Russ Roberts’ Bitter Pill

bitterpill

Globalization is a pretty controversial topic nowadays but, not too long ago, that wasn’t the case. Economists of every stripe pretty much viewed it as a net positive, a practice that enriched everyone. Today, those same economists are coming to grips with the reality that globalization is far from victimless. Millions of working class people across the developed world have seen there livelihoods gutted by the practice and their discontent is now reverberating across the globe. Rising populism, along with the specters of fascism and racism, have caused many economists to reassess globalization’s real impact.

However, like all religions, Capitalism, of which globalization is a main tenet, has many true believers. One of them is Russ Roberts, who recently wrote an article titled The Human Side of Trade. In my opinion, it is one of the most eloquent defenses of globalization I’ve ever read. He particularly uses a very effective example to set up his argument:

So let’s start with a seemingly unrelated example that will help us see the unseen. Suppose a scientist invents a pill that once you take it lets you live until 120 with no health issues whatsoever. Once you turn 120, you die a peaceful death on your birthday. Suppose the scientist, in a gesture of good will, charges $10 for the pill.

Should we let the scientist sell the pill? Is it good for the country? It’s good for almost everyone. But it’s going to be very hard on a very large group of people immediately:

Doctors. Nurses. Health Care administrators. People who build hospitals. People in medical school. People who teach in medical schools. People in health insurance companies. Pharmaceutical companies. Researchers. You get the idea. It’s millions of people. This is a very disruptive technology.

What’s going to happen to all those people?

Mass unemployment. All of the skills of all of those people are no longer valued. The past investments made in those skills are now wasted. Incomes of those workers will inevitably plummet overnight…”

“Most people would argue that the millions of health care workers have no right to stop people from living until 120. And on the surface, that’s the whole story — long life and a very tough transition for millions of people from lives of financial well-being and deep satisfaction to a much bleaker future.

But that’s not the whole story. We’re missing a huge part of the story.

The other important part of the story is that everyone is suddenly a lot wealthier. All the money we once poured into health care will now be able to be spent on other things.

Robert’s example is elegant and the defense he mounts from it is detailed, articulate, and comprehensive. There’s just one problem with it…

The premise is flawed.

You see, Roberts makes a fatal mistake with his argument. The miracle pill he presents allows everyone to live to the ripe old age of 120 with zero health or aging issues. I repeat, everyone. In other words, everyone who takes the miracle pill will experience an equivalent outcome.

See the problem? Globalization and Capitalism in general not only do not promise or guarantee equivalent outcomes, pretty much all economists agree that unequal outcomes are a defining aspect of our global economy. So Robert’s miracle pill example is a false premise.

If globalization could guarantee equivalent, positive outcomes for everyone, especially if they were anywhere near as dramatic as the ones in Roberts’ example, do you think anyone would have a problem with it?

I’d generally be content with this simple counter argument but that is not the only faulty premise in Roberts’ piece. One of the things illuminated by it and others like it is that a great many economists and others who consider themselves knowledgeable about Capitalism think that those who oppose globalization are not being rational. However, that isn’t the case at all, it’s very much the opposite. Indeed, it is supporters of globalization who are showing irrationality. Allow me to illustrate using Roberts’ own example, modified for the reality of the unequal outcomes of Capitalism:

Let’s start with the miracle pill. But, instead of selling it for $10, everyone on the planet is forced to take it. Rather than uniformly grant everyone great health and a 120 year lifespan, it does the following:

  • It gives the healthiest 1% of the population, plus a few outliers, near super human ability and a 120 year lifespan of health and vigor;
  • It gives the rest of the healthiest 10% of the population, plus random outliers, perfect health and a 120 year lifespan;
  • A large portion of rest of the population, representing billions of people, improves by anywhere from one to three grades of health. Huge portions of the terminally ill are healed but their health isn’t significantly altered or their lifespans improved. Common illnesses for most of the population are wiped out but, again, health and lifespan aren’t significantly improved. Hundreds of millions of the more healthy, plus many random outliers, actually enjoy significant improvements in health and lifespan, but nowhere near the benefits of the top 10%;
  • The sickest 10% of the population gains absolutely no benefit whatsoever;

On top of that:

  • Tens of millions of previously healthy people suddenly and unexpectedly develop debilitating illness. Many will live in various states of suffering and a large portion dies. There’s no way to tell who is going to suffer, however, scientists notice that only people who are generally in good health tend to be affected. The ultra-healthy never gain the illness and those in poorer health statistically gain far more benefit from the pill.

Now how do think the world would respond to such a pill?

My guess is that tens of millions of people suddenly developing debilitating illness that often leads to an agonizing death would terrify millions of people around the world. And what if the world’s leaders decreed that new iterations of pills would be issued randomly and, by threat of force, everyone had to continue taking them? How do you think the population would then respond?

Let’s take this even further: Let’s say that each iteration of the pill made most of the world’s population healthier overall than the last but, each time, slightly more people develop the debilitating plague?

Globalization has shattered the livelihoods of millions of people, many of whom will never recover from the effects. Even more importantly, many of their children will never recover. For many, the loss of solid middle-class employment is figuratively terminal (sometimes literally), with permanent consignment to society’s lower classes. The incremental benefit they gain from better goods is moot.

What people like Russ Roberts refuse to understand is that the world isn’t a spreadsheet. Globalization affects real people in very significant ways. In an economy driven by “motivated self-interest,” it is the height of hypocrisy to think people should accept their own suffering for “the greater good.”

For many, globalization is a pill too bitter to swallow.

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