President Trump assigned his son-in-law Jared Kushner to head up the effort to make the federal government more like a business. Trump has already been a leader in this effort by engaging in the same sort of nepotism that occurs in business. While it is certainly tempting to dismiss this appointment as more nepotism, it is worth considering whether government should be more like a business.
The idea that government should be more like a business is certainly appealing to those who education, experience and values relate to business. It is natural for people to see the world through the lens of their experiences and education. It is also natural to want to apply the methods that one is most familiar with to as many areas as possible. For example, my education is in philosophy and I have extensive experience in critical thinking, logic and ethical reasoning. As such, I tend to see the world through the philosophical lens and I want to apply critical thinking, logic and ethical reasoning whenever I can. Likewise, those who are educated and experienced in business see the world through the business lens and wish to broadly apply their business skills and methods.
A reasonable case can be made as to why this business focused approach has some merit. One way to argue for this is to point out that many skills that are developed in the context of business can be applied to government. For example, negotiating and deal making skills can be applied to politics—although there are certainly differences between the specifics of each area. As another example, business leadership and management skills can also be applied in government, although there are clearly relevant differences between the two areas. It would thus be a mistake to claim that government is nothing like a business. That said, those enamored of business often make mistakes in their zeal to “businessform” government (that is, transform it into business).
One basic mistake is to think that just because there are positive qualities of business that are also positive qualities of government, making government more like a business will bring about those positive qualities. Obviously enough, making one thing more like another only results in positive qualities if they are made alike in those positive ways. Merely making them alike in other ways does not do this. To use an analogy, dressing like a runner makes one like a runner, but this does not confer the health benefits of running.
There is also the fact that although things that have similar positive qualities are thus similar, it does not follow that they are thus otherwise alike in relevant ways. For example, efficiency is a positive quality of business and government, but merely making government like business need not make it more efficient. There are, after all, business that are very inefficient.
Also, the fact that efficiency can be a positive quality of both business and government does not entail they are thus alike in other ways or that the way business is made more efficient is the way to make government more efficient. To illustrate, a business might be very efficient at exploiting customers and workers while enriching the stockholders, but that is presumably not the sort of efficiency one would aim for in government.
Avoiding this mistake involves resisting the mythology and fetishizing of “businessifictaion” and giving due consideration to which skills, methods and approaches transfer well from business to government and which do not.
A second basic mistake is similar to that made by Ion in Plato’s dialogue Ion. The rhapsode Ion believes, at the start of the dialogue, that poets have knowledge and mastery about almost everything. His reasoning is that because poets write about, for example military matters, they have an expertise in military matters. As such, poets should be able to teach people about these matters and serve as leaders in all these areas.
Socrates, as would be expected, shows that the poets (as poets) do not have such knowledge. The gist of his argument is that each area is mastered by mastering the subject of that area and all these areas “belong” to others and not to the poets. For example, knowledge of waging war belongs to soldiers. The poets touch but lightly on these other areas and understand only the appearances and not the depth. Socrates does note that a person can have multiple domains of mastery, so a medical doctor could, for example, also be skilled at mathematics or art history.
The error in the case of business is to think that because there are many types of business and almost everything has some connection to business, then an alleged mastery of business confers mastery over all these things. However, business skills are rather distinct from the skills that are specific to the various types of businesses. To illustrate, while a manager might believe that their managing skills are universal, managing a software company does not confer software skills nor does managing a hospital confer medical skills. One might pick up skills and knowledge, but this would not be as a businessperson. After all, while a business person might be a runner, that does not make running a business. The fact that there are businesses associated with running, such as Nike, does not entail that skill in business thus confers skill in running. As such, for someone to think that business skills thus confer mastery over government would be a mistake. They might believe that they have such mastery because government interacts with business and some businesses do things like what government does, but they would be as mistaken as someone who thinks that because they manage a Nike outlet they are thus an athlete.
The American anarchist Henry David Thoreau presents what has become a popular conservative view of the effect of government upon business: “Yet this government never of itself furthered any enterprise, but by the alacrity with which it got out of its way…Trade and commerce, if they were not made of India-rubber, would never manage to bounce over obstacles which legislators are continually putting in their way…”
While this sort of laissez faire view of the role of the state in business is often taken as gospel, there is the question of whether Thoreau is right. While I do find his anarchism appealing, there are some problems with his view.
Thoreau is quite right that the government can be employed to thwart and impede enterprises—this is often done by granting special advantages and subsidies to certain companies or industries, thus impeding their competitors. However, he is mistaken in his claim that the government has never “furthered any enterprise.” I will begin with the easy and obvious reply to this claim.
Modern business could not exist without the physical and social infrastructure provided by the state. In terms of the physical infrastructure, businesses need the transportation infrastructure provided by the state. The most obvious aspect of this infrastructure is the system of roads that is paid for by the citizens and maintained by the government (that is, the citizens acting collectively). Without such roads, most businesses could not operate—products could not be moved effectively and customers would be hard pressed to reach the businesses.
Perhaps even more critical than the physical infrastructure is the social infrastructure that is created by the government (that is, the people acting collectively and through officials). The social infrastructure includes the legal system, laws, police services, military services, diplomatic services and so on for the structures that compose the governmental aspects of society.
For example, companies in the intellectual property business (which ranges from those dealing in the arts to pharmaceutical companies) require the existence of the legal system and law enforcement. After all, if the state did not enforce the drug patents, the business model of the major pharmaceutical companies would be destroyed.
