In 1996, Texas launched the Advanced Placement Incentive Program, which pays students from $100 to $500 (depending on the school) for earning a passing grade(a score of 3 or higher) on AP exams. Their teachers are also rewarded, with $100 to $500for each student who passes the exam, plus additional salary bonuses. The incentive program, which now operates in sixty Texas high schools, seeks to improve the college readiness of minority and low-income students. A dozen states now offer financial incentives to students and teachers for success on AP tests. 
   Some incentive programs target teachers rather than students. Although teachers' unions have been wary of pay-for-performance proposals, the idea of paying teachers for the academic achievement of their students is popular among voters, politicians, and some educational reformers. Since 2005, school districts in Denver ; New York City ; Washington, D.C. ; Guilford County, North Carolina ; and Houston have implemented cash incentive schemes for teachers.  In 2006, Congress established the Teacher Incentive Program to provide pay-for-performance grants for teachers in low-achieving schools. The Obama administration increased funding for the program. Recently, a privately funded incentive project in Nashville offered middle school math teachers cash bonuses of up to $15,000 for improving the test scores of their students. 
   The bonuses in Nashville, sizable though they were, had virtually no impact on students' math performance. But the Advanced Placement incentive programs in Texas and elsewhere have had a positive effect. More students, including students from low-income and minority backgrounds, have been encouraged to take AP courses. And many are passing the standardized exams that qualify them for college credit. This is very good news. But it does not bear out the standard economic view about financial incentives : the more you pay, the harder students will work, and the better the outcome.  The story is more complicated.
   The AP incentive programs that have succeeded offer more than cash to students and teachers ; they transform the culture of schools and the attitudes of students toward academic achievement. Such programs provide special training for teachers, laboratory equipment, and organized tutoring sessions after school and on Saturdays. One tough urban school in Worster, Massachusetts, made AP classes available to all students, rather than to a preselected elite, and recruited students with posters featuring rap stars, "making it cool for boys with low-slung jeans who idolize rappers like Lil Wayne to take the hardest classes." The $100 incentive for passing the AP test at the end of the year was a motivator, it seems, more for its expressive effect than for the money itself. "There's something cool about the money," one successful student told The New York Times. "It's a great extra." The twice-weekly after-school tutoring sessions and eighteen hours of Saturday classes provided by the program also helped. 
   When an economist looked closely at the Advanced Placement incentive program in low-income Texas schools, he found something interesting : the program succeeded in boosting academic achievement but not in a way that the standard "price effect" would predict (the more you pay, the better the grades).  Although some schools paid $100 for a passing grade on the AP test, and others paid as much as $500, the results were no better in schools that offered the higher amounts. Students and teachers were "not simply behaving like revenue maximizers," wrote C. Kirabo Jackson, the author of the study. 
   So what was going on ? The money had an expressive effect --- making academic achievement "cool." That's why the amount was not more decisive. Although only AP courses in English, math, and science qualified for the cash incentives at most schools, the program also led to higher enrollment in other AP courses, such as history and social studies. The Advanced Placement incentive programs have succeeded not by bribing students to achieve but by changing attitudes toward achievement and the culture of schools. 






     

MARKET REASONING RENDERS MORAL CONSIDERATIONS IRRELEVANT ---Episode 5

                                                       TICKET SCALPING

                                 DOCTOR APPOINTMENTS

    Queuing for pay is not only an American phenomenon. In China the line-standing business has become routine at top Beijing hospitals. The market reforms of the last two decades have resulted in funding cuts for public hospitals and clinics, especially in rural areas. So patients from the countryside now journey to the major public hospitals in the capital, creating long lines in registration halls. They queue up overnight, sometimes for days, to get an appointment ticket to see a doctor. 

