Trade and the collective-action problem

No, it’s not irrational or morally wrong for Americans to care more about the well-being of other Americans than about the well-being of Belgians, any more than it’s irrational or morally wrong for parents to care more for their own children than for other children. Local social capital is valuable, and ought to be tended.

Alex Tabarrok makes a moral case against worrying about whether some forms of trade might, on balance, damage the economic interests of the residents of the United States. Why, he rhetorically demands, should we base our evaluation of the gains and losses from trade “on arbitrary characteristics like which side of the border the actors fall on”?

As Brad DeLong says, Tabarrok’s expression of love for all humankind is praiseworthy. But it seems to me that his argument embodies a major analytical mistake: it ignores the collective-action problem and the importance of the social capital embodied in groups smaller than all of humanity, including the nation-state.

One of the fundamental facts about human beings is our capacity to cooperate at large scale, over long distance, and over time. Economic exchange is an important means of facilitating cooperation, but it is not the only means. Kinship, norms enforced by reputational effects, and state action also organize cooperation. It is neither irrational nor morally wrong for me to be more eager to benefit, and more reluctant to harm, those with whom I cooperate more, because they are my relatives, because they are my neighbors or my co-workers or my fellow-members of other groups that embody collective social capital, or because they are my fellow-citizens.

The sovereign state has the capacity to pay for public goods by compulsory taxation, thus avoiding the free-rider problem. Wages or profits earned by people or firms that pay U.S. taxes are more important to me than wages or profits earned by those who pay taxes elsewhere, because I get a share of those wages or profits in the form of greater expenditure on public goods or reduced taxation. But even putting that aside, the feeling of community among Americans or Mexicans or Germans or Thais has all sorts of beneficial results (along, of course, with some quite horrible ones).

Does that mean that nations should be entirely selfish? No, any more than the fact that parents care more about their own children than they do about other children means that families should be entirely selfish. In particular, a big, rich country like the U.S. ought to be a generous contributor both to world-scale public goods and to the needs of the global poor. I would like to help convince my fellow-citizens that their pride as Americans ought to lead them to want our country to do its share of the world’s common tasks.

But I can’t do that from a position that dismisses their pride as Americans as something they ought to outgrow, because (as Tabarrok would have it) being American is of no more moral significance than being left-handed. We are all members of multiple moral communities. And we can’t make ourselves better members of the larger ones by making ourselves worse members of the smaller ones. Think globally, act locally.

Footnote To take a homely example, common to Tabarrok, DeLong, and me: we’re all members of widely-disseminated research communities: “invisible colleges.” But we are also all members of “visible colleges” that issue our paychecks: specific departments within specific universities. Is it wrong for us to help members of our own departments (for example, mentoring junior colleagues) in ways that we wouldn’t help the very same people if they were elsewhere? Or is it rather part of what it means to be a colleague? A department in which collegiality has no moral weight is unlikely to perform its functions well, and it’s likely to be a miserable place to work.


More on this: an exchange of emails with Alex Tabarrok, and some related thoughts from Robert Frank.

I’m told that Anna Brewer Stilz, now teaching at Columbia, addressed this class of issues in her Havard Gov. Dept. Ph.D. dissertation (not yet published): Squaring the Circle: The Problem of Motivation in Democratic Thought.


Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact:

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