As another example, companies that do business internationally require the government’s military and diplomatic services to enable their business activities. In some cases, this involves the explicit use of the military in the service of business. In other cases, it is the gentler hand of diplomacy that advances American business around the world.
All businesses rely on the currency system made possible by the state and they are all protected by the police. While there are non-state currencies (such as bitcoin) and companies can hire mercenaries; these options are generally not viable for most businesses. All of this seems to clearly show that the state plays a critical role in allowing business to exist. This can, however, be countered.
It could be argued that while the state is necessary for business (after all, there is little in the way of business in the state of nature), it does nothing else beyond that and should just get out of the way to avoid impeding business. To use an analogy, someone must build the stadium for the football game, but they need to get out of the way when it is time for the players to play. The obvious reply to this is to show how the state has played a very positive role in the development of business.
The United States has made a practice of subsidizing and supporting what have been regarded as key businesses. In the 1800s, the railroads were developed with the assistance of the state. The development of the oil industry depended on the state, as did the development of modern agriculture. It could, of course, be objected that this subsidizing and support are bad things—but they are certainly not bad for the businesses that benefit.
Another area where the state has helped advance business is in funding and engaging in research. This is often research that would be too expensive for private industry and research that requires a long time to yield benefits. One example of this is the development of space technology that made everything involving satellites possible. Another example is the development of the internet—which is the nervous system of the modern economy. The BBC’s “50 Things that Made the Modern Economy” does an excellent analysis of the role of governments in developing the technology that made the iPhone possible (and all smart phones).
One reason the United States has been so successful in the modern economy has been the past commitment of public money to basic research. While not all research leads to successful commercial applications (such as computers), the ability of the collective (us acting as the state) to support long term and expensive research has been critical to the advancement of technology and civilization.
This is not to take away from private sector research, but much of it is built upon public sector foundations. As would be expected, private sector research now tends to focus on short term profits rather than long term research. Unfortunately, this view has infected the public sector as well—as public money for research is reduced, public institutions seek private money and this money often comes with strings and the risk of corruption. For example, “research” might be funded to “prove” that a product is safe or effective. While this does yield short term gains, it will lead to a long-term disaster.
The state also helps further enterprise through laws regulating business. While this might seem like a paradox, it is easily shown by using an analogy to the role of the state in regulating the behavior of citizens.
Allowing business to operate with no regulation would be like allowing individuals to operate without regulations. While this might seem appealing, for an individual to further their life, they need protections from others who might threaten their life, liberty and property. To this end, laws are created and enforced to protect people. The same applies to protecting businesses from other businesses (and businesses from people and people from businesses). This is, of course, the stock argument for having government rather than the unregulated state of nature. As Hobbes noted, a lack of government can become a war of all against all and this ends badly for everyone. The freer the market gets, the closer it gets to this state of nature—a point well worth remembering.
It might be assumed that I foolishly think that all government involvement in business is good and that all regulation is desirable. This is not the case. Governments can wreck their own economies through corruption, bad regulations and other failures. Regulations are like any law—they can be good or bad, depending on what they achieve. Some regulations, such as those that encourage fair competition in business, are good. Others, such as those that grant certain companies unfair legal and financial advantages (you might be thinking of Monsanto here), are not.
While rhetorical bumper stickers about government, business and regulation are appealing in a simplistic way, the reality of the situation requires more thought and due consideration of the positive role the state can play—with due vigilance against the harms that it can do.
The scene is a bakery in a small town in Indiana. Ralph and Sally, a married couple, run the Straight Bakery with the aid of the pretty young Ruth. Dr. Janet and her fiancé Andrea enter the shop, looking to buy a cake.
Sally greets them with a pleasant smile, which quickly fades when she finds out that Janet and Andrea are a lesbian couple. Pointing at the door, she says “baking you a wedding cake would violate my religious beliefs. Go find Satan’s baker! Leave now!” The couple leave the shop, planning to drive to the next town—their small town has but one bakery.
At the end of the day, Sally leaves the shop. Ralph says he will help Ruth close up the shop. After Sally leaves, Ralph and Ruth indulge in some adultery.
Indiana has recently gotten nation attention for its version of the Religious Freedom Restoration Act. The bill would prevent state and local governments in Indiana from “substantially burdening” the exercise of religion unless it can be proven the state has a compelling interest and is using the least restrictive means for acting on that interest.
Proponents of the bill claim that it is aimed to protect people, such as business owners, with strong religious beliefs from the intrusion of the state. Those who oppose the bill note that it would legalize discrimination and that it is aimed at gays and lesbians. Many other states have similar laws, but some of them have laws that protect people from discrimination based on sexual orientation.
Since the law cannot specify individual religions for protection, it is likely to lead to some interesting consequences, possibly involving Satanism—as happened in my adopted state of Florida. While the legal aspects of this matter are rather important, as a philosopher my main concern is with the ethics of the matter.
On the face of it, religious freedom seems to be good—after all, it would seem to fall under the broader liberty of thought and belief (which is ably supported by Mill in his work on liberty). As such, the bill initially seems to be a morally reasonable defense of a well-established right.
The bill, as opponents argue, would certainly seem to allow people to discriminate against others, provided that they can justify their discrimination on religious grounds. The law cannot, obviously, require that a religion be true, rational, consistent, sensible or even sane—all religions are equally protected. This, of course, could lead to some serious consequences.
