Tuesday, January 13, 2009

The Economics and Morality of Distributed Costs

Some time ago it was (kind of) asked if spending $100M on a presidential campaign was immoral. I pointed out that $100M was something like 20% of 1% of what America spends on ice cream. I still buy that as a valid comparison, but it asks a follow-up question:

If Bill Gates buys $200,000 in ice cream one year, does that carry the same moral value (magnitude and direction) as the city of Muscatine, Iowa spending $200,000 on ice cream in the same year?

In other words, the same amount of money was prioritized to go to ice cream, but is there some reason why it's okay for the citizenry of Muscatine to spread the cost of that $200,000 around on something frivolous while it's not okay to concentrate that amount of frivolity?

2 comments:

James Parsons said...

I think I recall this conversation, sort of. The original dilemma was that the campaigns were so expensive and such a misallocation of resources, while the counter argument was that given the importance of the endeavor that the amount of money spent was a pittance in relation to what is the unremarked upon but truly frivolous.

I think the question in either case (concentrated or diffused) is what kind of value you're getting for your expenditure. If the $100M dollars produced a qualitatively "better" campaign (more informative, more inspiring, more inclusive, or basically just a more successful President) than one which cost half as much or less, then the complaint wouldn't be a moral one. Spending isn't immoral; wasting is.

To make the comparison to ice cream, if Bill Gates or the townsfolk of Muscatine get a reasonable amount of pleasure from their ice cream, don't overindulge to the point of ill health (obesity, heart disease, whatever), etc., then there's no moral dilemma. If however, Bill Gates allows 100 thousand dollars worth of Haagen Daaz to go bad in the freezer or the citizens of Muscatine buy ice cream instead of healthy school lunches, then you have a conscious (and therefore immoral) waste of resources.

I think the only way the "concentration of frivolity" comes into it is that Bill Gates alone would have a hard time eating all that ice cream himself, and so some amount of waste or extreme over-indulgence is assumed/implied. At a certain level, you can't actually utilise everything you can easily buy. ("How many yachts can you waterski behind?!?" asks an incredulous Charlie Sheen!) If Gates buys rare $50K/pint Tiger Liver flavored ice cream, then the waste is not in quantity, but in the slightly more amorphous measure of quality (how much tastier can Tiger Liver Ice Cream be than Cold Stone Fudge Ripple?) But, assuming he's just getting enough Edy's Grand for a big summer barbecue at the compound, then no problem.

Anonymous said...

You could turn it on its head. Taking into consideration how much money Gates has given away via the foundation, he can have as much ice cream as he wants and who cares. But what have the inhabitants of Muscatine done for the disadvantaged? Maybe they should get no ice cream.