Kidneys and Vietnam
Grobstein links to this post by Bryan Caplan, who asks why people oppose markets in organs.
I find this kind of stuff obnoxious, but let me take a stab at explaining opposition (a better stab, I hope, than the one Will Wilkinson proposes but does not endorse).
The big tradeoff of a free-market system, I think, is that it greatly increases efficiency (by one particular not-uncontroversial measure) and also puts in place a system that to some extent benefits the rich at the expense of the poor. I believe we should attempt to limit the scope of the market to those areas where we think this tradeoff is worthwhile.
So here's an overwrought hypothetical that I've thought about a bit. It's 1975, and U.S. helicopters are evacuating as many people from Saigon as they can before the Communists arrive. But how should they allocate space on those helicopters? Not everyone who wants to escape can be accommodated.
The obvious answer, to a free marketer, is to sell spaces on the departing helicopters. This has all kinds of pro-efficiency consequences, including providing an incentive for Vietnamese people to work hard and providing an incentive for entrepreneurs to start helicopter-evacuation businesses. Additionally, the revenue could be used to offset income taxes in the United States, which will reduce the deadweight loss associated with all (non-Pigovian) taxes. And of course, willingness to pay just is the way we should allocate resources, under a Pareto-optimizing system (or Kaldor-Hicks or whatever, same idea).
So imagine two men who have worked with the Americans in Saigon and who will definitely be executed if captured by the Communists. The idea here is that one of them will put a higher value on his life than the other, and will pay more to escape. By holding a properly designed auction, we can determine which of these men puts a higher value on his own life, and then rescue that man instead of the other.
And, the free marketer might argue, we can't be sure the richer man will win the auction. Perhaps the poor man is younger, or has a big family, or is just idiosyncratically attached to life. Then he might outbid the richer man, especially if there is a free market in organs or children or something so that he can juice up his bid.
But I suspect that in most circumstances the rich man will win the auction regardless. Willingness to pay, here, doesn't measure much more than total wealth. None of the people crowding the Saigon rooftops was merely casually interested in a helicopter ride out of Vietnam. No one is going to be outbid because of anything other than relative poverty.
So then the question is, what are we trying to maximize? And admittedly there is no good answer. We tend to allocate organs based on things like likelihood of success. So you don't give a kidney to someone whose body is very likely to reject it, and you don't give a liver to someone who continues to drink heavily, regardless of how much those would-be recipients are willing to pay to jump in front of the people ahead of them on the list. We don't let people buy (human) kidneys just to fry them up and eat them, even though I don't see why that would be impermissible in a free-market system.
And yes, the status quo tends to be bureaucratic and human and therefore imperfect and arbitrary. It requires medical professionals to make judgments that we are uncomfortable authorizing anyone to make. I mean, how did the Americans determine which Vietnamese to rescue in Saigon? There's just no good answer. But there are plenty of bad answers, and one of them is to enact a free market in organs.
I find this kind of stuff obnoxious, but let me take a stab at explaining opposition (a better stab, I hope, than the one Will Wilkinson proposes but does not endorse).
The big tradeoff of a free-market system, I think, is that it greatly increases efficiency (by one particular not-uncontroversial measure) and also puts in place a system that to some extent benefits the rich at the expense of the poor. I believe we should attempt to limit the scope of the market to those areas where we think this tradeoff is worthwhile.
So here's an overwrought hypothetical that I've thought about a bit. It's 1975, and U.S. helicopters are evacuating as many people from Saigon as they can before the Communists arrive. But how should they allocate space on those helicopters? Not everyone who wants to escape can be accommodated.
The obvious answer, to a free marketer, is to sell spaces on the departing helicopters. This has all kinds of pro-efficiency consequences, including providing an incentive for Vietnamese people to work hard and providing an incentive for entrepreneurs to start helicopter-evacuation businesses. Additionally, the revenue could be used to offset income taxes in the United States, which will reduce the deadweight loss associated with all (non-Pigovian) taxes. And of course, willingness to pay just is the way we should allocate resources, under a Pareto-optimizing system (or Kaldor-Hicks or whatever, same idea).
So imagine two men who have worked with the Americans in Saigon and who will definitely be executed if captured by the Communists. The idea here is that one of them will put a higher value on his life than the other, and will pay more to escape. By holding a properly designed auction, we can determine which of these men puts a higher value on his own life, and then rescue that man instead of the other.
And, the free marketer might argue, we can't be sure the richer man will win the auction. Perhaps the poor man is younger, or has a big family, or is just idiosyncratically attached to life. Then he might outbid the richer man, especially if there is a free market in organs or children or something so that he can juice up his bid.
But I suspect that in most circumstances the rich man will win the auction regardless. Willingness to pay, here, doesn't measure much more than total wealth. None of the people crowding the Saigon rooftops was merely casually interested in a helicopter ride out of Vietnam. No one is going to be outbid because of anything other than relative poverty.
So then the question is, what are we trying to maximize? And admittedly there is no good answer. We tend to allocate organs based on things like likelihood of success. So you don't give a kidney to someone whose body is very likely to reject it, and you don't give a liver to someone who continues to drink heavily, regardless of how much those would-be recipients are willing to pay to jump in front of the people ahead of them on the list. We don't let people buy (human) kidneys just to fry them up and eat them, even though I don't see why that would be impermissible in a free-market system.
