Ethical Hiring and Firing

It struck me one day when I was passing a parking inspector on the street that that kind of job could not be very hard to learn, i.e., most ‘normal’ people could probably do it quite easily. Yet, it is probably the case the people who actually do jobs like that – jobs that most people can do with a small amount of on-the-job training – often have more work experience or education that is needed (but it could also be the case that they simply have the right social connections). There are other jobs that require some sort of education, but usually not a three- or four-year university degree. Many civil service jobs, for instance, ask for degrees in political science, law, sociology, etc. even though the job description has very little to do with the contents of such degrees.

In other words, many people are over-skilled or over-educated, relative to their present job. On the other hand, there are many people who remain unemployed because they can’t get the experience or education that will put them on the top of the list of the hiring employer. There might be a measure of ‘hidden’ discrimination in this.  We usually frown upon nepotism or favoritism, because we want to ensure equality of opportunity and meritocracy. Thus, one might want to rely on objective criteria (years of education, years of work experience, etc.) when hiring. But if these objective criteria are not very relevant for the job in question, then this appears to be nothing but a form of discrimination of those who have not been able to connect to the right kind of social networks (and we all know that social networks are of increasing importance when it comes to landing a job these days) or have been forced to stay away from work life for other reasons. And it is probably the case that this kind of discrimination hits people even harder than the ‘classic’ kinds of discrimination: race, ethnicity, sexual preference, age, religion etc.

Now, if we want to maximize happiness in society it seems that employers should relax their demands for education or experience, when those criteria are not very relevant for the job in question. Empirical research has confirmed that whereas people are able to adapt to many unfortunate circumstances in life (for instance, becoming disabled), unemployment  seems to be an exception to this. After the shock of becoming unemployed has receded, quality of life increases somewhat again, but usually not up to the pre-unemployment level. Combatting long term unemployment should, thus, be important for a hedonistic utilitarian. One way of doing this could be – at least for some vacancies – to consciously hire people who may have less experience or education than the top applicants. In other words, hiring people with adequate qualifications rather than people with excellent qualifications (which are unnecessary for doing the job in question anyway).

In times of high unemployment employers might receive hundreds of applications when they announce a vacancy, and it is hard to imagine that the person who actually gets the job is actually better at doing the job than any other person who ‘ranks’ from, let’s say, place 2 to 20 on the list. On the contrary, we all know from experience that a not insignificant amount of people we encounter in everyday life are more or less incompetent at their job. Thus, in many cases the policy suggested here would not only be more just, but also more efficient for society. But even if it turns out to reduce efficiency, we must always remember that it is always possible to sacrifice some efficiency if it means greater justice (i.e. overall happiness).

You can read more on this topic in my article ‘Ethics in Hiring: Nepotism, Meritocracy, or Utilitarian Compassion,’ in the lastest issue of Philosophy for Business.

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Hedonism and Basic Income

As a hedonist, I have often defended the Welfare State, which includes, for instance, financial assistance to people who are unable to find work (or unable to work at all). The logic behind this is that the relief of suffering that ensues is not counteracted by a similar loss in pleasure by those who are taxed in order to fund such programs.

This kind of assistance can come in different forms. In Sweden, for example, there are unemployment benefits that are determined as a percentage of one’s previous salary (this has all sorts of requirements attached to it), but there is also means tested assistance which is calculated to cover only the necessities of life (rent, food, clothes, etc.). Other kinds of assistance exist for the sick, for students, for parents, and so on.

The idea behind a basic income is that these different kinds of assistance can be replaced by a single type of benefit that all citizens are entitled to. It does not matter whether they are unemployed, sick, students, parents, or simply people who choose not to work – they are all eligible to receive the basic income. The question is whether a basic income is preferable to traditional benefits from a hedonist perspective.

