Marginal Utility in International Context
Mao, Chad (wikimedia)
It’s worth saying explicitly that the points I was making yesterday about the egalitarian implications of the declining marginal utility of money apply even more forcefully to the international context. An extra $1,000 a year in income for a developed world lawyer is doing a lot less to enhance human welfare than is an extra $1,000 a year in income for a person currently getting by on $1 a day. I think one has to be realistic about the level of concern for foreigners that it’s reasonable to expect a given government to manifest, but also important to try to expand the bounds of people’s consciousness with regard to these kind of things.
Foreign aid is normally what comes to people’s minds immediately when they think about the global poor. But it’s also worth considering the impact of our immigration policy (quite positive compared to most other developed nations), our trade policy (not so hot), and our approach to climate change. As I’ve observed before, the conventional way of doing cost-benefit analysis has the perverse effect of weighting harms to rich people more heavily than harms to poor people when if anything it should be done the other way ’round. If you ruin the livelihood of a professional political blogger living in the USA, he’ll probably find another job to do. Certainly he won’t starve to death. If you ruin the land of a third world farmer living near the margin of subsistence, the alternatives are incredibly bleak.
28 Responses to “Marginal Utility in International Context”
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July 21st, 2009 at 12:23 pm
I think this discussion is missing the point. Money is a means, not an end, and if we are going to talk marginal utility (which, of course, has its dead-ends) we need to grasp the context in which that money exists. If there are structural barriers to health, educational, or social goods, then money, in and of itself, isn’t going to provide any boost in “utility.” The superficial understanding of money as inherently valuable leads us to the naive view that ramped-up foreign aid will solve all the world’s poverty problems.
July 21st, 2009 at 12:33 pm
About immigration: Let’s not kid ourselves. It may well benefit the U.S., but it doesn’t benefit the countries of origin except in the most immediate, short-sighted way. Countries that live on remittances, and that aren’t pressured towards positive change by their most resourceful and educated citizens, are going to be poor forever. Immigration to the U.S. is a gift to the parasitic elites of immigrants’ countries of origin.
July 21st, 2009 at 12:35 pm
“An extra $1,000 a year in income for a developed world lawyer is doing a lot less to enhance human welfare than is an extra $1,000 a year in income for a person currently getting by on $1 a day.”
A 5% unemployment rate for government workers and lobbyists in Washington DC does a lot less for the other states with 10% employm3nt plus.
July 21st, 2009 at 12:36 pm
If we really cared about maximizing per-person utility we’d be working as hard as we could to limit fertility rates in poor countries.
July 21st, 2009 at 12:40 pm
How can someone be an unemployed government worker?
July 21st, 2009 at 12:45 pm
@4:
The rich world got out of the Malthusian trap not by limiting fertility, but by development. Given that we have many examples in memory of the latter to draw on (Korea, Botswana, etc.), and none, that I can think of at least, of the former, it seems that development will be an easier route toward prosperity than finding a way to reduce the population of poor countries while maintaining their economic output.
July 21st, 2009 at 12:52 pm
It’s probably more informative to think about this sort of thing with something like a “compensating variation” framework — what income increase for a destitute farmer in an undeveloped country yields an increase in utility equal to that received by a developed country lawyer’s income increase of $1,000?” — answer is probably “not much in dollar terms.”
July 21st, 2009 at 12:59 pm
“than is an extra $1,000 a year in income for a person currently getting by on $1 a day.”
Umm that extra $1K better go to his wife. If he gets it, it will go to drugs and prostitutes. And don’t get me wrong, those prostitutes are pretty good and need their money too. But if you give that money to his wife, she’ll start a restaurant that will be famous ten years from now. And her kids will go to school. The mom wants that, just like any other mom. Dad wants to drink whiskey and screw prostitutes until he has no money left. So who do you want to give the money to?
Women there are actually worse with their money, but they do have one thing going for them: They spend their money on their kids first, then they blow the rest. But even then, a woman wants basic things for their family. Like school books for the kids. They buy some other stuff, and then they get what they really want: a new dress. But you know what? If you spend all your time making sure the kids get educated and you cook the meals for the family, you damn well deserve a new dress. As for their husbands, they deserve the bullet to the head that they will get in their fighting. They were worthless pieces of crap before they got shot in the head. And no woman will shoot them. They don’t have guns, but it doesn’t matter. Someday, their husband will be shot by someone else. And the wives won’t really miss them. They’ll just take all the money that’s left and try to give their kids a chance.
And look, I’ve been harshly criticized for my take on this, ad I surely will again. But one thing that didn’t happen last time was that nobody stood up for the crack-head dad. If you think I’m being sexist by saying the women should get the money, then tell me why you want the crack-head dad to smoke up that money in twenty minutes.