   The appointment tickets are a bargain --- only 14 yuan (about $2). But it isn't easy to get one. Rather than cam out for days and nights in the queue, some patients, desperate for an appointment, buy tickets from scalpers. The scalpers make a business of the yawning gap between supply and demand. They hire people to line up for appointment tickets and then resell the tickets for hundreds of dollars --- more than a typical peasant makes in a months. Appointments to see leading specialists are especially prized --- and hawked by the scalpers as if they were box seats for the World Series. The Los Angeles Times described the ticket-scalping scene outside the registration hall of a Beijing hospital : "Dr. Tang. Dr. Tang. Who wants a ticket for Dr. Tang ? Rheumatology and immunology." 

   There is something distasteful about scalping tickets to see a doctor.  For one thing, the system rewards unsavory middlemen rather than those who provide the care. Dr. Tang could well ask why, if a rheumatology appointment is worth $100, most of the money should go to scalpers rather than to him, or his hospital. Economists might agree and advise hospitals to raise their prices.  In fact, some Beijing hospitals have added special ticket windows, where the appointments are more expensive and the lines much shorter. This high-priced ticket window is the hospital's version of the no-wait premium pass at amusement parks or the fast-track lane at the airport --- a chance to pay to jump the queue. 

   But regardless of who cashes in on the excess demand, the scalpers or the hospital , the fast track to the rheumatologist raises a more basic question : Should patients be able to jump the queue for medical care simply because they can afford to ay extra ?

   The scalpers and special ticket windows at Beijing hospitals raise this question vividly. But the same question can be asked of a subtler form of queue jumping increasingly practiced in the U.S. ---the rise of "concierge" doctors. 

                                  CONCIERGE DOCTORS

    Although U.S. hospitals are not thronged with scalpers, medical care often involves a lot of waiting. Doctor appointments have to be scheduled weeks, sometimes months, in advance. When you show up for the appointment, you may have to cool your heels in the waiting room, only to spend a hurried ten or fifteen minutes with the doctor. The reason : Insurance companies don't pay primary care physicians much for routine appointments. So to make a decent living, physicians in general practice have rosters of three thousand patients or more, and often rush through twenty-five to thirty appointments per day.

   Many patients and doctors are frustrated with this system, which leaves little time for doctors to get to know their patients or to answer their questions. So a growing number of physicians now offer a more attentive form of care known as "concierge medicine." Like the concierge at a five-star hotel, the concierge physician is at your service around the clock. For annual fees ranging from $1,500 to $25,000, patients are assured of same-day appointments, no waiting, leisurely consultations, and twenty-four-hour access to the doctor by email and cell phone. And if you need to see a top specialist, your concierge doctor will pave the way. 

   To provide this attentive service, concierge physicians sharply reduce the number of patients they care for. Physicians who decide to convert their practice into a concierge service send a letter to their existing patients offering a choice : sign up for the new, no-wait service for an annual retainer fee, or find another doctor. 

   One of the first concierge practices, and one of the priciest, is "MD-squared, " founded in 1996 in Seattle. For a fee of $15,000 per year for an individual { $25,000 for a family } , the company promises "absolute, unlimited and exclusive access to your personal physician." Each doctor serves only fifty families.  As the company explains on its website, the "availability and level of service we provide absolutely necessitates that we limit our practice to a select few." An article in Town and Country magazine reports that the "MD-squared" waiting room "looks more like the lobby of a Ritz-Carlton than a doctor's office." But few patients even go there. Most are "CEOs and business owners who don't want to lose an hour out of their day to go to the doctor's office and prefer instead to receive care in the privacy of their home or office. "

   Other concierge practices cater to the upper middle class. MDVIP, a for-profit concierge chain based in Florida, offers same-day appointments and prompt service (answering your call by the second ring) for $1,500 to $1,800 per year, and accepts insurance payments for standard medical procedures. Participating physicians cut their patient rolls to six hundred, enabling them to spend more time with each patient. The company assures the patients that "waiting will not be a part of their health care experience." According to The New York Times, an MDVIP practice in Boca Raton sets out fruit salad and sponge cake in the waiting room. But since there is little if any waiting, the food often goes untouched.