There is no clearcut answer to that question. As I stated at the outset, hedonists should defend some kind of assistance to those that are unable (and perhaps also unwilling) to work. On the plus side, a basic income lets people choose an “epicurean” way of life, which – I believe – can be conducive to increased happiness. Epicurus’s idea was that one does not need much in the sense of material wealth to be happy. More important is leisure and good friends. A basic income also enables engagement in political life (“civic virtue”), which is somewhat in line with John Stuart Mill’s ideals.

A drawback to basic income, however,  is that it may render some people too passive. Empirical research seems to confirm that sitting alone at home all day watching television (or something similar) is detrimental to one’s happiness. This means that a basic income is most beneficial to those who have good ideas about how to use their free time in an active way. Some traditional unemployment benefits require certain activities on the part of the recipient, and this is probably what some people need (whereas the idea behind the basic income is that it is supposed to be totally unconditional).

Is there a risk that a basic income scheme would become to expensive? Of course, hedonists must always take account of the fact that many people are not hedonists, and they will perhaps resent paying taxes to finance a basic income (which means that, for instance, entrepreneurs may “obstruct” these policies). On the other hand, it is not to be suspected that many people would choose to live on the basic income instead of working, because we must suppose that the level of the basic income is set rather low. It will allow people to live modestly by themselves, but it should not be set so high as to allow, for example, the forming of a family (something that most people want).

There is, however, a kind of paradox involved in this. If – as I believe – people could become happier by living in a more epicurean way and renounce many modern pleasures, and if more people realized this, then perhaps more people would want to live on a basic income instead of working. But then we could not afford the basic income scheme. The ideal, then, supposes that most people would not choose the epicurean way to happiness! If too many people choose that way we would have to come up with some other scheme, for instance, shortening the workday for everyone to five hours, which would radically reduce unemployment and increase leisure time (for most people). This compromise would be beneficial both to those who have a hard time finding something meaningful to do in their spare time and those who can’t get enough spare time. At the same time the level of production that is necessary to maintain a decent material quality of life can be kept going.

I have uploaded a longer text on the hedonist case for a basic income on the Social Science Research Network.

Can We Afford to Help Refugees?

[This a translation of an old post from my Swedish blog]

For a few (mainly among the Sweden democrats, I presume), the refugee question may be about protecting Swedish “culture” or “identity”, but for most people it mainly seems to be a question about costs: can we afford to help a lot of refugees or not? For that reason, I would like to contribute with a few theoretical comments about what it might mean to say that one can or cannot afford something (discussion about our actual national accounts I leave to others).

When is it possible to say that one person definitely cannot afford to help another person? There are possibly saint-like people who would dispute the following answer, but it seems reasonable to assume that someone who does not have food, clothes, and shelter for oneself cannot afford to help someone else (it is, rather, precisely those people who need help from others). It is rather pointless to share one’s last piece of bread with someone else so that both get too little food and perish.

But the further one progresses from the satisfaction of those basic needs, the less meaningful it gets to claim that one “cannot afford” certain things. Of course, one could always use the expression in a technical sense, – Bill Gates might afford to buy 100 luxurious houses, but he “can’t afford” to by 101 – but for a well-to-do person it is more apt to talk about priorities. I think most of us would claim that a parent who says he cannot afford a winter coat to his child, although he has just bought a new hi-fi system for himself, can actually afford the coat, but has prioritized something else.

There is no doubt that Sweden can afford to help more refugees than the numbers that have already been helped. The question is if we want to prioritize it. Many Swedish households seem to have a lot of money to spend on travels, home improvement and interior design, electronic gadgets, restaurant meals etc. This is obviously something they prioritize above helping strangers in need.

Why, then, is it the case that some people still claim that we cannot afford receiving refugees? Apparently the affordability answer is simply a pretext. There must be some other real reason. The main candidates for such a reason, I believe, are: (i) a moral conviction that we do not have any economic responsibility towards strangers, (ii) the nationalist argument mentioned above, or (iii) pure unreflective egoism. It would, thus, be good if those who claim that “we can’t afford” openly state which of these viewpoints they actually endorse.