July 21st, 2009 at 1:27 pm
fostert, my grandfather was a sharecropper in east Texas. During the Depression, tough times, etc. When the crops were in and he got his share, he would give nearly all the money to my grandmother. He would keep a smidgen of the money himself, and then disappear for a couple of weeks, with a number of other similarly situated men.
just a data point, if you like.
July 21st, 2009 at 1:43 pm
US immigration policy could be much more pro-poor. U.S. quotas on immigration have been found to be the largest form of wage discrimination in history.
http://ksghome.harvard.edu/~lpritch/Papers/CMP_place_premium_july10v2.pdf
I also do not believe there is evidence that less developed countries are harmed by emmigration. Does anybody have a cite on this?
July 21st, 2009 at 1:47 pm
Clearly, I’m missing something, but to me, the synthesis of fostert’s and bdbd’s comments is that since bdbd’s grandfather didn’t have enough money to spend on prostitutes, he instead went on a “fishing trip” with some similarly situated men.
July 21st, 2009 at 2:58 pm
Jason, I don’t know where ol’ grandpa went, nor what he did there. There may have been some fishing going on — many fish bite if you’ve got good bait — but I’m sure it wasn’t a focal element. Those were tough times and rustic circumstances — I doubt that what prostitutes there were would have cost much. Whatever went on, I expect some alcoholic crack-equivalent would have been involved. When I knew him grandpa was slow and relaxed with a wry sense of humor and a twinkle in his eye. In the times I’m speaking of, which are hearsay and family legend for me, he was a hard pressed man.
July 21st, 2009 at 3:14 pm
Jason L.,
Regarding the Malthusian trap- actually there are a number of quite poor (or, at least, middle-income) countries which have tremendously decreased their fertility rates in the last few decades. Vietnam and Guyana are quite poor countries with below replacement fertility rates. Brazil, Mexico, and Venezuela also have gotten out of the Malthusian trap, and while they aren’t quite poor countries they are certainly not rich ones and they all still have a lot of poor people (though Bolivarian Socialism has made it less painful to be poor in Venezuela).
I used to believe that only prosperity could lift a country out of the Malthusian trap but reflecting on the last 15-20 years of falling global birthrates convinced me otherwise.
Botswana currently has, I think, a declining or stable population due to HIV, so it’s hard to tell what the birth and death rates would be like in the absence of the epidemic.
July 21st, 2009 at 3:23 pm
oh, and ol’ grandpa had 7 kids (who grew up to be all sorts of things in post war America) — well beyond replacement.
July 21st, 2009 at 3:27 pm
I also do not believe there is evidence that less developed countries are harmed by emmigration. Does anybody have a cite on this?
In Mexico, there are whole communities that have been rendered into ghost towns due to emigration. Since most emigrants are young men, this leaves many children to grow up without their father and the father to live alone, far away, alienated, without his community, family and friends. All in all, forced mass emigration, like the one from Mexican rural areas to US agribusiness, causes much pain and hardship to the people and communities involved.
Of course, I am referring to normal men, not Fostert monsters.
As to links, there are many studies done by Mexicann sociologists and anthropologists on the subject. If you do not read Spanish, I am sure you can google up something that has been translated.
July 21st, 2009 at 3:59 pm
Err, Lupita, you do realize that those men send their money back to their wives, right?
They’re a brilliant example in support of fostert’s argument, not against.
Now, socially, for Mexico, it’s a fucking disaster, but, mate, I sincerely doubt ole fostert would disagree with you there.
July 21st, 2009 at 4:10 pm
Lupita:
Are these mostly undocumented and/or guest workers? I’d think that many fewer kids are left behind when workers legally emmigrate (which was the policy context for my comment). Do you disagree?
Also, in what sense is the migration to the U.S. “forced?” Why do they leave Mexico if they are worse off in the U.S.? Or is it only their families that end up worse off? What would these workers be doing if they stayed in Mexico? In any case, can you recommend a study? My Spanish isn’t great, but Spanish or English would be fine.
I was also mostly responding to the “brain drain” that Rich in PA was talking about. My sense is that there is not much evidence that brain drain is a major problem for developing countries, but I’d be interested in seeing contrary evidence.
July 21st, 2009 at 5:07 pm
The problem with immigration is that healthiest, the ones most anoyed about corrpution and the smartes leave the messed up countries, leaving the less smart, less healthy and less willing to take risks, not just reckless risk but also those good for society as a whole behind.
July 21st, 2009 at 7:06 pm
As usual, Lupita is correct and the yahoo hipsters who believe in free trade and free movement are wrong. Mass emigration undermines the solidarity of developing country communities, and strengthens the relations of dependency between third world countries and the west.
July 21st, 2009 at 10:41 pm
Hector,
I wasn’t saying that it’s not possible to be poor and also to have a below-replacement fertility rate; rather, I was saying that if you want to stop being poor, it makes more sense to develop than to try to control fertility while maintaining economic output. The examples of Vietnam and Guyana that you give seem to me to strengthen my point rather than weaken it.