   For concierge doctors and their paying customers, concierge care is everything medicine should be. Doctors can see eight to twelve patients a day, rather than thirty, and still come out ahead financially. Physicians affiliated with MDVIP keep two-thirds of the annual fee (one-third goes to the company), which means a practice with six hundred patients makes $600,000 per year in retainer fees alone, not counting reimbursements from insurance companies. For patients who can afford it, unhurried appointments and round-the-clock access to a doctor are luxuries worth paying for. 

   The drawback, of course, is that concierge care for a few depends on shunting everyone else onto the crowded rolls of other doctors. It therefore invites the same objection leveled against all fast-track schemes : that its unfair to those left languishing in the slow lane.

   Concierge medicine differs, to be sure, from the special ticket windows and the appointment-scalping system in Beijing. Those who can't afford a concierge doc can generally find decent health care elsewhere, while those who can't afford a scalper in Beijing are consigned to days and nights of waiting.

   But the two systems have this in common : each enables the affluent to jump the queue for medical care. The queue jumping is more brazen in Beijing than in Boca Raton. There seems a world of difference between the clamor of the crowded registration hall and the calm of the waiting room with uneaten sponge cake. But that's only because, by the time the concierge patient arrives for his or her appointment, the culling of the queue has already taken place, out of view, by the imposition of the fee. 

MARKET REASONING RENDERS MORAL CONSIDERATIONS IRRELEVANT ---Episode 4

                                  BREAKING IN LINE
                                                    or
                                 JUMPING THE QUEUE

   Nobody like to wait in line. Sometimes you can pay to jump the queue. It's long been known that, in fancy restaurants, a handsome tip to the maitre d' can shorten the wait on a busy night. Such tips are quasi bribes and handled discreetly. No sign in the window announces immediate seating for anyone willing to slip the host a fifty-dollar bill. But in recent years, selling the right to cut in line has come out of the shadows and become a familiar practice. 

                                               FAST TRACK 

   Long lines at airports security checkpoints make air travel an ordeal. But not everyone has to wait in the serpentine queues. Those who can buy first-class or business-class tickets can use priority lanes that take them to the front of the line for screening. British Airways calls it Fast Track, a service that also lets high-paying passengers jump the queue at passport and immigration control. 
   But most people can't afford to fly first-class, so the airlines have begun offering coach passengers the chance to buy line-cutting privileges as an a' la carte perk. For an extra $39, United Airlines will sell you priority boarding on your flight from Denver to Boston, along with the right to cut in line at the security checkpoint. In Britain,  London's Luton Airport offers an even more affordable fast-track option : wait in the long security line or pay 3 lbs. (about $5) and go to the head of the queue. 
   Critics complain that a fast track through airport security should not be for sale. Security checks, they argue, are a matter of national defense, not an amenity like extra legroom or early boarding privileges ; the burden of keeping terrorists off airplanes should be shared equally by all passengers. The airlines reply that everyone is subjected to the same level of screening ; only the wait varies by price. As long as everyone receives the same body scan, they maintain, a shorter wait in the security line is a convenience they should br free to sell. 
   Amusement parks have also started selling the right to jump the queue. Traditionally, visitors may send hours waiting in line for the most popular rides and attractions. Now, Universal Studios Hollywood and other theme parks offer a way to avoid the wait : for about twice the price of standard admission, they'll sell you a pass that lets you go to the head of the line. Expedited access to the REVENGE OF THE MUMMY thrill ride may be morally less freighted than privileged access to an airport security check. Still, some observers lament the practice, seeing it as corrosive of a wholesome civic habit : "Gone are the days when the theme-park queue was the great equalizer," one commentator wrote, "where every vacationing family waited its turn in a democratic fashion."
   Interestingly,amusement parks often obscure the special privileges they sell. To avoid offending ordinary customers, some parks usher their premium guests through back doors and separate gates ; others provide an escort to ease the way of VIP guests as they cut in line. This need for discretion suggests that paid line cutting ---even in an amusement park --- tugs against a nagging sense that fairness means waiting your turn. But no such reticence appears on Universal's online ticket site, which touts the $149 Front of Line Pass with unmistakable bluntness:"Cut to the FRONT at all rides, shows, and attractions !" 
   If you're put off by queue jumping at amusement parks, you might opt instead for a traditional tourist sight, such as the Empire State Building. For $22 ($16 for kids) , you can ride the elevator to the eighty-sixth-floor observatory and enjoy a spectacular view of New York City. Unfortunately, the site attracts several million visitors a year, and the wait for the elevator can sometimes take hours. So the Empire State Building now offers a fast track of its own. For $45 per person, you can buy an Express Pass that lets you cut in line---for both the security check and the elevator ride. Shelling out $180 for a family of four may seem a steep price for a fast ride to the top. But as the ticketing website points out, the Express Pass is "a fantastic opportunity" to "make the most of your time in New York ---and the Empire State Building --- by skipping the lines and going straight to the greatest views." 

