Different Rules for Different Worlds

It’s Christmas Time.  That magical time of year where friends get together, families visit, and, for a little while, all seems well.

But, as sure as Christmas time comes around, we also get economic defenses of Scrooge and calls for cash to be given rather than gifts.  From a mainstream economic point of view, there’s nothing inherently wrong with these articles.  However, they miss a larger point, a point once known to economists, but have since been forgotten (or trivialized): moral rules matter.

Humans, as social creatures, live in two worlds at once (to paraphrase Hayek).  We live in our personal worlds, which have their rules, and we live in the commercial/interpersonal world, which has its own set of rules.  We must move in between these worlds constantly and manage the two rule regimes.  What is appropriate in one world may not be appropriate in the other.

By way of example, imagine if a friend asked you for a ride somewhere.  It’d be frowned upon if you asked him for money (outside gas money or maybe tolls). However, for a taxi to do the same thing, you’d expect to pay and there’d be no impropriety. No one would accuse the taxi driver of inappropriate behavior and no disapprobation levied on him. However, for a friend to make a profit, it’d be inappropriate and he would be saddled with disapprobation (considered a bad friend, etc).  Asking for money would violate the rules in the personal world but not the interpersonal world.  To try to apply the rules of one to the other would be problematic.

We expect people to behave in certain ways.  The cold indifference Scrooge shows toward Cratchit elicits feelings of disapprobation, especially during Christmas.  We expect this time of year to bring about beneficence and we expect employers to treat their employees a certain way.  When the interpersonal rules are applied in this situation, they appear wholly inappropriate, at least within a certain level of propriety.   Further, Scrooge’s transformation at the end of A Christmas Carol is itself praiseworthy.  He becomes benevolent, which is virturous.

I hasten to point out that nothing Scrooge does, either before or after his transformation, is unjust.  Scrooge, at no time, violates any rules of justice: he does no harm to anyone.  But simply because an act is just does not mean it is praiseworthy.  As Adam Smith says, the rules of justice can be obeyed by sitting still and doing nothing; but that behavior is hardly grounds for any approbation.  Justice is a negative virtue; it only affects other people when ignored.  Benevolence and the other virtues are positive, and they can do real good through acting.  While Scrooge was surely just, he was hardly praiseworthy.

Another example of the difference between these two worlds is from cash as a Christmas gift.  Again, from a purely economic point of view, there is hardly anything to object to.  But we are not in the interpersonal world of economics, but rather the personal world, where different rules exist.  One of those rules is: you give gifts to those you love.  Money is unacceptable according to these rules.  Loved ones are expected to exchange thoughtful gifts, not cash.  Violations of those expectations lead to hurt feelings and disapprobation.

One of the things these economic models of gift-giving do not take into account is the moral currency from obeying the rules.  This is likely why an institution that is so inefficient on its face (gift-giving) has remained a tradition for centuries.

Humans are social creatures and we live in multiple worlds at once.  Using a set of behavior from one world as a role-model for the other is a poor choice.  We must consider what makes a person good and just.  And that is the role of moral philosophy.

9 thoughts on “Different Rules for Different Worlds

  1. Nice post Jon.

    An interesting example of when these worlds collide is when a parent loans money to one child. Should this loan be interest free because it’s family or does that create the problem of unfairly favoring one child over the others if all don’t get loans?

    My parents solved this problem by standing willing to loan any of us money at an interest rate well lower than we could get anywhere else but higher than the rate they were getting on CD’s. In this way everyone benefits. The estate the other heirs will inherit is slightly larger than if it had only earned the CD rate and the borrower enjoys a substantial benefit. My parents have made a number of such loans to their children over the years. I addition to the benefit of the interest saved by the borrowers and earned by the lender, there is the benefit of everyone learning the relevant economic principles.

    My wife’s family tends to be horrified by the notion of charging relatives any interest ever. They have missed many opportunities where everyone could benefit as a result.

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    • Greg

      It’s an interesting question, and probably the best answer is “it all depends”. I’ve solved the inheritance problem by assuring my children that my wife and I Intend to spend every cent, and failing that, our grandchildren may benefit. according to their needs and their ages at the time, or perhaps organizations whose work we admire may receive a little help when we’re gone.

      I have loaned money both with and without interest payments required, depending on their ages and life situations at the time. I gave each of my three daughters 1/2 of a used car at high school graduation, and required that they pay me back the other 1/2 at low interest rates and manageable payments.

      Hopefully they each understand that help from me, if any, depends entirely on the circumstances at the time such a need arises.

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      • Ron,

        That all makes sense but you can’t make much of an effort to spend it all before you die without taking a serious risk of going broke before you intend to.

        I have actually given each of my kids 100% of an old car at some point. Probably could have gotten a better deal. I remember my dad giving me a drastic discount on a used car to put me in a car as safe as he wanted me to be in. He bought his first used car with his own money for $10 back in those days that you are nostalgic for when a dollar meant something. It was an more heroic era.

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        • This discussion actually goes to one of my larger points: this situation is not a situation with a clear answer. What does the virtue of familial benevolence demand? The rules are loose, vague, and indeterminate (to use Adam Smith’s phrasing). The options you both list are meritorious. It cannot be solved through a precise and accurate rule.

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          • Exactly, Jon. There is no single measure of moral obligation between individuals. I would also hesitate to draw a sharp distinction between our personal worlds and our commercial / interpersonal worlds. I envision a fairly smooth continuum from people we are very close to, immediate family or friends, to persons unknown. Our relationships with others are different depending on where they are on that continuum, and aren’t fixed.

            I’m glad Greg’s and my parenting policies don’t meet with disapprobation.

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