Driving home, Sally’s car is struck by a delivery van and she is badly injured. Luckily, Dr. Janet and Andrea (a trained nurse) are right behind the van. As Dr. Janet and Andrea rush to help, they see it is Sally. Dr. Janet, a devout member of the Lesbian Church, has sworn to God that she will not treat any straight bigots. Looking down at the dying Sally, Dr. Janet says “saving you would violate my sincerely held religious beliefs. Sorry. Perhaps you can find another doctor.” Sally dies.
The obvious counter to this sort of scenario is that religious freedom does not grant a person the liberty to deny a person an essential service, such as medical treatment. Using the standard principle of harm as a limit on liberty, the freedom of religion ends when it would cause unwarranted harm to another person. It could also be argued that the moral obligation to others would override the religious freedom of a person, compelling her to act even against her religious beliefs. If so, it would be wrong of Dr. Janet and Andrea to let Sally die. This, of course, rests on either the assumption that harm overrides liberty or the assumption that obligations override liberty. There are well-established and reasonable arguments against both of these assumptions. That said, it would certainly seem that the state would have a compelling interest in not allowing doctors, pharmacists, and others to allow people to die or suffer harm because of their religious beliefs. But, perhaps, religious freedom trumps all these considerations.
After having a good time with Ruth, Ralph showers off the evidence of his sins and then heads for home. Ruth helps herself to some of the money from the register and adjusts the spreadsheet on the business PC to cover up her theft.
Ralph is horrified to learn that Sally has been killed. He takes her to the only funeral home in town, run by the Marsh family (who moved there from Innsmouth). Unfortunately for Ralph, the Marsh family members are devoted worshippers of Dagon and their religious beliefs forbid them from providing their services to Christians. After being ejected from the property, Ralph tries to drive Sally’s body to the next town, but his truck breaks down.
He finds that the nearest shop is Mohamed’s Motors, a Muslim owned business. Bob, the tow truck driver, says that while he is generally fine with Christians, he is unwilling to tow a Christian’s truck. He does recommend his friend Charlie, a Jewish tow truck driver who is willing to tow Christians, provided that it is not on the Sabbath and the Christian is not a bigot. Ralph cries out to God at the injustices he has suffered, forgetting that he has reaped what he has sown.
In the case of these sorts of important, but not essential, services it could be argued that people would have the right to discriminate. After all, while the person would be inconvenienced (perhaps extremely so), the harm would not be large enough to make the refusal morally wrong. That is, while it would be nice of Bob to tow Ralph’s truck, it would not be wrong for him to refuse and he is under no obligation to do so. It might, of course, be a bad business decision—but that is another matter entirely.
If appeals to harm and obligations fail, then another option is to argue from the social contract. The idea is that people who have businesses or provide services do not exist in a social vacuum: they operate within society. In return for the various goods of society (police protection, protection of the laws, social rights and so on) they are required to render their services and provide their goods to all the members of the civil society without discrimination. This does not require that they like their customers or approve of them. Rather, it requires that they honor the tactic contract: in return for the goods of society that allow one to operate a business, one must provide goods and services to all members of the society. That is the deal one makes when one operates a business in a democratic society that professes liberty and justice for all.
Obviously, people do have the right to refuse goods and services under certain conditions. For example, if a customer went into Ralph & Ruth’s Bakery (Ralph moved on quickly) and insulted Ruth, urinated on the floor and demanded they give him a half price discount, Ruth would be justified in refusing to make him a cake. After all, his behavior would warrant such treatment. However, refusing a well-behaved customer because she is gay, black, Christian, or a woman would not be justified. This is because those qualities are not morally relevant to refusing services. Most importantly, freedom of religion is not a freedom to discriminate.
It might be countered that the government has no right to force a Christian to bake a wedding cake for a gay couple. This is true, in that the person can elect to close his business rather than bake the cake. However, he does not have the moral right to operate a business within civil society if he is going to unjustly discriminate against members of that society. So, in that sense, the state does have the right to force a Christian to bake a wedding cake for a gay couple, just as it can force him to bake a cake for a mixed-race couple, a Jewish couple, or an atheist couple.
With the start of a new semester, I have gotten a bit behind on my blogging. But, since I am working on a book on rhetorical devices, I have an easy solution; here is an example from the book:
When I was a kid, people bought used cars. These days, people buy fine pre-owned vehicles. There is (usually) no difference between the meanings of “used car” and “pre-owned” car—both refer to the same thing, namely a car someone else has owned and used. However, “used” sounds a bit nasty, perhaps suggesting that the car might be a bit sticky in places. By substituting “pre-owned” for “used”, the car sounds somehow better, although it is the same car whether it is described as used or pre-owned.
If you need to make something that is negative sound positive without actually making it better, then a euphemism would be your tool of choice. A euphemism is a pleasant or at least inoffensive word or phrase that is substituted for a word or phrase that means the same thing but is unpleasant, offensive otherwise negative in terms of its connotation. To use an analogy, using a euphemism is like coating a bitter pill with sugar, making it easier to swallow.
Euphemisms and some other rhetorical devices make use of the fact that words or phrases have connotations as well as denotations. Put a bit simply, the denotation of a term is the literal meaning of the term. The connotation of the term is its emotional association. Terms can have the same denotation but very different connotations. For example “child” and “rug rat” have rather different emotional associations.
