Pig Beach, Bahamas. Where pigs swim free. (Beara Creative)

The Piggishness Disposition

Way back when COVID-19 wasn’t even designated a pandemic yet, someone had the idea that the government should send a free box of face masks to every household in America. Few people were in the room at the time, so it’s anyone’s guess why that didn’t happen, but that alone might have saved hundreds of thousands of lives. The world could be a very different place right now: COVID could be under control, Mr. Trump would have been re-elected handily, and we would be talking about other things. But, unfortunately, it is what it is.

The reason is economics — NOT the economic “lockdown” as we have been talking about, but rather, economic theories about things like externalities and motivation. In a nutshell, economists believe that humans are naturally inclined to follow incentives and thus seek benefits and avoid costs. IOW, people FLOCK to a markdown, but they AVOID a tax like a plague. As we will see this Friday, Black Friday, people will buy anything — even things they don’t need — if they can get 50% off. We are bargain hunters and gatherers.

But there was never any incentive like that to stop COVID. In fact, joining the fight came at significant COST, not only of buying our own masks (rather than getting a free box from the government), but also the real costs of losing a paycheck and all the costs associated with losing the life we once called normal. Cost, cost, cost. This whole pandemic has been nothing but cost. It’s heartbreaking how much cost there has been.

Now, of course, there has supposedly been the benefit of saving lives, but this is not a visceral benefit. The lives we would save would not be our own, but those of others who we could never know. This is called an “externality.” Basically, our actions have some nebulous ripple effect that MIGHT save a life way over there somewhere, but in our mind’s eye, that barely computes. It is NOT motivation, at least not in a reptilian way.

It is far too late now to change the course of events that have brought us to this place, but we might be able to employ another economic theory that has the potential to be as powerful — Pigovian tax. This is not the sort of incentive that “seeks benefit” (such as a Black Friday sale), but rather the other sort of incentive that “avoids cost” (such as not wanting to pay a toll). As an economist would say, “A Pigovian tax is intended to correct an undesirable or inefficient market outcome (a market failure), and does so by being set equal to the external marginal cost of the negative externalities.” IOW, if people have to PAY to play, they might not.

Most of economics can be summarized in four words: “People respond to incentives.” The rest is commentary. Steven Landsburg

For instance, what if restaurants were open but every bill had a Breaking Protocol tax of 20%? People could have their meal at their favorite restaurant, but would they? Or, what if you could go to the market without a mask, but the admission price is suddenly $10? Would people put on the mask? Probably. Hey, even the rich are cheap. Incentive. Money talks.

To put it simply, it is way too free and easy for people to NOT abide by the rules. All they have to do is say, “f*ck you” and not do it. You know, “freedom,” and all. But that’s not the way it works anywhere else in our society. If you want to get to work faster, you pay for the toll lane, otherwise, you get a big hefty fine for going solo in the HOV lane. If you want a hotel room that’s quieter and has a view, you PAY for it. You can’t just complain your way into it. It has a COST, and then people can grapple with the pro and cons of that.

A Pigovian tax sounds apropos because it taxes the “pigs” in our society, but it’s actually named after English economist Arthur Pigou, who wasn’t a pig at all. He was smart. Very, very smart. We should be smart too. /end

Arthur Cecil Pigou (1877–1959).




Sent from a future where everyone thinks as slowly as me.

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Peter Sylwester

Peter Sylwester

Sent from a future where everyone thinks as slowly as me.

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