And yes, the status quo tends to be bureaucratic and human and therefore imperfect and arbitrary. It requires medical professionals to make judgments that we are uncomfortable authorizing anyone to make. I mean, how did the Americans determine which Vietnamese to rescue in Saigon? There's just no good answer. But there are plenty of bad answers, and one of them is to enact a free market in organs.
posted by James | 11:55 AM
5 Comments:
I don't think I believe in the market in cases where people are willing to go all-in, period. The assumption of basic rationality, that options are being assessed and valued correctly, seems empirically very far off when talking about desperate people.
As for Caplan's post that Dave linked to, I think the estimate that 10% or fewer are wisdom-of-repugnance types is utterly unhinged.
If I were legally allowed to buy a (human) kidney to fry it up and eat it, it would probably cost tens of thousands of dollars. You might regard this as a failure of the market, because it allows me to value a tasty meal over someone else's chance at surviving an illness.
Fair enough.
But you'd be dead wrong if you thought there was anything special about kidneys here. If I am permitted to spend $10,000 on anything, I am diverting social resources that someone else could enjoy instead. If I am allowed to spend $10,000 on something not vital to my survival, I am diverting social resources that would be vital to someone else's survival -- do you doubt that $10,000 could save someone's life?
Your sketched case against the market in kidneys applies with equal force to the market in swimming pools. You do not want to introduce any squishy concerns about bodily integrity or whatever, but as a result your argument proves far too much.
At the same time, you're vastly underselling the benefits of a market in organs when you say the status quo is weak because it's "imperfect and arbitrary" and requires "uncomfortable" judgments. Perhaps! But the huge problem with the status quo, which swamps all of those, is undersupply! Very few people want to give up a kidney for zero material compensation, and I can't blame them. A system that could begin to compensate donors for their sacrifices would be better for patients and many, many fewer people would die on the waiting lists like they do today.
People being able to sell kidneys is very different from people being able to buy kidneys. Allowing some compensation for organ donation does not seem to raise the same issues as allowing people to get kidneys preferentially because they are rich (indeed, in the status quo, there is compensation for organ donation, though as far as I know it is non-monetary). I'm not defending the status quo against all alternatives, I'm just defending it against the markets-uber-alles ideology.
As for the notion that all $10,000 bundles of resources are fungible, I disagree. As a society we devote certain acres in the Champagne region of France to grape cultivation, and very few poor people benefit (lots of poor people can afford sparkling wine, but probably not from France).
But it's unclear to me that those acres could be put to any use that would benefit poor people more. It's a northern climate, it's hard to see how you could cultivate very much food or lumber or whatever. True, some labor is diverted to champagne production, but not very much relative to its price.
So champagne is scarce, and a lot more than $10,000 is spent on it every year, but it's not as though we could make 100 fewer gallons of champagne and use the resources to make a kidney. Champagne is scarce because good grape-growing land in Champagne is scarce, and it's fine to devote what acreage there is to making wine.
Now it is true that large-scale redistribution is almost certainly desirable, and this will mean fewer swimming pools and whatnot for the rich. But I take that as a separate, if related, issue. The question at hand is the scope of the marketplace. I'm happy to let the rich buy things like swimming pools, to the extent they can afford them after they've paid redistributive taxes, because there is no vital shortage of swimming pool inputs that threatens people's lives. It's the same with champagne. It's not the same with kidneys, or helicopter rides out of Saigon.
Now, it's impossible to be absolutist about this. Rich people can afford safer cars, better nutrition, safer houses, etc. All of these things will contribute to longer, healthier lives for rich people (I imagine - this wouldn't always be the case, but I bet it usually is).
But the benefits to a free market in cars, food, etc. really are substantial, and the extent to which rich people's longevity comes at the expense of the poor is questionable (the supply of most inputs being fairly elastic). So in my view, the markets are properly used to allocate food, cars, etc. (with some provision of basic needs for the extremely poor).
But, again, not kidneys and helicopter rides out of Saigon.
I agree with your framework for determining when it's desirable to create a (relatively) free market in something, noting the obvious point that the tradeoff between equity and efficiency should account for redistribution after market gains (e.g., taxes).
Thing is, your post just seems to eloquently express that this tradeoff should be made, that "markets uber alles" is deadly dogmatism.
And it surely would be in the case of a meaningfully free market in kidneys -- some people who need them less (or not at all in a medical sense e.g., kidney eaters) would board the kidney express before dying dialysis patients.
Fair enough. But you should at least embrace an alternative.
Here's my initial stab. The government should be the only authorized buyer of kidneys, it should buy enough to meet medical demand (assuming this would be overall utile, etc., etc.!), and it should distribute them according to need. Given an appropriate market-clearing price, perhaps private buying could be opened up without reducing the supply for the needy (i.e., kidney eaters, people with de minimis kidney trouble, and the like could buy, the government's purchasing price would account for this, and the government would possibly tax private buyers to offset its correspondingly higher price, or just because it's a utile addition to the bucket of taxes). Regardless, it's clear that you've got to pay people!
I was never much of a dancer / but I know you've got to sell / your idiot body around!
In fairness to Caplan, despite his disgustingly oily face and manner, I think he was talking more about the bodily integrity stuff (selling kidneys for cash) than whether rich people should be able to buy kidneys (which I'm not sure Leon Kass would object to). ADL's solution seems unrealistic b'se it's politically hard for the govt. to buy kidneys b'se of widespread Kassiness. With organ markets, GM children, etc. the actual options on the table are legalization (i.e. decriminalization) and prohibition. I'm not sure which I'd prefer: it depends a lot on the empirics of what kinds of people actually end up selling their kidneys and for how much.
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