The way to use a euphemism is to replace the key words or phrases that are negative in their connotation with those that are positive (or at least neutral). Naturally, it helps to know what the target audience regards as positive words, but generically positive words can do the trick quite well.
The defense against a euphemism is to replace the positive term with a neutral term that has the same meaning. For example, for “an American citizen was inadvertently neutralized during a drone strike”, the neutral presentation would be “An American citizen was killed during a drone strike.” While “killed” does have a negative connotation, it does describe the situation with more neutrality.
In some cases, euphemisms are used for commendable reasons, such as being polite in social situations or to avoid exposing children to “adult” concepts. For example, at a funeral it is considered polite to refer the dead person as “the departed” rather than “the corpse.”
“Pre-owned” for “used.”
“Neutralization” for “killing.”
“Freedom fighter” for “terrorist”
“Revenue enhancement” for “tax increase.”
“Down-sized” for “fired.”
“Between jobs” for “unemployed.”
“Passed” for “dead.”
“Office manager” for “secretary.”
“Custodian” for “janitor.”
“Detainee” for “prisoner.”
“Enhanced interrogation” for “torture.”
“Self-injurious behavior incidents” for “suicide attempts.”
“Adult entertainment” or “adult material” for “pornography.”
“Sanitation engineer” for “garbage man.”
“Escort”, “call girl”, or “lady of the evening” for “prostitute.”
“Gentlemen’s club” for “strip club.”
“Exotic dancer” for “stripper”
“A little thin on top” for “bald.”
“In a family way” for “pregnant.”
“Sleeping with” for “having sex with.”
“Police action” for “undeclared war.”
“Downsized” for “fired.”
“Wardrobe malfunction” for “exposure.”
“Commandeer” for “steal.”
“Modify the odds in my favor” for “cheat.”
Hero of Alexandria (born around 10 AD) is credited with developing the first steam engine, the first vending machine and the first known wind powered machine (a wind powered musical organ). Given the revolutionary impact of the steam engine centuries later, it might be wondered why the Greeks did not make use of these inventions in their economy. While some claim that the Greeks simply did not see the implications, others claim that the decision was based on concerns about social stability: the development of steam or wind power on a significant scale would have certainly displaced slave labor. This displacement could have caused social unrest or even contributed to a revolution.
While it is somewhat unclear what prevented the Greeks from developing steam or wind power, the Roman emperor Vespasian was very clear about his opposition to a labor saving construction device: he stated that he must always ensure that the workers earned enough money to buy food and this device would put workers out of work.
While labor saving technology has advanced considerably since the time of Hero and Vespasian, the basic questions remain the same. These include the question of whether to adopt the technology or not and questions about the impact of such technology (which range from the impact on specific individuals to the society as a whole).
Obviously enough, each labor saving advancement must (by its very nature) eliminate some jobs and thus create some initial unemployment. For example, if factory robots are introduced, then human laborers are displaced. Obviously enough, this initial impact tends to be rather negative on the displaced workers while generally being positive for the employers (higher profits, typically).
While Vespasian expressed concerns about the impact of such labor saving devices, the commonly held view about much more recent advances is that they have had a general positive impact. To be specific, the usual narrative is that these advances replaced the lower-paying (and often more dangerous or unrewarding) jobs with better jobs while providing more goods at a lower cost. So, while some individuals might suffer at the start, the invisible machine of the market would result in an overall increase in utility for society.
This sort of view can and is used to provide the foundation for a moral argument in support of such labor saving technology. The gist, obviously enough, is that the overall increase in benefits outweighs the harms created. Thus, on utilitarian grounds, the elimination of these jobs by means of technology is morally acceptable. Naturally, each specific situation can be debated in terms of the benefits and the harms, but the basic moral reasoning seems solid: if the technological advance that eliminates jobs creates more good than harm for society as a whole, then the advance is morally acceptable.
Obviously enough, people can also look at the matter rather differently in terms of who they regard as counting morally and who they regard as not counting (or not counting as much). Obviously, a person who focuses on the impact on workers can have a rather different view than a person who focuses on the impact on the employer.
Another interesting point of concern is to consider questions about the end of such advances. That is, what the purpose of such advances should be. From the standpoint of a typical employer, the end is obvious: reduce labor to reduce costs and thus increase profits (and reduce labor troubles). The ideal would, presumably, to replace any human whose job can be done cheaper (or at the same cost) by a machine. Of course, there is the obvious concern: to make money a business needs customers who have money. So, as long as profit is a concern, there must always be people who are being paid and are not replaced by unpaid machines. Perhaps the pinnacle of this sort of system will consist of a business model in which one person owns machines that produce goods or services that are sold to other business owners. That is, everyone is a business owner and everyone is a customer. This path does, of course, have some dystopian options. For example, it is easy to imagine a world in which the majority of people are displaced, unemployed and underemployed while a small elite enjoys a lavish lifestyle supported by automation and the poor. At least until the revolution.
A more utopian sort of view, the sort which sometimes appears in Star Trek, is one in which the end of automation is to eliminate boring, dangerous, unfulfilling jobs to free human beings from the tyranny of imposed labor. This is the sort of scenario that anarchists like Emma Goldman promised: people would do the work they loved, rather than laboring as servants to make others wealthy. This path also has some dystopian options. For example, it is easy to imagine lazy people growing ever more obese as they shovel in cheese puffs and burgers in front of their 100 inch entertainment screens. There are also numerous other dystopias that can be imagined and have been explored in science fiction (and in political rhetoric).