(Then there is of course the question of how one is supposed to help people if one actually wants to prioritize this – through taxes or through individual actions. That question is too complex to discuss here and now.)

The Non-Marxist Case against Capitalism

Let us define capitalism as a system where most of the means of production are privately owned, where the freedom to use those means as one wants is relatively large and where the levels of taxes and state economic redistribution are relatively low. As we all know this system has always been criticized from the left, often from a Marxist perspective, where the main point of accusation is that workers are exploited, i.e., they don’t get the full value of their contribution to production.

Nowadays, however, the left seems to have a hard time arguing against capitalism, and bringing up Marx (or other more obscure theoreticians) surely does not help. There is no mass movement among workers in developed countries today who oppose capitalism, and it is difficult to rally them under the banner of “socialism”, when the examples of the Soviet Union, Cuba and other communist states are thrown back in one’s face.

In light of this I have to ask myself: why not bring up a simple moral – and explicitly non-Marxist – case against socialism, a case that virtually anyone can understand in five minutes? Namely: if capitalists did their moral duty, i.e., used their money to help other people, there would be no problem with capitalism. But the fact that there are a few superrich people who own most of the wealth in the world tells us that they are not doing their moral duty. To be substantially richer than one’s fellow human beings is in itself a moral failing, and the quickest way to remedy this is simply to tax them and spread the wealth around (and in some cases socialize the means of production).

Some might protest: if rich people are taxed heavily then people won’t go into business at all. That, however, simply reinforces the point that they are failing morally, being egoists and only ready to exert themselves if that can make them a lot richer than everybody else. A moral person should be willing to work for the benefit of other people (including people one will never meet). The question is, then, how the state should deal with people with radically different morals than the majority; but that is a question that must be handled by all social systems. Claiming that one may have to cater to a few business savvy egoists is not to concede that capitalism is good.

Personally, though, I don’t think anything disastrous would happen if, for instance, top marginal tax rates were raised to levels that were common a few decades ago (for instance, above 90% in the US during both Republican and Democrat rule). People will still create new businesses (and we should encourage people to do so cooperatively) if it allows them to live somewhat more lavishly than the “ordinary” worker, but still very modestly, compared to how CEO:s of large companies live now. Perhaps a first step would be to go back to the time when the CEO made “only” 20 times more than the worker (in the 1960s for the US), rather than 300 times more today.

Taxed-Based Solidarity in a Global Economy

It is often said that it is hard to have high taxes when capital is easy to move. If, for instance, the corporate tax gets too high, companies can simply pack up and leave for countries where labor is cheaper and taxes are lower; and if dentists are forced to pay too much income tax, they can likewise move to another country. This is often framed in a language that invokes necessity and unchangeability. We simply can’t raise taxes.

It is, however, important to remember that, at bottom, this is more a question of “won’t” than “can’t”. If we “can’t” raise taxes, it is simply because some people do not want to pay higher taxes. In the same way, the problem of incentives to work is not a problem that necessitates one particular solution to the tax problem. It is not a “natural” given that the more you earn, the less willing you will be to pay more taxes. By the same token, it is not “logically” necessary that a society becomes poorer whenever you raise taxes. It all depends on whether people want to pay taxes or not, whether they believe in sharing their resources in this way; whether they believe that one ought to work not only for the benefit of oneself (or one’s family), but also for the benefit of total strangers.

So when people say that we cannot raise taxes, because people and businesses will leave (or avoid taxes by the means of tax havens and the like), the reason is not that taxes in themselves are bad or hurtful to the economy. The reason is that some people simply do not want to pay taxes. This fact is often obscured by the latter group’s way of framing the problem like a problem of the necessity kind, rather than as question of their own unwillingness. When businessmen (or the parties who represent them) say that we must lower taxes, we should not (at least not as a first reaction) simply say “oh well, I guess we have to do it then, because otherwise they will leave”. Our first reaction should be to ask those very businessmen why they are so unwilling to share their wealth. And if they stand for egoism, then let them stand for it openly and proudly in the public arena, instead of just pointing to some economic “necessity” that does not exist.

