The Problem of Consequentialist Public Policy

by pjamesbeardsley

It’s been a few days since I’ve posted.  I’ve been busy.

In that time, I posted the following on facebook:

Requesting that members of an organization ethically opposed to contraception, or anyone else, not be forced (yes, with very real threats of lethal force) to give up their property to pay for other people’s contraception is not the same thing as denying access to contraception. Denial is an action. Therefore, inaction is not denial (modus tollens). Not paying for other people’s stuff is inaction, not action.

It’s no “War on Women.” It’s stopping the war on property

Which drew a response from my long time friend, the always thoughtful Sean Sheehan.    The rest of the exchange was as follows (click the picture to enlarge):

My main issue with Sean’s line of thought is the consequentialism of it: if X benefits from some action, then X should pay for it.

If X benefits from it

This makes an implicit assumption: we know X will have a net benefit from something.  It makes the assumption that you can predict the future.

Not that such an assumption is always bad.  People speculate all the time.  It keeps prices more stable.  It keeps money more sound.  The assumption that there will be greater benefit in the future from some foregone benefit now is the nature of investment, and investment makes us more prosperous.

If you have a half of tank of gas now, but you think the price will be higher in a few days, you’re more likely to fill up now.  This increases demand now, raising the current price.  If you think the price will be lower in a few days, you’re less likely to fill up now.  This decreases demand now, lowering the current price.   This being done on a massive scale “smooths” the transition of prices from one state to the next, making current prices reflect future prices, making them more stable. Decisions based on expectations about the future are not inherently bad things.

Making them for other people, on the other hand, is.

I think this is particularly relevant to the case of subsidized contraception in an effort to drive down unwanted pregnancies.  While admittedly a very simplified equation, it is fairly representative of the truth:

Unwanted pregnancies = amount of unprotected sex * natural conception rate + amount of sex with contraception * rate of conception while using contraception

Subsidizing contraception makes the market price cheaper.  You’ll get no argument from me.  This decreases the opportunity cost for persons to use contraception.  Likely then, many more persons will use contraception.

But does that decrease the number of unwanted pregnancies?  Maybe, but suffice it to say I know we don’t know that for sure.  Being on contraception decreases the perceived risk associated with having sex.  This greatly increases the amount of sex with contraception.

That increase makes sex in general more widespread, and therefore more acceptable in society.  There is increased societal pressure for girls to engage in sexual intercourse.  If girl A and girl B are both after guy C, girl B, even if she’s not on contraception, feels more pressure to have sex with guy C if she thinks girl A will do so because girl A is more likely to be on contraception.  This increases the perceived opportunity cost of not having unprotected sex with guy C, raising the amount of unprotected sex as well.

So even if contraception subsidies do make the market price of contraception cheaper, I see no reason to believe they actually, necessarily reduce the number of unwanted pregnancies.  The exact opposite may be the effect.

Even if contraception subsidies do lead to fewer unwanted pregnancies, is that necessarily a good thing?  Sure, more women would be less educated; that’s not good.  But there would be greater population: greater population leads to greater division of labor, leading to greater specialization, leading to greater comparative advantage, leading to greater prosperity.  There would likely be more marriages in the absence of contraception subsidies, and married couples tend to be more productive, and make more money, than two single people.

That’s the danger of making public policy based on consequentialist ethics: we don’t know the future.  We don’t know the full impact of every little decision, and sometimes, the actual consequences of a policy can be the exact opposite of what was intended.  Government intrusion into medical care has made it more expensive.  Welfare has led to more people unable to provide for themselves.  Housing subsidies led to a massive housing bubble and financial collapse, leading to mass numbers of people getting kicked out of homes.  Greater restrictions on the availability of firearms tend to lead to more firearm-related crimes.

Speculation is fine.  Forcing everybody to speculate simultaneously, and speculate the same way, is dangerous.  Just because I may think you’d benefit from filling your tank now doesn’t mean that you should, and by no means gives me the right to force you to do so.  Even if I’m right about the price of gasoline, and we can’t be certain that I am, how do I know that you weren’t going to use that money for something even better, something that would have made you more money than the money you would have lost by waiting to fill up your tank?

Then X should pay for it

I tried to demonstrate by an industrial analogy that such is a complicated matter.  If Company A invests in a technology that drives down their production costs of product B, it will likely drive down the free market price of whatever good or service they are producing.  This will drive down the free market price of competing goods, such as product C from Company D.  If I purchase product C, I am benefiting from that initial company’s investment: I am able to save money on my purchase.  Do I have a moral responsibility to pay for the initial company’s investment?

A legitimate question is, “Do I pay, in some way, for Company A’s initial investment?”  The answer is sort of.  I’m not completely isolated from the risk associated with the investment.  If Company A’s investment is a failure, company A is less wealthy.  They may have to downsize, making some people poorer, making their ability to make direct or indirect mutually beneficial exchanges with me less likely.  They may exit the particular product market, driving up demand for competing product C, making product C more expensive.  To be sure, I am not isolated from the results of Company A’s investment.

And that’s just it: completely “free riders” are somewhat of a myth in the free market.  We are not completely isolated from the decisions of others.  I bear a burden if Company A’s investment is a failure, and I get a benefit if it is successful.  Even if I have nothing whatsoever do to with Company A; even if I don’t realize it.

But what we do have in a free market are incentives.  Incentives for risk taking.  Incentives for prudence.  Incentives that keep the brunt of the benefits and failures on the one who controls the resources.  Deviation from the market distorts those natural incentives.