Can Capitalism Save Lives? – Econ Chronicles – Learn Liberty
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Can Capitalism Save Lives? – Econ Chronicles – Learn Liberty

February 22, 2020


There are now over 300,000 Americans on dialysis.
Every year, about 60,000 die. Kidney transplants are hard to get, but hundreds of millions
of Americans have a kidney to spare. The numbers are heavily in our favor. The tragedy goes
on year after year. Almost nobody wants to do surgery to help a total stranger for free.
And selling your kidney is illegal. Voters, and the politicians they elect, have
banned the trading of cash for kidneys. Why? Because they underrate the social benefits
of markets. They suffer from what I call anti-market bias. People who have never studied economics
often equate greedy intentions with bad results. Economists share a standard objection to this
bias. Thanks to competition, the surest way to get rich is to make your customers happy.
As the eighteenth-century economist Adam Smith put it, It is not from the benevolence of
the butcher, the brewer, or the baker that we expect our dinner, but from their regard
for their own self-interest. Think about reviews on websites like Yelp.
If you give your customers good value, they’ll come back and tell others to do the same.
If you rip your customers off, they go elsewhere next time and tell others to do the same.
When customers are free to choose, firms can’t put profits before people. If they do, they
lose their people and their profits. Economists=appreciation for markets leads
us to unconventional solutions to all sorts of problems. Take the kidney shortage. Most
people would shrug that there are no more kidneys available. But that’s false. If just
one person in a thousand donated a kidney, everyone on dialysis could get one. There’s just one problem. Asking someone to
give you a kidney is a huge favor, the kind of favor that only people who know and love
you will agree to do. Love already saves a lot of lives, but it’s clearly not enough.
So why not legalize a market for human kidneys, where people who desperately need kidneys
could buy one from a willing donor? Regardless of their politics, almost no one
who isn’t an economist sees merit to this idea, and almost everyone who is an economist
does. Some worry that low-income people would be first in line to sell. But what’s wrong
with making poor people rich, and sick people well? This doesn’t mean that economists always favor
unregulated markets. Unlike a typical voter, though, economists rarely complain because
business is making money by solving a problem. Economists complain when business isn’t making
money by solving a problem. When a market visibly isn’t working, economists
try to figure out ways to jump start markets. In many cases, slightly different government
policies would do the trick. Take air pollution. Many economists turn to
government because they can’t figure out how a person could make money by cleaning the
air. But that doesn’t mean you can’t have market. Liberal economist Alan Blinder promotes tradable
pollution permits to cut the cost of reducing pollution. Instead of telling firms how to
cut emissions, government could cap their total emissions, then let firms with spare
pollution permits sell them to other firms that are over their quota. Blinder says this
would reduce the cost of cleanup by at least 50 percent. When firms can sell their spare
permits, they have a strong incentive to find cheaper ways to clean the air. If markets can slash the cost of cleanup,
why do voters resist the idea? Blinder blames anti-market bias. The public seems to recoil
in horror at the idea of selling the right to pollute, as if even a small emission of
a pollutant were immoral. There’s always going to be some pollution. As Blinder says, to
think otherwise, is not to think. When you can’t imagine a way for business
to make money solving a problem, it’s tempting to conclude that no one will ever think of
a way for business to make money solving a problem. Even economists, who pride themselves
in their appreciation of markets, make this mistake. If you went back in time to 1985 and described
the Internet, most economists would have rolled their eyes millions of free websites providing
everything from directions to histories of Germany. It’ll never happen. Most economists
would have been wrong, not because they had too much faith in markets, but because they
had too little faith in human imagination.

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  1. It's the superficial surface that most people look at. When they think of people selling organs for money, it sounds grim. In practice, those who would be most willing to part with a Kidney, are those who need money the most, and likewise, those who need a kidney, will be willing to part with money for it.

     There is no logical argument against it. The only mounted attack against it is the knee-jerk emotional barrage that, unfortunately, seems sufficient to sway the minds of most voters. 

  2. Actually the Internet could be feasible in 1985 since we already had it and it was on campuses like MIT. Maybe before 1969 it would have been a fairy tale.

  3. at the end where you say that they wouldn't believe it is because you're not explaining it properly. these websites are NOT free, they get their money through ad revenue and you pay by seeing those ads. if you explained that there are many "free" websites that offer services, but also have advertisements on them, they'd understand what you're talking about since there was much of this going in in the 1800's in the way of paid promotions, roadside signs and such. 

