Moral Externalities

Moral Externalities

Note: this is merely an excerpt taken from a rough draft of an essay that will appear in my forthcoming book, Visions of Reality. —Greg Nyquist

Economists have in their arsenal of interpretive ideas the concept of externalities, by which they mean simply any “external” cost or benefit from that is not entirely borne by those responsible for it. A house with a front yard littered with broken-down old cars is a classic example of an externality. The owner of the house bears some of the cost of such untidiness in the reduced value of his property; but so do his neighbors, who through no fault of their own find the values of their homes taking a hit. The owner of the house with junked cars in his front yard has imposed a cost on his neighbors that he does not have to bear. Another classic example is pollution from a factory. The cost of the pollution is borne by all the individuals of the community, whether they are associated with the factory or not.

Economists often describe externalities in terms of costs and decision makers. As one economics textbook puts it: “An externality arises when the cost borne by the decision maker do not include all of the costs of his decision. Some are inflicted on people who were not involved in the decision. There are social costs of production that are not accounted for in private cost calculation.” [Principles of Economics, Robert Haney Scott, Nic Nigro, Macmillan Publishing Co., Inc. New York, 1983, pp.426]

Externalities aren’t always bad. An example of a good externality would be the neighbor who does a splendid job with the landscaping and upkeep of his house. Another example might be the Open Source movement, where programmers in essence develop software than release it to the public without monetary remuneration.

Economists, in keeping with their mania for the quantifiable, have for the most part confined their concept of externalities to matters dealing with cost or price. But of course it can be extended to matters far outside the limited sphere of economics. There exist externalities in the moral sphere as well — externalities which, although their costs (or benefits) cannot so easily be measured in terms of price or utility yet which nonetheless do in fact exercise a very real impact on our daily lives. To be sure, if, like the typical economist, we have only eyes for what can be quantified and have lost all vision for the qualitative element of reality, then we will probably be utterly blind to these less effable, yet nevertheless very real externalities. Even more to be pitied in this context is the idealogue, whose attachment to some stale creed or dogma renders him incapable of grasping any aspect of reality that does not easily fit in the procrustean bed of his ideology. To escape from the tyranny of ideas — which is to say, the tyranny of rationalism — is the first step towards that fund of useful and profound knowledge often called “wisdom.” Ideas should serve to describe and elucidate reality. It is a travesty of cognition to allow ideas to distort or, even worse, conceal reality.

The subject of moral externalities — of burdens imposed on innocent bystanders as a consequence of the immorality of others — is a reality that has for too long been ignored. Oh, to be sure, most people with the least amount of moral sense are aware of the social consequences of immoral behavior. But too often the tendency is to view the subject merely its grosser and more common manifestations, ignoring altogether the more subtler problems that relate most directly to the issue of externalities. If a man drinks to excess or drives recklessly or commits adultery, most people will recognize that his actions affect others. That is why such behavior is regarded as immoral. Morality exists in a social context. If a man’s behavior only affects himself, then whether that behavior is “moral” or not has little relevance to the rest of us. Only behavior that affects others — whether positively or negatively — can be regarded as moral (or immoral) in any relevant sense of the word.

The concept of moral externalities has not, however, been evoked to describe the obvious moral consequences of human action. When a man cheats on his wife, the consequences to his spouse, the primary victim of his act, are obvious. No special concept need be devised to analyze such consequences. They are obvious to common sense. The notion of a moral externality, on the other hand, is somewhat more subtle, involving, not the immediate participants of a behavioral situation, but the secondary societal consequences — the outlying ripples in the pond of causation. A specific example will better illustrate what I am driving at.

Imagine a neighborhood of two dozen or so families, all of whom are raising children, many of them boys, between the ages of five and fifteen. Now suppose that one of those families egregiously spoils their children, especially their male children, so that they develop into willful, savage, vicious, and utterly unmanageable brats. What is likely to be the result of this scenario? Isn’t it at least possible that the children whose parents spoil them rotten will, through the influence that children naturally exercise on one another, corrupt those children in the neighborhood who are not spoiled, so that the efforts of parents to discipline their offspring are compromised as a result of the lax child-rearing practices of one family? Of course it’s possible. Even one bad child can exercise inordinate influence on his peers simply because children are naturally attracted to someone who does not face the same restrictions as they do. Antinomianism is cool among the young. It has charismatic appeal. And all that is needed to make a bad child really influential over his peers is to have a few children begin following his example, bringing into play the whole dynamic of peer pressure, until even the children that don’t want to do anything bad feel obligated if only to keep themselves from being ostracized.

Now imagine that instead of one family spoiling their children, it is several families. The odds of moral corruption merely increase, until the neighborhood reaches the point where it becomes extremely difficult for even the most strict parents to prevent their children from being corrupted by other children. We see this phenomenon at work today with our nation’s young people. The corruption of hedonism, in the forms both of drug use and sexual promiscuity, is rife among the teenage population. Almost a third of tenth graders have smoked marijauna in the last year; over half of twelfth graders have used illicit drugs [ref here]; more than half of 17-year-olds have had sex. Not only teenagers, but society at large, pays a large price for all this irresponsible hedonism. One out of every ten females aged 15 to 19 become pregnant every year. Nearly four out of every five of these pregnancies is unplanned [ref here]. Juvenile crime continues to be a huge problem in our society. Nearly a third of teenagers aged 14 to 15 have admitted committing acts of vandalism. Twenty per cent of high school students reported the presence of street gangs in their schools. Almost one in six teenagers has tried to run away from home at least once [ref here].

Classical economics makes a point of distinguishing between what immediate and distant consequences, between what is seen and not seen. “In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects,” wrote the French economist Frederic Bastiat. “Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we forsee them.” [Selected Essays on Political Economy, 1]

The trouble with this approach is that remote consequences are not easy to determine, especially when ideology, desire, or interests intervene with judgment.

[This concludes the excerpt of the essay "Moral Externalities"]