There are, of course, a multitude of other options when it comes to automation.
In my previous two essays I wrote about the new sharing economy, focusing on regulations and taxes. In this essay I will cover resources (human and other). As noted in the previous two essays, the new sharing economy is exemplified by companies such as Uber and Airbnb that serve to organize transactions between individuals. In the case of Uber, people can serve as drivers for Uber selling rides in their own cars—without (as of this writing) all the usual costs and regulations of operating a cab. In the case of Airbnb, people can rent out property and (as of this writing) generally avoid the usual regulation and taxes associated with running a hotel.
For the people providing the goods and services, the new sharing economy makes it easier for people to make money. In general, the new sharing economy involves three parties. The first is the person who provides the actual good (apartment, for example) or service (a ride to the airport, for example). The second is the person who uses the service and the third is the company that provides the organizing service (often via an app) While this is an old model (people have long offered services and goods via things like newspaper ads), technological advances have changed the scale of this once informal economy. It has also served to blur the traditional roles somewhat. To be specific, those who provide the goods and services are not actually employees of the organizing services and those using the goods and services are not exactly customers of the organizing services. There are some advantages and some disadvantages in regards to these roles.
In the case of those providing the services and goods, one of the obvious advantages is that they can make money. While they could do this without the organizing service, the service obviously makes this easier and provides other advantages.
One of the advantages of not actually being an employee of the organizing services is that the provider has a high degree of autonomy that is usually absent in the traditional employee-employer relationship. The provider can (within the constraints of economic need) work as little as desired and is free to stop at will. This level of autonomy certainly has considerable appeal to some people—especially people who are looking for a more traditional job while making money to pay the bills. In some ways, the situation is somewhat like being a temp.
Of course, there are some disadvantages to being a provider. One is that doing this is rather like being self-employed in that there are typically no benefits and no job security. Also, the risks and costs tend to fall heavily on the provider. For example, if someone crashes into the company truck Sally is driving, then the company handles the matter. But, if Sally is freedriving for Uber and her car is hit, this is most likely going to work exactly as it would if Sally was just driving to Starbucks for a latte—that is, it is on her.
Another point of concern is that the organizer might be in the position to set rates or impose other limits—much like a traditional boss can. For example, Uber can set what drivers are paid on its own
But, this is nothing new—people who do freelance work or are self-employed in the usual sense face all these problems. After all, being the worker is generally not an optimal situation and being what amounts to a temp or freelancer can be even less optimal in terms of security and pay.
There are numerous advantages to the organizing companies. One is that they have people doing the actual work for them (for example, driving people) who are not employees. They also typically have people providing the resources (cars, gas, houses and so on) that are used. While the companies do incur costs in terms of running the organizing functions, they are able to avoid (or significantly reduce) the usual costs of running a business. For example, a hotel needs to have hotel employees (maids, etc.) and an actual hotel. Airbnd does not—the providers provide the services and buildings. As another example, a service that organizes drivers does not need to buy cars, maintain them or insure them—thus resulting in considerable savings.
In essence, the new sharing economy splits management from what would traditionally be the resources (human or otherwise) of a company. The organizer takes on the role of management while avoiding the need to have traditional human resources (beyond the administrative aspects of the business) and the need to have the material resources (beyond those needed for the administrative aspects).
Some companies do operate in something of a hybrid mode—having workers as well as material resources owned by the company while also having a sharing aspect to the business. This is, clearly enough, a variation on the old model of a company hiring temp workers, freelancers and contractors.
This model can, apparently, be very profitable—in large part due to matters of scale. After all, getting a slice of thousands of sales can result in a nice profit. Also, many of these companies benefit from internet inflation—the almost magical overvaluation of companies with business models based on the internet.
Given the apparent success of companies like Uber and Airbnd, it is reasonable to expect other companies to spring into existence to create what might be a new internet bubble—the sharing bubble. Of course, there are some clear limits on what sort of companies can exist—for example, airlines and heavy manufacturing are not really fit for the sharing economy. However, additional advances in economy might see some new realms for the sharing economy. For example, if 3D printers become truly viable, light and specialized manufacturing might become part of the sharing economy.
In my previous essay on the new sharing economy I discussed the matter of regulation in regards to such companies as Uber and Airbnb. In this essay, I’ll cover the subjects of taxes.
As with regulation, some people are quite opposed to taxes. Other people are fine with taxes—at least with imposing taxes on others. In general, though, people prefer to not pay taxes. As such, it is hardly a surprise that the new sharing economy includes various attempts to avoid taxes. One example of this is the case of services like Airbnb. On the face of it, these services are just providing a means by which a person can rent out his spare room, condo or apartment. For example, a person who will be in another state for a few months might use Airbnd to rent out his apartment so he can have some income to offset the rent. Looked at one way, this service is just a more organized version of the old informal economy in which people do a sublease, rent out their camp, or get a temporary tenant for their house.