  4. People don't have an anti-market bias, they have prescience. Market solutions to control natural resources have not only failed to be equitable but they now threaten the ecosystem and hand off costs to the public and future generations. Experience has proved the "tragedy of the commons" has become "tragedy of the private", when corporate interests, desperate for returns on investment, elect to exploit our national resources for short-term profits.

    That said, I'm not entirely opposed to the idea of selling organs, but that isn't making the poor "rich". They still live in socially immobile society and in the end they are really left with one less organ to sell. At best, it is a brief respite from poverty.

    Of course, in a true Capitalist society, when the poor need their kidney transplants, they'll just die, so I don't see Capitalism saving a lot of lives in this respect compared to a civilized society.

  5. The media in the US is bullshit that's why I don't watch it. The internet is a much more reliable thing in getting information.

  6. "Capitalism demands the best of every man—his rationality—and rewards him accordingly. It leaves every man free to choose the work he likes, to specialize in it, to trade his product for the products of others, and to go as far on the road of achievement as his ability and ambition will carry him."

    ~ Ayn Rand

  7. Pollution is an externality, children can be seen as externalities in a divorce. I think we should continue to make sure the air, water is as clean as possible. I know you can't get all of the pollution, but we should keep and gradually reduce pollutions to lower levels over time…Tradeable pollution permits is a much more efficient alternative to Cap N Trade by President Obama; under-polluters profit while over-polluters have an incentive to clean up.

  8. Yes, well Smith also believed in "FREE" markets. The real question: what's the minimal amount of freedom needed to produce a real free market, a market like the so called "Black" Market & the emergent crypto-currencies? Just do it seems the best advice.

  9. i think in general free markets are great and in the scope of what bryan caplan is actually addressing, which is his anti-market bias detailed in his book, this video makes perfect sense. it is true free markets do not always work, but when people vote with the idea in their head that free markets always fail and reward evil and greedy people the ideas put fourth in this video should help clear up their confusion. 

  10. Unregulated kidney market will make millionaires out of healthy homeless people. You can argue that sudden financial windfall is bad for poor people (most lottery winners are now alcoholics and addicts of some kind), but free market in the organ business will save lives. No legal free market for human organs will lead to human trafficking (harvesting organs) and theft of organs (drugged then waking up in the middle-of-nowhere motel with opened stomach, not fun!!!)

  11. yup, i believe it is better to regulate the selling and buying of kidneys and other organs. as of now, there is a huge black market for such things, and theres alot of stories of poor people in impoverished country get exploited of their body. with regulation, theres no need for sick desperate people paying exorbitant fee through shady third party and for the poor desperate people to be taken advantage of. 

  12. I'm sorry but I can't support "Tradeable Pollution Permits." It's a manufactured market trading worthless pieces of paper that determine how much productivity you are allowed to create. Markets aren't the kind of thing that can be created from the top-down, otherwise market distortions and economic misallocation that comes with government intervention inevitably result. I wouldn't be shocked if the manufacturing of worthless goods with fiat value resulted in an asset bubble anyhow.
    Also, everyone should know the permits by its more modern name, "Cap & Trade."

  13. Today we learned that most economists are ignorant cattle with fancy degrees. Good for the State, bad for the People. 

  14. What Bryan Caplan is talking about is the standard strawman of capitalist critique. It's very interesting that he doesn't really address that many of the problems people have with markets, is the inability to deal with material needs such as a home or transportation or how they cannot deal with biological needs such as food and water. Capitalist's or Free Market apologists more specifically, usually quote Adam Smith out of context regarding self interest, because Smith also spoke ill of self interest as he put forward a number of examples of free market self interest, one of those examples being slavery and selling of forced labour.

    It's important to understand that while yes, many critics of capitalists will agree that markets do help people who need it, it can also be used to deprive the lives of others. Take the housing crash for example, it was recently that one of the big contributors of the housing crash, Wells Fargo, was in an area of motivated profiting self interest to break the law by forging mortgage documents allowing them ownership of the house. So now Wells Fargo is being investigated for defrauding people based on profiting. And before the standard free market apologetic response comes in about nonaggression principle or the typical Rothbardian strawman, you need to remember one thing here, markets as they exist are not moral entities. They're amoral for all intents and purpose if you base your entire ideological transaction on self-interest and profit.

    So in short, the strawman erected by Bryan Caplan here is unconvincing but may in fact only be speaking to those who have already drank the free market koolaid. That being said here, before any of you dimwit morons start accusing me of being a socialist or communist… I'm actually a technocrat so don't even bother.

