How a market believer and market skeptic disagree in an unexpected way
Robert J. Shiller, a finance professor, writes in Finance and the Good Society (Shiller, 2013) about how finance (and markets) contribute to bringing the good society near. Shiller beliefs that markets (and finance) can solve many of our problems.
Michael J. Sandel, a political philosopher, contradicts this belief in markets in his book What Money Can’t Buy (Sandel, 2013). Sandel argues that markets corrupt goods that we hold dear, and that financial incentives crowd out intrinsic motivation and civic morals.
Market believer v. Market skeptic
Based on their books, we can call Shiller a market believer and Sandel a market skeptic. But, maybe not entirely. On the consumption of wealth (generated by those markets) the two men seem to disagree unexpectedly.
Shiller observes that consuming goods that signal social status, so-called “positional goods”, cause resentment and that taxing such goods progressively makes sense. Although unfeasible now, Shiller thinks policymakers should introduce a tax on “positional goods” when the opportunity arises.
Remarkably, Sandel mentions early on in his book that “[i]f the only advantage of affluence were the ability to buy yachts, sports cars, and fancy vacations, inequalities of income and wealth would not matter very much.” Seemingly, “positional goods” do not concern Sandel, like other moral subjects do, such as markets for life and death.
Undecided; a lesson learned
Although it is undecided whether we need action on the wealthy showing off, we have nonetheless learned a lesson. How can a market believer argue for higher taxes on “positional goods”, a kind of goods that do not concern a market skeptic? You would expect to find Shiller and Sandel on different sides of this argument. This, to me, above all means that the kind of fundamentalism we sometimes attribute to people (and their scholarly fields) is not actually there.
References
- Michael J. Sandel (2013). What Money Can’t Buy: The Moral Limits of Markets
- Robert J. Shiller (2013). Finance and the Good Society