Botswana has certainly suffered since the appearance of HIV, but has managed to hold on to its middle-income GDP/capita that it built up largely before HIV started exacting its toll.
Are there any examples of countries that initially were poor, and then didn’t appreciably increase their economic output, but did decrease their population, and thus became not poor?
July 21st, 2009 at 11:22 pm
Are these mostly undocumented and/or guest workers? I’d think that many fewer kids are left behind when workers legally emmigrate (which was the policy context for my comment). Do you disagree?
I think it is the other way around, legal residents are able to leave their families behind because they are able to cross the border to visit them and be together on special occasions. Illegal workers, on the other hand, are trapped in the US and the only way for them to have some semblance of family life is for the whole family to emigrate together. The tragic truth is that many families are split, children are growing without a parent or both parents, wives are left behind wondering if their husbands are being faithful, etc.
in what sense is the migration to the U.S. “forced?”
By poverty, particularly rural, NAFTA-induced poverty.
What would these workers be doing if they stayed in Mexico?
Probably brandishing machetes with the Zapatistas.
can you recommend a study?
If you want statistics, I recommend CONAPO. For an article about ghost indigenous communities, you may find this interesting.
July 21st, 2009 at 11:23 pm
Thank you, Hector. You are much too kind.
July 22nd, 2009 at 1:46 am
Another tragic outcome of mass emigration from rural areas is that we no longer have Mexican corn to make real tortillas, which is the basis of Mexican cuisine. Mexico now imports American corn which produces tortillas that cannot withstand a drop of salsa without disintegrating.
Fatherless children eating mushy enchiladas and Coke, that is what we have become. It is very sad.
July 22nd, 2009 at 1:56 am
If one is concerned exclusively with average per capita utility, then one needn’t use any kind of “Malthusian” argument for reducing the fertility of those whose kids will likely have the least happy lives (and poverty is one element of that, although there are many others, like parents with substance abuse problems, violent temperaments, or even an emotionally sterile coldness which could in its subtle way be quite unpleasant for the kid.)
But then Derek Parfit asks you if that means you wish that some group of aliens in the Andromeda Galaxy with no conceivable contact with any other world and who are somewhat less happy than the galactic average but live worthwhile lives on their own terms should be winked out of existence to increase the average, and if you say no, he takes you all the way to the repugnant conclusion.
July 22nd, 2009 at 7:48 am
Re: Fatherless children eating mushy enchiladas and Coke, that is what we have become. It is very sad.
Lupita,
I agree that is very sad. (Are you Mexican btw, since you use ‘We?’) Many of today’s hipsters will not find it sad though. Under the influence of the more unpleasant strains of feminism they consider that fathers are unnecessary to a well adjusted childhood, and simply an out-of-date patriarchal concept. Their vision of utopia would have a lot of fatherless homes. Particularly since their ideology emphasizes promiscuity, abortion, swinging, and other practises that undermine the institution of the family.
July 22nd, 2009 at 7:48 am
Poverty is a political problem, not a foreign aid problem, or a immigration problem, or a trade problem.
Without institutions to empower citizens, such as law, private property, and open markets, dictators will always use the citizenry as chattel.
Obama supporting a wannabe dictator isn’t helping matters.
July 22nd, 2009 at 8:22 am
Re: Another tragic outcome of mass emigration from rural areas is that we no longer have Mexican corn to make real tortillas, which is the basis of Mexican cuisine.
Don’t forget that NAFTA is a big part of this. Mexican corn farmers cannot compete with subsidized American corn (nor can Mexican sugar growers compete with subsidized American corn syrup). Free trade and mass emigration are just two aspects of a unified thing called Late-Capitalism, which seeks to reduce all human beings to mere interchangeable factors of production. And also, do not exempt the Mexican elites from your criticism. The Mexican regime in the early 1990s was only too happy to dismantle the village cooperative farms that had saved vast numbers of Mexican peasants from destitution.
Re: Probably brandishing machetes with the Zapatistas.
Exactly. This is a big part of why the collaborationist oligarchies in Latin America support mass emigration, because it saps martial vigor among the peasant and working classes, and encourages them to think of themselves as individuals rather than as members of an oppressed group. Though I will say this- in some instances emigration is a good thing. I’m glad that the dispossessed Venezuelan oligarchy is trying to emigrate to Miami so they can sip mojitos on the beach, instead of remaining in Venezuela to form a Fifth Column.
July 22nd, 2009 at 1:56 pm
Lupita:
“legal residents are able to leave their families behind because they are able to cross the border to visit them and be together on special occasions. Illegal workers, on the other hand, are trapped in the US and the only way for them to have some semblance of family life is for the whole family to emigrate together.”
Thanks for this. This is a very good point. I saved the links you sent and will read them as soon as I have free time.