  15. Horrible 🙂  Is this man even in touch with reality?
    Well, i suppose some of his ideas could work, but only with heavy, heavy regulations.

  16. Well I think Mr. Caplan made an interesting case for cap and trade, but I have some serious reservations especially when an authoritative institution like the government is involved in creating and controlling the system. Who controls the permitting process and distribution? How would we determine how many permits to issue? What is preventing government from creating biases when giving out permits? Would this arbitrarily created permit process hurt some business more than others? The cost of new rules, taxes, and regulations have a bigger impact on small start ups more than large established business.

  17. While I understand the value of an organ market, the legitimisation of such a practice would almost certainly give rise to black markets. Homeless people and illegal immigrants will start disappearing.

  18. can somebody help me. what did he mean when he said economists from the past would say "the internet will never happen because it provides to much for free"? Was he saying often even economists under estimate the potential of things to make money and be successful?

  19. "Poor people 'rich'"?  Perhaps not the best choice of words now, eh?  "Rich" for their standards, perhaps, but certainly not in the longer vision.  Let's be a bit more accurate if we're trying to prove a point.

  20. Federal, State, nor local Governments are willing, or capable of regulating shit,  so what delusional idiot would propose selling body parts?  A Libertarian with shit for brains. 

  21. Wow. Have low-income citizens desperate to make ends meet sell their vital internal organs for a couple thousand dollars to rich people who can afford a private market organ. 

    Dr. Caplan, perhaps you can be the first to demonstrate what a great idea this is. Since removing kidneys and the like is such a snap and never without health complications, perhaps you could put up your own kidney for sale? 

  22. @Learn Liberty, can you explain how resistance to a carbon credit is anti-market bias and not resistance to further government regulation?

  23. The legal sale of organs is one of the easiest things to support when you realize that it would completely solve the problem of 15 people dying each day waiting for a kidney and that the supposed drawbacks are not drawbacks at all.

  24. Awesome video Bryan Caplan!  Way to go!  A simple and clear video that makes the point fast on the power of markets and the bias against them, even in overcoming difficult challenges of commons like pollution.

  25. I suppose if god so loved the world he wouldn't have sent his son; he would have sent kidneys. Who's the "good guy" here, the life saver who needs some cash or those hoping love will save us all?

  26. Are the libertarian economists hard at work solving the child porn market?  How about the snuff film market?  If someone is willing to pay to kill you and you agree.  Cest la Vie!  Enjoy the freedom!

  27. cap and trade – booooo; the problem with it is creating an artificial market along with another bureaucracy.

    Why not give tax breaks instead?
    Top 10% of energy producers that have the lowest pollution per energy output ratio get huge tax breaks; top 50% with lowest ratio get a tax break as well. 

    No cap and trade, no additional market place, creates incentive to keep pollution lower than competition and rewards those that do.

  28. Um you were right all the way until you tried to determine why the sale of human organs is banned. If you would like to see why it is banned look at china killing prisoners to harvest organs and sell them to the highest bidder. Innocent people also get kidnapped to get harvested. That is why it got banned, but good try.

  29. The moral dilemma comes when a rich person with a broken kidney due to excessive consumption, tempts a poor mother of four children with 3-4k to buy a kidney.

    She will obviously do it to get out of an urgent rot where her children are concerned, no matter how short sighted thinking that would be.

    A year later she dies from kidney failure.
    A few years later the rich person buys another, and another.

    Should a person be able to buy body parts of others in distress who are easily persuaded?

    – 

    If so, then I have multiple great business ideas. I will use the lists of people in debt from the bank who have a family and are at risk of losing their home. I will offer one of the parents to sell all their "spare parts" to get out of debt. I can get it at bargain prices!  Then I rent the body parts out to those who can afford it, and harvest them when they die.

    It's perfect. You can choose from multiple product categories. Second-, third- or even fourth-handed products. The old ones are cheaper, but those harvested from younglings  will cost you! $$$ catchiiing.

  30. Libertarians are trying to put a happy face on their own egocentric self interest!  But I repeat myself!

  31. So please tell me connection to free web sites and you SELLING your kidney. I'll tell you, advertising just like T.V. But that it really has nothing to do selling a kidney its just fluff to distract you from the point that selling a kidney on the a market, because it would go to highest bidder not the most in need.