One aspect of the informal economy is that taxes are usually not collected. For example, if Professor Sally informally rents out her house to her grad student Bob while she is in Europe as a visiting professor, Professor Sally and Bob will almost certainly not pay taxes—although Bill and Sally would certainly be involved with tax payments if Bob was renting a hotel room from Sally. While there are no doubt people who would like taxes paid on even informal transactions such as this, the informal nature of these transactions tend to make this impractical—this part of the traditional informal economy is small and decentralized so that having a tax system would be cost prohibitive in terms of what is gained in regards to the public good. There is also the legitimate concern that such private transactions (“okay, you can stay at my house for two months while I am in Europe, but you need to pay the utility bills, take care of the plants and walk my dog”) can fall outside of the legitimate domain of state control.
However, when a company such as Airbnd gets involved, then things change. The once purely informal economy becomes centralized around companies and there is also an increase in the scale of operations. After all, it is one thing if Professor Sally’s grad student is paying a modest fee to stay in her house while she is in Europe, it is quite another if Professor Sally starts running her house as a hotel. It also becomes a somewhat different matter if the number of people renting out property increases significantly. To be clear, there would seem to be three important changes. The first would be the centralization. Instead of people reaching informal agreements as individuals (who often know each other), these would be actual business transactions through a central company. The second would be the character of the process—short term renting out via a company would be rather closer to the hotel model than to the old informal model. The third would be the number of people involved: the sharing economy would presumably be considerably larger than the old informal economy.
From a practical standpoint, two of the changes could be used to justify using a similar tax approach to the sharing economy as is used in the traditional business economy (such as that of hotels). To be specific, with a centralized company and a large operation the collection of taxes becomes a more practical matter.
From a moral standpoint, if it is acceptable for the businesses with the same model (such as the traditional hotel) to have taxes imposed, then the same would seem to apply to the new sharing economy. So, if Sally would have to handle taxes if she ran a traditional hotel, then she should have to do the same if she ran her sharing economy hotel through an online service like Airbnb. Or perhaps Airbnb would be the one to handle the taxes.
Naturally enough, it might be wondered why taxes should be imposed on the new sharing economy—even if the new sharing economy is rather similar to aspects of the old economy. Of course, the people who make money through sharing rides or apartments do pay taxes for that income. However, there has been some controversy over services like Airbnb paying the hotel tax.
One reason for sharing companies to pay taxes and fees like traditional companies that they are analogous to is fairness. After all, the free market is not as free if some companies enjoy special breaks. Another reason is that the taxes and fees are needed to pay the public services and infrastructure that such companies (and their sharers) utilize. It might be contended that this is already covered by the taxes paid by individuals for their income. However, by that logic, businesses would seem to be exempt from taxes and fees on the grounds that their employees pay taxes.
Also, the growth of the sharing economy imposes new costs on the community in a way comparable to the costs of having a similar business. For example, having many Uber drivers in an area is like adding a large cab company to the area. As another example, having Airbnb rentals in a community makes the area more like a hotel area, with the accompanying burden on the community. As such, if the community (which includes many people who are not part of the sharing economy) faces increased costs then it is clearly acceptable to pass these costs on to those who benefit from this new economy.
There is also the cost of regulating the industry—as noted in my previous essay, when the sharing economy becomes comparable to the normal businesses (such as hotels and cab companies), then comparable public good (such as safety) regulations should apply. Naturally, these come with costs and it makes sense that the costs should be connected to the profits, rather than just be taken from the community in general. For example, with non-professional drivers acting like cab drivers and people renting out apartments and homes like hotels, there are legitimate concerns about public safety. Cab companies and hotels bear some of the cost of their regulation and so too should the sharing companies.
Naturally, there is still the more general debate about what is a fair tax/fee and concerns about the impact of taxes on the economy. However, it seems reasonable to believe that the sharing economy is analogous to the non-sharing economy and that it should bear a fair share of costs imposed upon the community.
The rising success of companies such as Airbnd and Uber have created considerable interest in what has been called the sharing economy. The core idea behind the sharing economy is an old one: people provide goods and services as individuals rather than acting as employees or businesses. One classic example of this is paying a neighborhood kid who mows lawns or babysits. Another classic example is paying a friend’s gas money for a ride to the airport. The new version of the sharing economy does make some changes to the traditional model. The fundamental difference is that the old sharing economy was typically an informal word-of-mouth system while the new sharing economy is organized by companies. As an example of the old sharing economy, your neighbor might have told you about the teenager she hired to babysit her kids or to mow her lawn (back in the day when this was an accepted practice). As an example of the new sharing economy, you might use the Uber app to get a chipper soccer mom to give you a ride to the airport in her mini-van. Unlike the old sharing economy in which your neighbor (probably) did not take a cut for connecting you to a sitter or mower, the companies that connect people get a cut of the proceeds—which can be justified by the services they provide.
The new sharing economy has received considerable praise, mainly due to the fact that it makes it easier for people to make money in what are still challenging economic times. For example, a person who would be hard pressed to get a job as a professional cabbie can easily drive for Uber. However, it has also drawn considerable criticism.
As might be suspected, some of the most vocal critics of the sharing economy are the people whose livelihoods and profits are threatened by this economy. For example, Uber’s conflicts with taxi services routinely make the news. Some people dismiss these criticisms as the usual lamentations of obsolete industries while others regard the criticisms as having legitimacy. In any case, there is certainly considerable controversy regarding this new sharing economy.
One point of concern is regulation. As it now stands, the sharing economy is exploiting the loopholes that exist in the informal economy (which is regulated far less than the formal economy). For example, professional cab drivers are subject to a fairly extensive set of regulations (and expenses, such as insurance costs) while an Uber driver is not. As another example, the hotel industry is regulated while services like Airbnb currently lack such regulations regarding things such as safety and handicap access.
