A pretty good president because he fought to protect wildlife, even while shooting it. Or riding it.

Friends, I was recently engaged in a discussion with a gentleman who argued that while people do have a right to life they do not have a right to water.

I replied that he clearly had not thought this through

But his statement and his further claim that water is a commodity that should be traded like gold are tied to a much larger issue.

This is the fact that many economists like to reduce the value of everything to a mere price tag.

I believe that in this they are making a rather subtle mistake: they are confusing something’s value with its cost.

Damn you! And your cuteness.

Damn you! And your cuteness.

The economists’ argument will follow shortly but first I must point out, as I so often do, that in any field as broad as Economics trying to put everyone under the same heading is silly.

I am certain that there are economists who already know what I’m about to say. But that doesn’t mean that the argument I am laying out doesn’t represent a definite trend. A trend that needs to be critiqued.

And then burned at the stake.

Well it's still better than "because I said so..."

Well it’s still better than “because I said so…”

Anyway, the economists’ argument for putting a price tag on literally everything goes like this:

1. If something has value then people are willing to pay for it. Even something as ephemeral as a sunset or a gorgeous mountain view can be given a financial value.
2. Giving something this financial value is easy peasy! Because it simply is whatever amount people are willing to pay for it.
3. So if someone is willing to pay an extra million bucks for a house because it has a stunning view then that just is what the view is worth to the person.

There you go. Now everything has a financial value. All is well, right?

Well, no.

See, the problem with this approach is that it ends with one placing a price tag on things that are priceless like the above-mentioned water, or air, or even human life itself.

The economists’ response is then to say that I am being naive and that human life clearly does have a price tag since doctors, emergency services and indeed entire healthcare systems have to make this call on a daily basis.

The fact is that even in the ‘socialised’ healthcare systems of Western Europe actuaries still have to decide which life-saving services to offer and which are simply too expensive. This makes sense, and is the right thing to do, because if we blew all our money on a few patients the whole system would get bankrupted which would hurt far more people.

If your grandad’s bionic heart costs the same as five heart bypass surgeries then I’m sorry pappy but you need to hush.

Only dreams now.

But the fact that healthcare systems have to make pragmatic calls about funding doesn’t prove that life itself has an inherent monetary value.

Let’s try out a thought experiment. Let’s say that a healthcare system has done the math and has decided that they cannot afford to spend more than $500 on each patient. That’s just the reality.

But then a happy coincidence comes to pass. A humanitarian industrialist donates eleventy billion dollars to the healthcare system. Everyone rejoices, the actuaries do the math again and they find that they can now afford to spend $1000 on each patient.

What has happened here? Are we supposed to believe that the value of a life, the actual inherent worth of a human being as a human being, has suddenly doubled over night? That seems silly because it implies that the more money there is the more valuable people are.

Let’s try the experiment again except this time the humanitarian industrialist donates all the money. All the money in the world is now thrown at healthcare. All doctors in all hospitals are now awash in a sea of infinite cash.

manatee is generous god

A manatee philanthropist! A manphanthropist!

How much money would we spend on saving lives then? Why, as much as we could, of course. If there was a 0.001% chance of saving a life if we spent a trillion dollars on a suit of exoskeletal battle armour then we would do it, because there would be no reason not to.

Because human life is priceless, and we all know it.

Contrast this with something like a hamburger. Even if you have all the money you are unlikely to buy a hamburger if it costs a thousand bucks. It’s not worth it.

But some things, like human life, are.

What is happening when healthcare systems allocate funds is not a case of them deciding how much a life is worth. It is a case of them deciding how much they can afford to spend, and that’s not the same thing. It has nothing to do with the life’s value and everything to do with its cost.

To explain the difference let’s use the example of water. The cost of water is very cheap. But the value of water is infinite. If a billionaire who is dying of dehydration gets offered a bottle of Evian for 50 grand and she agrees to pay it she is not saying that this is what the bottle is worth, she is merely acknowledging that this is what it currently costs.

You could keep raising the price of that water forever and she would keep agreeing to pay it, because the alternative is death.

And life is priceless.

People can of course also cite legal examples in which wrongful death results in a cash settlement. But that also has nothing to do with the value of the lives that have been lost.

Those settlements are determined by judge and jury who decide what an appropriate punishment is. If a jury was told that awarding damages of $50M would magically bring the wrongfully killed back to life then they would probably do just that. The same goes for $100M or a billion, or ten.

Once again the cost can infinitely inflate to get as close as possible to the value.

But sadly case-based resurrection is not an option and so court settlements are not about the value of life. They are about the lowest amount of money that will both compensate the bereaved for their suffering and be large enough to make those responsible (like Shell, Pfizer or Halliburton) behave more morally in future (good luck with that).

Viewed in this way it seems obvious that many of these decisions are not about value, but only about cost.

This poses the question of why many economists insist on reducing everything to a mere price tag? Simple: it’s easy, and they don’t have the balls to admit that they haven’t got an alternative.

Naw bro, if you look like 200 meters to your left you forgot to carry a 1.

Naw bro, if you look like 200 meters to your left you forgot to carry a 1.

The breed of economist that I am criticising enjoys using numbers because numbers are unambiguous and thus they provide a false sense of accuracy.

But like any tool numbers are only as accurate as the use to which they are put.

Numbers are precise, but that doesn’t mean they are accurate.

And while using numbers to determine the cost of a human life is  (unfortunately) appropriate using numbers to signify the inherent value of a life is not appropriate at all, and we can see this by the fact that the apparent cost keeps inflating to a potentially infinite degree as more funds become available.

It’s not about what the life is worth to you, it’s about how much you can afford to spend.

And when these economists claim that things don’t actually have an inherent value and that value is wholly determined by the market what they are really saying is that they can’t think of an alternative, and they are hoping that no one notices.

Well, I have noticed.

And what I have noticed is that people, especially economists, don’t study enough Philosophy.

If they had studied Philosophy then they would have heard of the is/ought distinction. This is something that I’ve mentioned several times before.

An is/ought distinction occurs when someone confuses how something is with how it ought to be. The way things are is that we need to put monetary limits on things like healthcare. But that’s not how things should be.

We ought to do whatever we can to save whomever we can.

And we are likely to forget that, as these economists have, when we reduce people’s lives to mere numbers in an effort to fake accuracy, where there is only uncertainty.

-TTB

Oh Mister Rogers, if only I could quit you.

Oh Mister Rogers, if only I could quit you.

[EDIT: Nick Hanauer and Eric Beinhocker have actually written an article that covers exactly the same issues I’m discussing, but with references to actual economists and proper use of numbers and shit.

I highly recommend it that you all read it right here.

The gist of it is that prosperity can best be thought of not as the accumulation of money but rather as the accumulation of solutions to the problems that people face. This of course must also include access to those solutions.]

[Standard Disclaimer: this post was entirely my own opinion and was not paid for in any way, directly or otherwise, by anyone or anything that stands to gain in any way from the ideas expressed herein.]

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