This may not alter the fact that the globalized economy makes it difficult for one country to have substantially higher taxes than other countries. But it is important to establish the right reasons for this – that globalization is not a “force of nature” or a historically inevitable process, but a result of people’s (moral) choices. By the same token, the reason that some people must work for starvation wages in sweatshops is not some natural necessity. People (who are very much richer than the sweatshop workers) can choose to pay more for the products they are making, and the companies can choose lower profits in favor of higher wages for their workers. These, more fair and just, choices are not made, because people do not want to make them. Globalization can be just and fair if we want it to be. If we don’t want it to be fair and just then it won’t be so. There are no natural necessities involved here. We decide how the world will turn out.

Some Problems With Effective Altruism

The most famous living utilitarian/hedonist philosopher, Peter Singer, has during the last few years been heavily engaged in the effective altruism movement, and his book The Life you Can Save has been followed by a website (and organization) with the same name. Effective altruism focuses on the voluntary giving of money to charities that are “approved” because of their effectiveness in reducing suffering in the world. On the site The Life you Can Save people are urged to take a pledge to donate at least 1% of their income to charities. All this can be said to represent a turn in Singer’s thought towards relaxing utilitarian demands on people in order to get people to actually share some small part of their resources, instead of just switching off due to what they perceive are unreasonable moral demands and give nothing instead (although in theory, I assume that Singer still maintains that people in affluent countries should give much more than 1%).

It is, of course, commendable if people want to give some more (on top of taxes going to foreign aid, and the like) of their wealth to people in much poorer circumstances. I believe, however, that the effective altruism movement seems to disregard the political level too much. Advocacy for larger voluntary donations to charities must always go hand in hand with at least as much advocacy for policy changes, mainly when it comes to raising taxes (preferably progressive taxes). People often have moral principles that entail solidarity with the less fortunate; but people (including moral philosophers) are usually also aware of their own moral weakness, i.e., their propensity to neglect their duties when no one is watching, or when their friends, family, and acquaintances do not provide any social pressure to act in certain ways. Even though we know what is good and what is demanded of us, and even though we are glad to do it, we often prefer a bit of coercion to keep us on the right path. A tax can provide this; giving to charities not as much. (Of course, a tax will also make people who do not believe in altruism pay, but that is not a problem in this context, since utilitarianism is not, in principle, against such coercion.)

A further advantage with taxes rather than voluntary giving is that we can be more sure that other people are doing their fair share. Again, we often want to do good, but when we see that other people are not doing anything, we ourselves feel unjustly treated and may decide not to do anything either. Taxes, on the other hand, make sure that everyone does their fair share. If the whole point of Singer’s turn to effective altruism was to loosen moral demands in the hope that people would be willing to give a little rather than nothing, then he should also consider the bad psychological effects of feeling that others are not doing their fair share and the good psychological effects of having some (mainly self-imposed) sanctions to compel us to do what we believe is good, but are, at least sometimes, too weak-willed to do.

A last point pertaining to all this is that, at least for some purposes, taxed-based charity is more effective, in that recipients can probably rely more on a steady stream of aid. To make a parallell to unemployed people in welfare states, they would not feel secure if their benefits came very irregularly with different sums each month. It is, in other words, best if poor people can claim certain benefits as a right (which only states, or perhaps imagined libertarian state-like voluntary associations, can safeguard) rather than rely on charitable generosity. It is probably the case the total sum of charitable donations fluctuates quite a lot, depending on which disasters are covered in the media at the moment. Relying on tax-funded aid, managed by state agencies, probably avoids these fluctuations to a larger degree than voluntary donations.

Part 5

What Mises wants to reestablish is a liberal program which was never fully realized during the “liberal era” of the 1800s. As long as politics basically went in the classical liberal direction human productivity increased substantially, people got a higher material standard of living, and child mortality was reduced – all this proves the effectiveness of liberalism, according to Mises. But the socialist experiment, which had influenced liberalism for a few decades, had only led to misery.