  32. What's wrong with that! Hail to the capitalism. Poor people should be able to sell their organs to rich in order to make their living. Perhaps the next step is the human farms, it is far more efficient. We can raise people for their organs,slaughter them and feed others with the ones that we slaughtered. We can also make slaves and even sex slaves out of them.Think the endless posibilities. The economy will also grow, and governments can have more tax. Businesses will make so much money. BUT WAIT A SECOND, WE CAN ASK PEOPLE TO BECOME AN ORGAN AND A TISSUE DONOR AFTER DEATH, AND PROVIDE FREE MEDICAL SERVICES TO EVERYONE LIKE MODERN HUMANS

  33. It should be noted that everybody EXCEPT the donor makes money transplanting organs! Occasionally, a hospital or doctor will waive their fee, but usually – they make money. Why is that not immoral, too? Also, the patient pays for that kidney, too. There is a charge for it on the hospital's bill.

  34. Yes, but people who are desperate to sell organs may carry more diseases than people willing to donate them.  Look at blood donations, the people who get paid have more infected blood than the people who volunteer.  With self interest comes immoral actions to feed the self interest.  I'd go on, but this is youtube and I won't be back to have a serious debate.   

  35. I really like this video. Allowing a kidney market would also destroy the black market hold on it.. just like ending the war on drugs and decriminalization of prostitution would basically destroy the black market as a whole. Gangs and cartels would shrivel up and prisons would have at least 30% more room. 

  36. that is why the true greedy try to influence government to get subsides and special favors to protect their business from competition (and force people to be customers whether they like it or not ) and this is why businesses are being stifled, ignorance, people are ignorant make poor advisors, voters and decision makers. only thinking fully researched people make good advisors and decision makers. unfortunantly doing research looking beyond the obvious requires to much work and while many poorer people cry greed among the super rich they don't see their own greed. green technologies do not work on their own because not enough people want the product they want to sell for vaious reason but mostly the cost so they are forced to give their money via government subsides from taxpayers money. why do you suppose city buses have to be subsidized? not enough people with money want to use them most who have the money prefer their own car and for very good reason, city buses are inefficient and cannot stand on their own four wheels without being propped up because not enough people want to ride them. so if gov would just protect people from intiation of force then the market (aka the people who actually buy stuff) will decide what is important and not and what they are willing to pay for and not. but the greedy among us will not allow this and so we all suffer (except the super rich of course) from poor quality goods and services for reasonable prices.

  37. this video makes a classic blunder assuming that we live in a free market. in today's world, the surest way to get rich is not by providing a service but through political favoritism.

  38. well you would end the kidney shortage but am i the only one who thinks that eventually only poor people will sell their kidneys ending up in a state where having two kidneys will be a privilege only available to the rich?
    people under the risk of home foreclosure will be forced to sell their body to pay the bills. quite a grim picture.

  39. This is what I learn from learn liberal. Business can solve all problems! Problems that can't be solved by business would be solved by the government. We don't need the government because business can solve all problems. They sound so hypocritical.

  40. What this whole video fails to realize is that competition always leads to a loser.

    Also, what it does not account for is corruption.

    The video mentions Yelp.
    Now yelp is a nice idea, get ratings on your business so people see you are nice, so people come to you.

    However, these things can be manipulated.
    A powerful business doesn't have to improve its service, if instead it can make everyone else's service look bad.
    Or do self praise.

    This is what the mafia is doing.

    Now coming back to the competition issue.
    First of all there is an alternative to competition, called cooperation.

    But I don't want to go into that.

    Now lets say I offer a service.

    I sell shoes.

    Now in my town, someone else also sells shoes, we both make shoes and sell them.
    In order for me to not go out of business and keep my customers I have to make sure they come to me, how can I do that?

    1) Low prices.
    2) High quality
    3) Extra service
    4) Not having any competition.

    In order to achieve 1, I have to make sure that my shoes are cheap, but not too cheap so no one wants them because of quality issues.
    How do I get cheap shoes?
    Well
    a) get cheaper raw material (usually achieved through exploitation of workers in other places who create that)
    b) pay my workers less
    c) replace human workers through machines
    d) use an alternative material
    e) reduce the quality of my shoes
    f) save money somewhere else (usually achieved through harming the environment by not caring about green production or shipping)

    The only nice thing I could do is find alternative material.
    Paying less for anything to anyone is not helping anyone buy myself.
    Reducing the quality of my shoes is not making better shoes, it is regression for the sake of cost efficiency, an inherently anti-progress concept.

    In order to achieve 2 I have to make sure that they are not too expensive so enough people still buy them.
    So how to get higher quality shoes?

    a) Get better raw material
    b) get better workers
    c) get better machines who work better than humans

    Less options here, and far more interesting from a progress point. However, better workers cost more, raw materials cost more. I still have to make a profit. Selling better shoes is just not as attractive as paying worse shoes for a cheaper price and saving costs at the same time.
    This usually happens only in very niche areas.
    It is much better to slightly improve your shoes, and greatly save costs at the expense of workers and the environment.

