I liked Jay Richards’s post about markets and moral character, but I think he leaves out another important point. Robert Reich complains that the market erodes the wages of workers. This is of course sometimes true for some workers for some of the time (though it’s hardly as if workers in more statist societies uniformly see their paychecks swell). But let’s stipulate for the sake of argument that Reich’s example of (relatively) free trade eroding wages has merit. That same sort of trade indisputably improves the purchasing power of those wages. If China can make a widget at a third of the price, then an American family desperately in need of widgets can save a lot of its money by buying Chinese widgets.
But in Reich’s example of big-box stores benefiting consumers he makes it sound as if saving money on life’s essentials is some sort of shabby enterprise, as if wanting to spend less on milk and bread is a form of greed.
I’m no unmitigated fan of Wal-Mart, but it can’t be denied that Wal-Mart—and stores like it—have improved the lives of a lot of low-income families by making life’s necessities, and even its luxuries, affordable. Lightbulbs put a lot of candle makers out of business, but lightbulbs also made indoor lighting cheaper, safer, and more widespread. That’s a good trade.
Indeed, the market is the only thing that transforms luxuries into affordable indulgences. A low-end car today has features that the best Mercedes didn’t have a generation ago. Teenagers have phones that are more powerful than the computers that NASA used to put men on the moon. Indeed, even leisure has become democratized. Here’s Christopher DeMuth writing in Commentary in 1997:
In the wealthy Western democracies, material needs and desires have been so thoroughly fulfilled for so many people that, for the first time in history, we are seeing large scale voluntary reductions in the amount of time spent at paid employment. This development manifests itself in different forms: longer periods of education and training for the young; earlier retirement despite longer life spans; and, in between, many more hours devoted to leisure, recreation, entertainment, family, community and religious activities, charitable and other nonremunerative pursuits, and so forth. The dramatic growth of the sports, entertainment, and travel industries captures only a small slice of what has happened. In Fogel’s estimation, the time devoted to nonwork activities by the average male head of household has grown from 10.5 hours per week in 1880 to 40 hours today, while time per week at work has fallen from 61.6 hours to 33.6 hours. Among women, the reduction in work (including not only outside employment but also household work, food preparation, childbearing and attendant health problems, and child rearing) and the growth in nonwork have been still greater.
There is a tendency to overlook these momentous developments because of the often frenetic pace of modern life. But our busyness actually demonstrates the point: time, and not material things, has become the scarce and valued commodity in modern society.
DeMuth’s essay reads a little too bullish given today’s economy, but his point is still correct. Remember, Adam Smith wrote that the “The wealth of a state, consists in the cheapness of provision and all other necessaries and conveniences of life.” (Mark Perry had a great post here the other day about how commodities have grown cheaper over time, despite the increase in human population, thanks to the creativity, adaptability, and dynamism of the market).
Reich has a tendency to see all economic questions through the prism of “what is good for unions,” and it colors his analysis.
One last point. I love the Templeton Foundation and I think they do fantastic work. But questions like “Does the Free Market Erode Moral Character?” bother me a great deal. As opposed to what? Socialism? Socialism certainly erodes moral character. Some of the most alienated, selfish, deracinated people I’ve ever met were people who grew up under the yoke of Communism. Arthur Brooks’s work has definitively shown that large welfare states siphon off philanthropy and erode altruism.
Adam Smith’s case for the free market rested on the fact that it encouraged good character (as Yuval Levin recently detailed), and I think Smith won that argument a long time ago. A more fruitful question, with deep religious and philosophical implications and precedents, would be “Does wealth erode moral character?” Debating that would still allow for some healthy attacks on the free market, because without free markets, wealth really isn’t something to worry about.