Some proponents of the free market might praise the limited (or nonexistent) regulation and this praise might have some merit—after all, it has long been contended that regulation impedes profits. However, there are at least two legitimate concerns here.
One is, obviously enough, the matter of fairness. If taxi drivers and hotels are subject to strict regulations that also involve additional costs, then it hardly seems fair that companies like Uber and Aibnd can offer the same services while evading these regulations. One obvious option is to impose them on the sharing economy. Another obvious option is to reduce regulations on the traditional economy. In any case, fairness would seem to require comparable regulation.
The second is the matter of safety and other concerns of the public good. While some regulations might be seen as burdensome, others clearly exist to protect the public from legitimate harms. For example, hotels are held to certain standards of cleanliness and safety. As another example, taxi companies are subject to regulations aimed at protecting the public. If the new sharing economy puts people at risk in similar ways, then it seems reasonable to impose comparable regulations on the sharing economy. After all, whether you are getting a hotel room or going through Airbnb, you should have a reasonable expectation that you will not perish in a fire due to safety issues.
It might be countered that the new sharing economy should still fall under the standards of the old sharing economy. For example, if I ask a friend to take me to the airport and she has an awful car and is a terrible driver, it is hardly the business of the state to regulate my choice (although the state would have the right to address any actual traffic violations). As another example, if I crash on someone’s couch for the night, it is hardly the business of the state to make sure that the couch is properly cleaned and that the house is suitable (although it would need to be up to code).
While this does have some appeal, there are two main arguments against this approach. The first is that the informal economy is largely unregulated because it is just that—informal. Once a company like Uber or Airbnd gets into the picture, the economy has become formalized—there is now a central company that is organizing things. This allows a practical means of regulating what is now commercial activity. The second is the matter of scale. When the informal economy is relatively small, the cost and difficulty of regulating for the public good can be prohibitive. For example, policing neighborhood babysitters or people who give the occasional ride to friends and get gas money for doing so would impose a high cost for a little return in public good. However, when an aspect of the informal economy gets organized by a company and greatly expands in size, then there is more at stake and hence paying the cost of regulating for the public good becomes viable. For example, regulating people occasionally giving friends or associates rides is one thing (a silly thing), but regulating large numbers of people driving vehicles for Uber is quite another matter.
One area that is going to be a matter of considerable controversy is that of discrimination. If Bob does not want to share a ride with a white colleague or give a handicapped associate a lift, then that is Bob’s right. After all, a citizen has every right to be biased. But, it gets rather more complicated if Bob is driving for Uber—after all, discrimination does harm to the public and the public might have a stake in preventing Uber Bob from discriminating. Similary, if Bob does not want his Latino friend crashing on his couch because he thinks Latinos are thieves, that is Bob’s right (the right of being a jerk to one’s friends). But, if Bob is renting out a room through Airbnd, then this could be a matter of legitimate public concern.
It might be countered that people “freedriving” or “freerenting” for the sharing companies still retain the right to discriminate since they are acting as individuals, albeit under the auspices of a company. That does have considerable appeal, especially since the people driving or renting are not actually employees of these companies. The company is just assisting people to exchange services and, it could be claimed, is no more accountable than a newspaper that has a “for sale” or “help wanted” section. Obviously enough, companies are generally going to want to avoid being associated with discrimination and hence they will probably engage in some degree of self-policing to avoid PR nightmares (or will do so if they are sensible or ethical). However, there is clearly an important issue here regarding whether or not laws against discrimination should be applicable to individuals who are involved with the sharing economy companies. The somewhat fuzzy status of those providing services does create a legitimate problem. As noted above, on one hand they are still just individuals using the service to connect to others. On the other hand, this service does seem to bring them into more of a formal business situation which is subject to such laws.
After running the Palace Saloon 5K, I participated in a cleanup of a nearby park. This event, organized by my running friend Nancy, involved spending about an hour and a half picking up trash in the Florida sun. We runners created a pile of overstuffed trash bags full of a wide range of discarded debris.
On my regular runs, I routinely pick up litter. This ranges from the expected (discarded cans) to the unusual (a blender dropped off in the woods). These adventures in litter caused me to think about the various issues related to litter and most especially the cost of litter.
One obvious cost of litter is the aesthetic damage it inflicts. Litter is ugly and makes an area look, well, trashy. While this cost might be partially paid by those who litter, it is also inflicted on those who visit the area and do not litter. One of the many reasons I pick up litter is that I prefer not to run through trashy places.
Another obvious cost of litter is the environmental damage it inflicts. Some of this is quite evident, such as oil or paint leaking from discarded cans. Other damage is less evident, such as the erosion and flooding that can be caused by litter that clogs up storm drains. There is also the harm done to animals directly, such as sea life killed when their stomachs fill with plastic debris. As with the aesthetic damage, the cost of the litter is largely paid by those who did not litter—such as the turtles and sea-birds harmed by discarded items.
A somewhat less obvious cost is that paid by people who pick up the litter discarded by others. For example, I take a few minutes out of almost every run to pick up and dispose of trash discarded by others. There are also walkers in my neighborhood area who pick up trash during their entire walk—I will see them carrying full bags of cans, bottles and other debris that have been thrown onto the streets, sidewalks and lawns. And no, they are not gathering up the debris to cash it in for recycling money.
