Among other things, morality is a bunch of heuristics that work pretty well—often better than explicit calculation, given our limitations—to produce outcomes that are better for all concerned. (Of course they don’t always work.) One reason why the heuristics can work better than explicit calculation is that they take into account (albeit fuzzily and inaccurately) things that may get missed completely in our explicit calculations.
For instance: We tend to think of monopolies as morally bad. But that isn’t just because they produce too little of their product and keep prices high. It’s broader than that: the intuition is more that they have “too much power” and we don’t trust their motives.
For instance: We tend to think of polluting firms as morally bad. But that isn’t just because they produce too much of their product. In fact, it isn’t at all because they produce too much of their product. If they could produce 10x more of the product without polluting more, that would be just fine. It’s because they are doing something harmful—and because their choice to do that might indicate that they’d be willing to do other harmful things too, if it increased their profits.
Put those two together. A polluting monopoly has too much power and too much willingness to do harmful things. That’s a bad combination. Even if they do better than a polluting non-monopoly or a non-polluting monopoly at producing the optimal amount of their product.
For instance: You can change your level of pollution by other means than making more or less product: you can, for instance, change your manufacturing processes. A company that cares about its public image may pollute less in order to preserve that image. A company that demonstrably doesn’t mind polluting, and that doesn’t need to care about its image to keep its sales up, is unlikely to do that.
For instance: A company that doesn’t care about harmful externalities, and that can afford to be inefficient because it has a monopoly, may be more willing to engage in other socially harmful behaviour: bribing politicians (more or less openly; in Western democracies one common way is to offer board seats or lucrative advisory positions to ex-politicians who have voted the “right” way), making products that are themselves harmful, reducing the quality of their product without lowering prices in order to take more profit, etc.
Economics is not a morality tale. But sometimes it is something worse.
Among other things, morality is a bunch of heuristics that work pretty well—often better than explicit calculation, given our limitations—to produce outcomes that are better for all concerned. (Of course they don’t always work.) One reason why the heuristics can work better than explicit calculation is that they take into account (albeit fuzzily and inaccurately) things that may get missed completely in our explicit calculations.
For instance: We tend to think of monopolies as morally bad. But that isn’t just because they produce too little of their product and keep prices high. It’s broader than that: the intuition is more that they have “too much power” and we don’t trust their motives.
For instance: We tend to think of polluting firms as morally bad. But that isn’t just because they produce too much of their product. In fact, it isn’t at all because they produce too much of their product. If they could produce 10x more of the product without polluting more, that would be just fine. It’s because they are doing something harmful—and because their choice to do that might indicate that they’d be willing to do other harmful things too, if it increased their profits.
Put those two together. A polluting monopoly has too much power and too much willingness to do harmful things. That’s a bad combination. Even if they do better than a polluting non-monopoly or a non-polluting monopoly at producing the optimal amount of their product.
For instance: You can change your level of pollution by other means than making more or less product: you can, for instance, change your manufacturing processes. A company that cares about its public image may pollute less in order to preserve that image. A company that demonstrably doesn’t mind polluting, and that doesn’t need to care about its image to keep its sales up, is unlikely to do that.
For instance: A company that doesn’t care about harmful externalities, and that can afford to be inefficient because it has a monopoly, may be more willing to engage in other socially harmful behaviour: bribing politicians (more or less openly; in Western democracies one common way is to offer board seats or lucrative advisory positions to ex-politicians who have voted the “right” way), making products that are themselves harmful, reducing the quality of their product without lowering prices in order to take more profit, etc.
Economics is not a morality tale. But sometimes it is something worse.