                                                 LEXUS LANES 

   The fast-track trend can also be seen on freeways across the United States. Increasingly, commuters can buy their way out of bumper-to-bumper traffic and into a fast-moving lane. It began during the 1980s with car pool lanes. Many states, hoping to reduce traffic congestion and air pollution, created express lanes for commuters willing to share a ride. Solo drivers caught using the car pool lanes faced hefty fines. Some put blow-up dolls in the passenger seat in hopes of fooling the highway patrol. Supposedly, a few men hired prostitutes---not to have sex---but to ride in the car on the way to some destination that the driver deemed critical. 
   Today, many commuters can do the same --- without the need for hired help. For fees of up to $10 during rush hour, solo drivers can buy the right to use car pool lanes. San Diego, Minneapolis, Houston, Denver, Miami, Seattle, and San Francisco are among the cities that now sell the right to a faster commute. The toll typically varies according to the traffic ---the heavier the traffic, the higher the fee. {In most places, cars with two or more occupants can still use express lanes for free.} On the Riverside Freeway, east of Los Angeles, rush-hour traffic creeps along at 15-20 miles an hour in the free lanes, while the paying customers in the express lane zip by at 60-65 mph. 
   Some people object to the idea of selling the right to jump the queue. They argue that the proliferation of fast-track schemes adds to the advantages of affluence and consigns the poor to the back of the line. Opponents of paid express lanes call them "Lexus Lanes" and say they are unfair to commuters of modest means. Others disagree. They argue that there is nothing wrong with charging for faster service. Federal Express charges a premium for overnight delivery. The local dry cleaners charges extra for same-day service. And yet no one complains that it' unfair for FedEx, or the dry cleaner, to deliver your parcel or launder your shirts ahead of someone else's. 
   To an economist, long lines for goods and services are wasteful and inefficient, a sign that the price system has failed to align supply and demand. Letting people pay for faster service at airports, at amusement parks, and on highways improves economic efficiency by letting people put a price on their time. 

