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.