For Mises the economist liberalism “is a doctrine directed entirely towards the conduct of men in this world. In the last analysis, it has nothing else in view than the advancement of their outward, material welfare and does not concern itself directly with their inner, spiritual and metaphysical needs.” Liberalism “does not promise men happiness and contentment, but only the most abundant possible satisfaction of all those desires that can be satisfied by the things of the outer world”. Those who believe they have a doctrine that can better satisfy people’s material needs are welcome to prove this by pointing to relevant facts.

Moreover, Mises – like the early liberals – thinks that the tasks of government should include nothing but the protection of property, liberty, and security. Everything beyond this is “evil”. One example of the difference between Mises’s and Hobhouse’s liberalism is economic support to the unemployed. Such benefit schemes only raises unemployment, according to Mises: “If what is involved is a case of unemployment springing from dynamic changes in the economy, then the unemployment benefits only result in postponing the adjustment of the workers to new conditions. The jobless worker who is on relief does not consider it necessary to look about for a new occupation if he no longer finds a position in his old one; at least, he allows more time to elapse before he decides to shift to a new occupation or to a new locality or before he reduces the wage rate he demands to that at which he could find work. If unemployment benefits are not set too low, one can say that as long as they are offered, unemployment cannot disappear.”

In short, the liberalism of Ludwig von Mises is founded on considerations regarding which kind of system will be most effective when it comes to increasing material wealth. In his voluminous work Human Action, from 1949, he sharpens his critique against the “interventionist” systems between socialism and (classical) liberalism. Especially important for him is that the price mechanism works without obstacles, i.e., that prices of goods, wages, interest rates etc., are set without institutional obstacles, so that the right relation of supply and demand is revealed. The longer one – through government planning – drifts away from the price formation process of the free market, the worse the economic outcome will be when it comes to material well-being. (Mises explicitly focuses on material needs, because he perceives that that is what most people want to maximize. He is, in other words, attempting a value-free means-end discussion about the best policy, given people’s preferences.)

Another economist who wanted to take back the term liberalism from the social liberal camp was Friedrich August Hayek. He was the driving force behind the formation of the Mont Pelerin Society, established in 1947 with the intention to reshape liberalism. The contention was that this concept had been connected with “arbitrary power” and had lost its connection to private property and market competition. There is also a critique against the assumed loss of belief in “absolute moral standards” and Rule of Law. To Hayek, Western civilization was a result of liberal ideas. Therefore he did not like that liberalism – especially during the first half of the 20th century – hade been mixed with socialist ideas. This is something which will lead to totalitarianism, he claimed, and, like Mises, he sets up a liberal (in his classic sense) regime as a counterpart to socialism, and claims that one must avoid middle stages. The most “populist” expression of Hayek’s thinking is The Road to Serfdom, from 1944, in which he claims that government planning is a route that may lead to naziism and fascism.

Anyway, the founding of Mont Pelerin Society was an important part of the creation of a new liberalism – neoliberalism – with the message that all forms of collectivism, even milder, rationalistic, liberal reforms, will lead to dictatorship and economic disaster.

In this essay, I have avoided criticizing any of the discussed systems of thought directly. My main purpose was to showcase the tendency to polarization that seems to exist within all ideologies, as well as between different ideologies. During the 20th century it is obvious that the kind of radicalism espoused by both communists and neoliberals has not been popular among democratic voters to any large degree. And it his hardly an original observation on my part that politics in Western democracies has revolved around solutions that lie slightly to the right or slightly to the left of the center (regardless of temporary longer forays in either direction). In light of this, it is easy to question whether the strong either-or thinking regarding socialism and liberalism of, for example, Mises and Hayek can ever be accepted by the large mass of people whose political thinking includes both equality and liberty, both private capitalism and social engineering, both personal responsibility and tax-based solidarity.