What I and others are doing is paying the cost of the littering of others with our time and effort. This is doubly annoying because the effort we need to expend to pick up the debris and dispose of it properly is generally more than the effort the discarder would have needed to expend to simply dispose of it herself. This is because such debris is often scattered about, in pieces or tossed into the woods—thus making it a chore to pick up and carry. Also, carrying trash while running is certainly more inconvenient than simply transporting it in a vehicle—and much of the trash beside the road is hurled from vehicles.
Some states, such as my home state of Maine, do shift some of the cost of litter to the litterer. To be specific, these states have a deposit on bottles and cans. When someone litters a can or bottle, he is throwing away the deposit—thus incurring a small cost for his littering. When someone picks up the bottle or can, she can redeem it for the deposit—thus offsetting the cost of her effort. While this approach does not cover all forms of litter, it does have a significant impact on the litter problem by providing people with an incentive to not litter or to pick up the litter thrown away by others.
This model of imposing a cost on littering and providing a reward for cleaning up litter seems to be an ethical system. In terms of fairness, it seems right that the person littering should pay a price for the damage that she does and the cost that she inflicts on others. It also seems right that people who make the effort to clean up the messes caused by others should receive compensation for their efforts. The obvious challenge is making the model work on a broader scale beyond just bottles and cans. Unfortunately, there are many more people who are lazy, uncaring or imbued with a feeling of entitlement than there are who have a sense of responsibility and duty. As such, I know I will be cleaning up after others for the rest of my life.
On 4/9/2014 NPR did a short report on the question of why there are fewer women in business than men. This difference begins in business school and, not surprisingly, continues forward. The report focused on an interesting hypothesis: in regards to ethics, men and women differ.
While people tend to claim that lying is immoral, both men and woman are more likely to lie to a woman when engaged in negotiation. The report also mentioned a test involving an ethical issue. In this scenario, the seller of a house does not want it sold to someone who will turn the property into a condo. However, a potential buyer wants to do just that. The findings were that men were more likely than women to lie to sell the house.
It was also found that men tend to be egocentric in their ethical reasoning. That is, if the man will be harmed by something, then it is regarded as unethical. If the man benefits, he is more likely to see it as a grey area. So, in the case of the house scenario, a man representing the buyer would tend to regard lying to the seller as acceptable—after all, he would thus get a sale. However, a man representing the seller would be more likely to regard being lied to as unethical.
In another test of ethics, people were asked about their willingness to include an inferior ingredient in a product that would hurt people but would allow a significant product. The men were more willing than the women to regard this as acceptable. In fact, the women tended to regard this sort of thing as outrageous.
These results provide two reasons why women would be less likely to be in business than men. The first is that men are apparently rather less troubled by unethical, but more profitable, decisions. The idea that having “moral flexibility” (and getting away with it) provides advantage is a rather old one and was ably defended by Glaucon in Plato’s Republic. If a person with such moral flexibility needs to lie to gain an advantage, he can lie freely. If a bribe would serve his purpose, he can bribe. If a bribe would not suffice and someone needs to have a tragic “accident”, then he can see to it that the “accident” occurs. To use an analogy, a morally flexible person is like a craftsperson that has just the right tool for every occasion. Just as the well-equipped craftsperson has a considerable advantage over a less well equipped crafts person, the morally flexible person has a considerable advantage over those who are more constrained by ethics. If women are, in general, more constrained by ethics, then they would be less likely to remain in business because they would be at a competitive disadvantage. The ethical difference might also explain why women are less likely to go into business—it seems to be a general view that unethical activity is not uncommon in business, hence if women are generally more ethical than men, then they would be more inclined to avoid business.
It could be countered that Glaucon is in error and that being unethical (while getting away with it) does not provide advantages. Obviously, getting caught and significantly punished for unethical behavior is not advantageous—but it is not the unethical behavior that causes the problem. Rather, it is getting caught and punished. After all, Glaucon does note that being unjust is only advantageous when one can get away with it. Socrates does argue that being ethical is superior to being unethical, but he does not do so by arguing that the ethical person will have greater material success.
This is not to say that a person cannot be ethical and have material success. It is also not to say that a person cannot be ethically flexible and be a complete failure. The claim is that ethical flexibility provides a distinct advantage.
It could also be countered that there are unethical women and ethical men. The obvious reply is that this claim is true—it has not been asserted that all men are unethical or that all women are ethical. Rather, it seems that women are generally more ethical than men.
It might be countered that the ethical view assumed in this essay is flawed. For example, it could be countered that what matters is profit and the means to this end are thus justified. As such, using inferior ingredients in a medicine so as to make a profit at the expense of the patients would not be unethical, but laudable. After all, as Hobbes said, profit is the measure of right. As such, women might well be avoiding business because they are unethical on this view.
The second is that women are more likely to be lied to in negotiations. If true, this would certainly put women at a disadvantage in business negotiations relative to men since women would be more likely to be subject to attempts at deceit. This, of course, assumes that such deceit would be advantageous in negotiations. While there surely are cases in which deceit would be disadvantageous, it certainly seems that deceit can be a very useful technique.
If it is believed that having more women in business is desirable (which would not be accepted by everyone), then there seem to be two main options. The first is to endeavor to “cure” women of their ethics—that is, make them more like men. The second would be to endeavor to make business more ethical. This would presumably also help address the matter of lying to women.