MARKET REASONING RENDERS MORAL CONSIDERATIONS IRRELEVANT --- Episode 3

              LET'S RETHINK THE ROLE OF MARKETS 

   Even if you agree that we need to grapple with big questions about the morality of markets, you might doubt that our public discourse is up to the task. It's a legitimate worry. Any attempt to rethink the role and the reach of markets should begin by recognizing that there are daunting obstacles.
   One such obstacle is the persisting power and prestige of market thinking, even in the aftermath of the worst market failure in eighty years. Another obstacle is the rancor and emptiness of our public discourse. Those two conditions are not entirely unrelated. 
   The first obstacle is puzzling. At the time, the financial crisis of 2008 was widely seen as a moral verdict on the uncritical embrace of markets that had prevailed, across the political spectrum, for three decades. The near collapse of once-mighty Wall Street financial firms,and the need for a massive bailout at taxpayers' expense, seemed sure to prompt a reconsideration of markets. Even Alan Greenspan, who as chairman of the U.S. Federal Reserve had served as high priest of the market triumphalist faith, admitted to "a state of shocked disbelief" that his confidence in the self-correcting power of free markets turned out to be mistaken. { Edmund L. Andrews, "Greenspan Concedes Error on Regulation," New York Times, October 24, 2008. } The cover of The Economist, the buoyantly pro-market British magazine, showed an economics textbook melting into a puddle, under the headline WHAT WENT WRONG WITH ECONOMICS. 
   The era of market triumphalism had come to a devastating end. Now, surely, would be a time of moral reckoning, a season of sober thoughts about the market faith. But things haven't turned out that way.
   The spectacular failure of financial markets did little to dampen the faith in markets generally. In fact the financial crisis discredited government rather than the banks. In 2011, surveys found that the American public blamed the federal government more than Wall Street financial institutions for the economic problems facing the country --- by a margin of more than two to one.
   The financial crisis had pitched the United States and much of the global economy into the worst economic downturn since the Great Depression and left millions of good, decent people out of work. Yet it did not prompt a fundamental rethinking of markets. Instead, its most notable political consequence in the United States was the rise of the whacko Tea Party movement, whose hostility to government and embrace of free markets would have made Ronald Reagan blush. In the fall of 2011, the Occupy Wall Street movement brought protests to cities throughout the United States and around the world. These protests targeted big banks and corporate power, and the rising inequality of income and wealth. Despite their different ideological orientations, both the Tea Party and Occupy Wall Street activists gave voice to populist outrage against the bailout. 
   Then there's the moral vacancy of contemporary politics. This vacancy has a number of sources. One is an attempt to banish notions of the good life from public discourse. In hopes of 
avoiding sectarian strife, we often insist that citizens leave their moral and spiritual convictions behind when they enter the public square. But despite its good intention, the reluctance to admit arguments about the good life into politics prepared the way for market triumphalism and for the continuing hold of market reasoning. 
   In its own way, market reasoning also empties public life of moral argument. Part of the appeal of markets is that they don't pass judgment on the preferences they satisfy. They don't ask whether some ways of valuing goods are higher, or worthier, than others. If someone is willing to pay for sex or a kidney, and a consenting adult is willing to sell, the only question the economist asks is, "How much ?" Markets don't wag fingers. They don't discriminate between admirable preferences and base ones. Each party to a deal decides for himself or herself what value to place on the things being exchanged. 
   This nonjudgmental stance toward values lies at the heart of market reasoning and explains much of its appeal. But our reluctance to engage in moral and spiritual argument, together with our embrace of markets, has exacted a heavy price ; it has drained public discourse of moral and civic energy, and contributed to the technocratic, managerial politics that afflicts many societies today.
   A debate about the moral limits of markets would enable us to decide, as a society, where markets serve the public good and where they don't belong.  It would also invigorate our politics, by welcoming competing notions of the good life into the public square. For how else could such arguments proceed ? If you agree that buying and selling certain goods corrupts or degrades them, then you must believe that some ways of valuing these goods are more appropriate than others. It hardly makes sense to speak of corrupting an activity --- parenthood, say, or citizenship --- unless you think that some ways of being a parent, or a citizen, are better than others.
   Moral judgments such s these lie behind the few limitations on markets we still observe. We don't allow parents to sell their children or citizens to sell their votes. And one of the reasons we don't is, frankly, judgmental : we believe that selling these things values them in the wrong way and cultivates bad attitudes. 
   Thinking through the moral limits of markets makes these questions unavoidable. It requires that we reason together, in public, about how to value the social goods we prize. It would be folly to expect that a morally more robust public discourse, even at its best, would lead to agreement on every contested question. But it would make for a healthier public life. And it would make us more aware of the price we pay for living in a society where everything is up for sale. 
   When we think of the morality of markets, we think first of Wall Street banks and their reckless misdeeds of hedge funds and bailouts and regulatory reform. But the moral and political challenge we face today is more pervasive and more mundane --- to rethink the role and reach of markets in our social practices, human relationships, and everyday lives. 

