On The Daily Show, Andrew Napolitano argued the libertarian dogma that selfishness maximizes the common good. The facts don’t agree. (More)
Progressive Puzzle Pieces, Part I – Hockey and the Common Good
This week Morning Feature will try to assemble the pieces we’ve covered over the past two months in series on Exiting the Crisis, The Darwin Economy, Nudge, Class Matters, The Empathy Gap, and Republic, Lost into a progressive big picture. Today we consider the free market dogma as argued by Andrew Napolitano, and why selfishness does not maximize the common good. Tomorrow we’ll review why maximizing choices does not improve our lives, and why we need nudges toward better decisions. Saturday we’ll conclude with issues of class, empathy, and Congress.
“Selfishness is a virtue.”
So said retired judge and Fox News host Andrew Napolitano in an extended interview for The Daily Show. He continued:
In the free market, when you are selfish, you make the most money at the least cost. You make the most profit. You have the most money in the bank. You hire the most people. You give them the most jobs, and there is the most prosperity.
This is classic libertarian and conservative dogma, based on a simplistic reading of Adam Smith. The theory is that individuals competing in self-interest will demand and produce the goods and services we all need and want, in the most efficient way possible. The “invisible hand” will guide individual selfishness toward the common good. Indeed extreme libertarians insist there is no “common good” except that of ensuring that each person is free to pursue his/her individual self-interest. Napolitano makes exceptions for government protection from “force or fraud,” although Brooksley Born recalls Alan Greenspan saying “I don’t think there is any need for a law against fraud.” But that caveat aside, most libertarians and conservatives agree that the government should not try to protect us from ourselves. That would be a “nanny state.” We should make our own choices and live with the consequences.
“Never again. Never again.”
On January 13, 1968, Minnesota North Stars center Bill Masterson, skated into the offensive zone with the puck on his stick. Two Oakland Seals players, Larry Cahan and Ron Harris, swooped in to cut him off. Masterson passed the puck to a teammate, but the two defenders were already committed. Both hit Masterson, toppling him backward onto the ice. The back of his head hit with such force that blood spurted from his mouth and nose. A teammate heard him murmur, “Never again. Never again.”
No one knows what Masterson meant by those words. Doctors worked for 30 hours, but could not save him. Masterson died of a massive brain injury. Despite their shock, most NHL players continued to play without helmets. EconPort quotes a 1969 Newsweek article:
Players will not adopt helmets by individual choice for several reasons. Chicago star Bobby Hull cites the simplest factor: “Vanity.” But many players honestly believe that helmets will cut their efficiency and put them at a disadvantage, and others fear the ridicule of opponents. The use of helmets will spread only through fear caused by injuries like Green’s or through a rule making them mandatory…. One player summed up the feelings of many: “It’s foolish not to wear a helmet. But I don’t because the other guys don’t. I know that’s silly, but most of the players feel the same way. If the league made us do it, though, we’d all wear them and nobody would mind.”
EconPort uses this example to illustrate a Prisoner’s Dilemma matrix, although by any reasoned reckoning their numbers seem absurd. They rate outcomes from 1-4, best-to-worst, with no regard for how little improvement the “best” offers or how catastrophic the “worst” can be. Their Prisoner’s Dilemma matrix only ‘proves’ that players have best individual choice is to skate without a helmet if you discount the horrific risks of death or other crippling head injuries. Rational actors, free market dogma insists, would not discount such risks.
“Sometimes you have to save the players from themselves.”
Except rational actors will discount such risks, and very predictably. Ask Philadelphia Flyers’ defenseman Chris Pronger. The National Hockey League mandated helmets in 1979, but that mandate did not include visors or cages to protect the face. Although the NHL Players Association “strongly encourages” players to wear face protection, about 32% of players chose not to. Pronger was one of them, and on October 24th this happened:
The stick barely missed Pronger’s eye. His vision was blurry for a few days after the injury, but doctors say he should be able to return sometime this month. And he has already announced that, when he returns to the ice, he’ll be wearing a visor. Other players like Nashville winger Brian McGrattan will wait for the league to mandate it:
If they brought the rule in to wear one, I wouldn’t be complaining. But I can’t be a guy in my role [an ‘enforcer’ whose hard-hitting play protects his team’s stars] flying around with a half visor on. That’s the only reason I don’t wear one.
As NBC and Versus hockey analyst Pierre Maguire put it, “Sometimes you have to save the players from themselves.”
Hockey players are not uniquely irrational. As we saw in Robert Frank’s The Darwin Economy, we all discount risks when weighed against opportunities for positional advantage. In her book Fool’s Gold, Financial Times reporter Gillian Tett quotes JPMorgan Chase CEO Jamie Dimon speaking at a World Economic Summit:
God knows, some really stupid things were done by American banks and American investment bankers…. Some stupid things were done … but it wasn’t just the bankers. Where were the regulators in all this?
In Republic, Lost, Lawrence Lessig calls that “chutzpah.” Perhaps, but it’s also very human. Like Chris Pronger and about a third of NHL players, bankers sought positional advantage. Pronger and other players knew the risks of skating without a visor, but they also know that players without a visor have a slight peripheral vision advantage over players who wear them, and no one player has an interest in protecting all the players’ health. That slight edge can be the difference between making or not making a key play. Similarly, banks constructed complex derivatives to make profits. The riskier the derivative, the more profitable its return, and no one bank had an interest in protecting the entire economy’s health. Dimon and the other JPMorgan executives were like Brian McGrattan … willing to take as much risk as the rules allowed.
But there are two differences:
First, McGrattan says he “wouldn’t be complaining” if the NHL mandated visors. He probably means that. Few NHL players complained when the league mandated helmets. On the other hand, Dimon and other bank executives resisted the Wall Street Reform and Consumer Protection Act, have complained about it since its passage, and have fought to weaken any reforms it offers.
Second, when Pronger or another player gets hurt, he and his teammates suffer. On the other hand, when the derivative dominoes began to topple, the entire world economy suffered. The Greek crisis happened, in part, because investments in derivatives seemed to offset Greece’s rising debt … until those derivatives became “toxic assets.”
Andrew Napolitano is wrong. Individuals selfishly pursuing profit will not always create “the most prosperity.” Instead, research and experience prove, people will discount risks to gain positional advantages and make other “irrational” decisions that cripple Adam Smith’s “invisible hand.” It may not fit libertarian dogma, but sometimes we do need rules to save us from ourselves.
For the common good.
Happy Thursday! ::hugggggs::