But that shift doesn’t mean that there isn’t a deep moral tenet – a belief in the value of human freedom – at the core of our discipline.
Some economists made that belief explicit. In the 18th century, Smith wrote, “Every man is, no doubt, by nature, first and principally recommended to his own care; and as he is fitter to take care of himself than of any other person, it is fit and right that it should be so.”
In the 19th century, John Stuart Mill asserted, “The only freedom which deserves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it.”
In the last century, Milton Friedman offered “freedom is a rare and delicate flower” and “a society that puts equality — in the sense of equality of outcome — ahead of freedom will end up with neither equality nor freedom.”
Economists, like Friedman, often made the case that freedom had instrumental value — it achieved other aims, including equality and prosperity. But no one should doubt that Friedman and Mill and Smith saw freedom as a fundamental good, a thing to be valued for itself. That is, after all, how freedom is treated at the very heart of economic theory.
I think I like John Stuart Mill’s version the best, since it roughly translates to “go make yourself happy, but don’t screw anyone else in the process.” Glaeser goes on in the article to take more about freedom (specifically, freedom of choice), where he points out that increased utility (i.e. happiness) comes from an expanded “choice set,” which one can interpret as increased freedom to choose. (He does gloss over the overchoice problem, but I am pretty sure that even most behavioral economists would prefer individuals choosing to constrain their own choices to outright choice limitation.) This notion is nothing out of the ordinary in economics, but it’s often a concept that is hijacked and interpreted in whatever way is, well, convenient. (Yep, I’m talking to you, Rand Paul.)
As such, Glaeser makes an important point on the distinction between freedom and laissez-faire policy:
Economists’ fondness for freedom rarely implies any particular policy program. A fondness for freedom is perfectly compatible with favoring redistribution, which can be seen as increasing one person’s choices at the expense of the choices of another, or with Keynesianism and its emphasis on anticyclical public spending.
Many regulations can even be seen as force for freedom, like financial rules that help give all investors the freedom to invest in stocks by trying to level the playing field.
The belief in freedom does, however, create a predilection for human interaction and trade. As Friedman wrote, “The most important single central fact about a free market is that no exchange takes place unless both parties benefit.” For many economists, defending free trade isn’t just about gross domestic product; it’s fighting for core values of freedom and human interdependence.
In fact, freedom, fairness and laissez-faire policy are really only aligned when no one’s freedom to do what he wants conflicts with anyone else’s freedom or liberty. This point is easily illustrated via a conveniently July-4th-themed example:
I was at a rooftop party last night where people were shooting off fireworks from the sidewalk next to the building. In other words, these people were using their freedom of choice to obtain fireworks and set them off in the middle of the city. I, on the other hand, am a little scared of fireworks, and the fireworks were getting very close to the roof deck. I very much wanted to exercise my freedom to both go to my friend’s party and not get shot in the eye with festive gunpowder, but this didn’t really seem to be an option. (And no, I don’t usually have this much of a bug up my butt, I just really don’t like fireworks in my personal space.)
On a logistical level, economists would argue that this is not a problem, since if the fireworks annoyed me more than they made the people setting them off happy, there is an amount I should be willing to pay to make the fireworks stop, and this would be an efficient outcome. From an ethical standpoint, however, it can easily be viewed as unfair that I should have to pay to maintain my rights while the people setting off the fireworks get compensated for being careless boneheads. (One could also argue that the correspondence between philosophical importance and willingness-to-pay only works if the fireworks aficionados and I are at roughly the same levels of income and wealth.)
Regulations against fireworks (yes, it was illegal to set them off in this location) implicitly acknowledge that the rights of people to not get shot in the eye with gunpowder supercede the rights of people to shoot off M-80’s in crowded spaces. On the up side, regulation takes payments and bargaining costs off the table. Furthermore, if regulation assigns rights efficiently (i.e. in line with the outcomes that people would arrive at via bargaining by self-interested* parties), then regulation does in fact increase overall freedom. On the down side, regulators have to guess a bit about what rights and freedoms are more valuable than others, which is where things can get more than a little sticky. If the tables were turned, for example, it could also be viewed as unfair that the fireworks people should have to pay and I should get compensated for being a party pooper. This is why ethics is hard.
For now, I will celebrate freedom in the way that nature intended- with hot dogs wrapped in bacon.
* I specifically said “self-interested” because I am not sure what to do, within the context of this framework or otherwise, with people who want, out of principle rather than personal impact, to regulate the behavior of others. Can someone please ask Ronald Coase how his theorem fits with those who are willing to pay to block gay marriage, for example?