MARKET REASONING RENDERS MORAL CONSIDERATIONS IRRELEVANT --- Episode 2

                                             EVERYTHING FOR SALE 


   Why worry that we are moving toward a society in which everything is up for sale ? For two reasons : one is about inequality ; the other is about corruption. Consider inequality. In a society where everything is for sale, life is harder for those of modest means. The more money can buy, the more affluence (or the lack of it ) matters.
   As pointed out yesterday, if the only advantage of affluence were the ability to buy yachts, sports cars, and fancy vacations, inequalities of  income and wealth would not matter. But as money comes to buy more and more---political influence, good medical care, a home in a safe neighborhood rather than a crime-ridden one, access to elite schools rather than failing ones---the distribution of income and wealth looms larger and larger. Where all good things are bought and sold, having money makes all the difference in the world.
   This explains why the last few decades have been especially hard on poor and middle-class families. Not only has the gap between rich and poor widened, the commodification of everything has sharpened the sting of inequality by making money matter more. 
   The second reason we should hesitate to put everything up for sale is more difficult to describe. Putting a price on the good things in life can corrupt them. That's because markets don't only allocate goods ; they also express and promote certain attitudes toward the goods being exchanged. Paying kids to read books might get them to read more, but also teach them to regard reading as a chore rather than a source of intrinsic satisfaction. Auctioning seats in the freshman class to the highest bidders might raise revenue but also erode the integrity of the college and the value of its diploma. Hiring foreign mercenaries to fight our wars might spare the lives of our citizens but corrupt the meaning of citizenship. 
   Economists often assume that markets are inert, that they do not affect the goods they exchange. But this is untrue. Markets leave their mark. Sometimes, market values crowd out nonmarket values worth caring about. 
   Of course, people disagree about what values are worth caring about, and why. So to decide what money should --- and should not ---be able to buy, we have to decide what values should govern the various domains of social and civic life. How to think this through is what we should be concerned about. 
   Here's a preview of the answer that I hope to get across to you wonderful people : when we decide that certain goods may be bought and sold, we decide, at least implicitly, that it is appropriate to treat them as commodities, as instruments of profit and use. But not all goods are properly valued in this way. The most obvious example is human beings. Slavery was appalling because it treated human beings as commodities, to be bought and sold at auction. Such treatment fails to value human beings in the appropriate way --- as persons worthy of dignity and respect, rather than as instruments of gain and objects of use.
   Something similar can be said of other cherished gods and practices. We don't allow children to be bought and sold on the market. Even if buyers did not mistreat the children they purchased, a market in children would express and promote the wrong way of valuing them. Children are not properly regarded as consumer goods but as beings worthy of love and care. Or consider the rights and obligations of citizenship. If you are called to jury duty, you may not hire a substitute to take your place. Nor do we allow citizens to sell their votes, even though others might be eager to buy them. Why not ? Because we believe that civic duties should not be regarded a private property but should be viewed instead as public responsibilities. To outsource them is to demean them, to value them in the wrong way. 
   These examples illustrate a broader point : some of the good things in life are corrupted or degraded if turned into commodities.  So to decide where the market belongs, and where it should be kept at a distance, we have to decide how to value the goods in question --- health, education, family life, nature, art, civic duties, and so on. These are moral and political questions, not merely economic ones. To resolve them, we have to debate,case by case, the moral meaning of these goods and the proper way of valuing them. 
   This a debate we didn't have during the era of market triumphalism. As a result, without quite realizing it, without ever deciding to do so, we drifted from having a market economy to being a market society. 
   The difference is this : A market economy is a tool --- a valuable and effective tool ---for organizing productive activity. A market society is a way of life in which market values seep into every aspect of human endeavor. It's a place where social relations are made over in the image of the market.
   The great missing debate in contemporary politics is about the role and reach of markets. Do we want a market economy or a market society ? What role should markets play in public life and personal relations ? How can we decide which goods should be bought and sold, and which should be governed by nonmarket values ? Where should money's writ not run ?
   These are the questions that I want to address. Since they touch on contested visions of the good society and the good life, I obviously can't guarantee definitive answers.ButI hope at least to prompt public discussion of these questions, and to provide a philosophical framework for thinking them through. 




