December 18, 2006

"I'm a good capitalist"

Hilzoy explains that there are preferences and then there are preferences.

One of the whole points of the market is that, absent market failures, it's a wonderful mechanism for transmitting information about consumer preferences to producers, and for giving producers an incentive to meet those preferences. For instance, I drink Diet Coke, and I prefer to drink it in cans, even though it would undoubtedly be cheaper if I bought it in those big two liter bottles. I assume that it's because there are enough people like me in the US that Diet Coke is available in cans. If people preferred it in some other form -- in little Diet Coke-soaked sponges that we could suck on, or Barney-shaped dinosaur containers, or IV drips, or whatever -- then I assume those would probably appear. But when I buy Diet Coke in cans, I don't normally hear about how strange and spooky it is for me to be trying to influence the market by buying the things I prefer. I don't get long lectures on how my decision to buy Diet Coke in cans will paradoxically cause cans to become unavailable. People normally just say: oh, right, cans. Fine. Some conservatives say: thank God you're allowing the market to register your choices, instead of setting up a central planning mechanism to decide on Diet Coke delivery systems. Some liberals add: I hope you recycle them. (I do.) But normally that's the end of it.

Just as I prefer Diet Coke in cans, I also prefer any product I buy not to be manufactured using child labor, or by slaves. Call me weird, but I do. And I see absolutely no difference, in principle, between taking this preference as a reason not to buy such products and taking my preference for Diet Coke in cans as a reason to buy Diet Coke in cans, except that since we generally don't know a lot about the labor used to manufacture the products we buy, it's not so instinctive. As far as I'm concerned, making decisions about what to buy in the absence of information about the conditions in which it was produced is sort of like buying food in the days before those lovely nutritional labels appeared: you do the best you can and hope it's enough, but more information would definitely be better, since it's information that allows me to more accurately register the preferences I actually have.

And the title is stolen from a common utterance of Baltar, who I often hear expressing a strong capitalist preference for buying from stores that please him, as opposed to those that irritate him.

Posted by binky at December 18, 2006 09:18 AM | TrackBack | Posted to Economics

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