                               

Market Reasoning Renders Moral Considerations Irrelevant---Episode 1

                           THE ERA OF MARKET TRIUMPHALISM

   The years leading up to the financial crisis of 2008 were a heady time of market faith and deregulation --- an era of market triumphalism. The era began in the early 1980s, when Ronald Reagan and Margaret Thatcher proclaimed their convictions that markets, not government, held the key to prosperity and freedom. And it continued into the 1990s, with the market--friendly liberalism of Bill Clinton and Tony Blair, who moderated but consolidated the faith that markets are the primary means for achieving the public good. 
   Today, that faith is in doubt. The era of market triumphalism has come to an end. The financial crisis did more than cast doubt on the ability of markets to allocate risk efficiently. It also prompted a widespread sense that markets have  become detached from  morals and that we need somehow to reconnect them. But it's not obvious what this would mean, or how we should go about it. 
   Some say that the moral failing at the heart of market triumphalism was greed, which led to irresponsible risk taking. The solution, according to this view, is to rein in greed, insist on greater integrity and responsibility among bankers and Wall Street executives, and enact sensible regulations to prevent a similar crisis from happening again. 
   This is, at best, a partial diagnosis. While it is certainly true that greed played a role in the financial crisis, something bigger is at stake. The most fateful change that unfolded during the past three decades was not an increase in greed. It was the expansion of markets, and of market values, into spheres of life where they don't belong. To contend with this condition, we need to do more than inveigh against greed ; we need to rethink the role that markets should play in our society. We need a public debate about what it means to keep markets in their place.  To have this debate, we need to think through the moral limits of markets. We need to ask if there are some things money should not buy. 
   The reach of markets, and market-oriented thinking, into aspects of life traditionally governed by nonmarket norms is one of the most significant developments of our time. 
   Consider the proliferation of for-profit schools, hospitals, and prisons, and the outsourcing of war to private military contractors. { In Iraq and Afghanistan, private contractors actually outnumber U.S. military troops.-----(T. Christian Miller, "Contractors Outnumber Troops in Iraq," Los Angeles Times, July 4, 2007; James Glanz, "Contractors Outnumber U.S. Troops in Afghanistan," New York Times, September 2, 2009). } 
   Consider the eclipse of public police forces by private security firms --- especially in the United States and Britain, where the number of private guards is more than twice the number of public police officers. { "Policing for Profit : Welcome to the New World of Private Security," Economist, April 19, 1997. } 
   Or consider the pharmaceutical companies' aggressive marketing of prescription drugs to consumers in rich countries. If you've ever seen television commercials on the evening news in the United States, you could be forgiven for thinking that the greatest health crisis in the world is NOT malaria or river blindness or sleeping sickness, but a RAMPANT EPIDEMIC OF ERECTILE DYSFUNCTION. 
   Consider too the reach of commercial advertising into public schools ; the sale of "naming rights" to parks and civic spaces ; the marketing of "designer eggs and sperm" for assisted reproduction ; the outsourcing of pregnancy to surrogate mothers in the developing world; the buying and selling, by companies and countries, of the right to pollute ; a system of campaign finance that comes damn close to the buying and selling of elections. 
   These uses of markets to allocate health, education, public safety, national security, environmental protection, recreation, procreation, and other social goods were for the most part unheard of thirty years ago. Today, we take them largely for granted.