    What could extra services be?
    I could offer foot massages for buying shoes at my place or some other thing which isn't important to mention.
    This is usually not improving the actual product but is simply marketing. You still sell the same shoes, but now give something extra.
    Lets say foot massages is what you do.
    Well now you have to pay someone who does that.
    How do you get the money for those extra services, assuming you are not making more money than before, since you still only sell shoes just like you did before you had competition?

    Speaking about not having competition. (4)
    Getting your competition out of the way is very good. Everyone in the market wants to have less competition, because it means less stress. If you have a hegemony on your product, you don't have to worry about all the things I talked about before.

    But lets take this all into perspective.
    Guess what happens at some point here.
    One of you might go out of business.
    At the end of the day everyone needs shoes, but one of you two will sell them in a way everyone likes them the most.
    What about the person who goes out of business?
    Is that okay? Is competition really what we want?

    How about cooperation. Instead of working against each other, why not pool together your resources and make good shoes at a fair price?
    Sounds too idealistic? Maybe, but in principle it could work.

    However that is not really my point.

    TLDR

    Competition leads to some kind of harm. Either harm to the workers, environment or the other company.

    Corruption will prevail in a system which rewards profit.
    If your goal is to make the best market choices, you have no interest in "playing fair" if at the end of the day you get away with it.
    Especially in a more "free market" than we have now.
    The freer the market, the worse for everyone.

    Keep in mind, the market is social darwinism in an economic form. It might give us some really cool inventions, but always at the cost of someone.

  41. Another in a set of propagandized, dimwitted arguments I've become depressed of debunking. Perhaps I'll just come up with a canned response and just start posting it under all such videos spouting nonsense and quoting from wealth of nations. Adam Smith also said that division of labor will destroy human beings and turn people into creatures as "stupid and ignorant" as it is possible for a human being to be. And therefore in any civilized society the government is going to have to take some measures to prevent division of labor from proceeding to its limits.

    Diabolical.

  42. This is why you need basic income and social democracy. You dont sell your kidney because of greed but because of poverty.

  43. Part of my objection to to pollution markets is what is called a pollutant on these exchanges. CO2 is a requirement for life on this planet, and it is considered a pollutant by politicians today. If you did it for Surfer, Mercury, and Heavy Metal emissions, I would be all for it, but no one even begins the discussion without CO2.

  44. The shortage of available human kidneys is a "damned if you do, damned if you don't" situation. A market would indeed solve it, but the idea involves literally selling parts of oneself–there would be all sorts of cultural negative externalities from that–so it is not implemented. Left-wing thinkers rail against it as part of larger ideas for reform, and right-wing thinkers don't want to think about putting a price on a person's body parts. (Probably. I'm more familiar with the left.) Neither option is a peasant one.

    Given the current state of technology, lab-grown human organ transplants are on the horizon, and it's definitely worth providing an incentive to develop that technology. This doesn't necessarily call for the form of market in this video–the first company to start mass-producing kidneys is going to be drowning in money from the medical system either way, and increasing the supply of kidneys is going to reduce that incentive. Maybe artificially pumping up that incentive via a federal reward, to bring that technology here sooner, could solve this problem in the best way…but, then, I'm not an economist, and there's only so much government funding available.

    I don't know.

  45. Great videos, Bryan… but you talk too fast. There is sort of a panicked feel to your speech, and it's a bit unsettling (no offense). Also, there are studies showing that people who speak in a slower, more measured voice tend to be more persuasive. So, slow down your speech and you'd be 1)more persuasive, and 2)be easier to listen to. A more pleasing and persuasive video… with only a minimal increase in video length.

  46. Here's my objection to the idea that free markets solve everything: What about the case of Gilead and the cure for Hepatitis C? The free market allowed them to purchase a patent from a government employed scientist/academic who made the discovery under an NIH-funded grant. So the taxpayers funded his research (and his salary), and then he sells the intellectual property for $4 Billion. Then they take a pill that costs $16 to manufacture and charge $86,000 for a 90-day course. So, now, if you have Hep-C in the US, you will likely not receive this cure because medicare cannot afford it. So, unless you begin to show signs of liver failure (which then makes the treatment less expensive than a transplant, and therefore favorable) or you get liver cancer (another common result of Hep-C), you will not receive treatment that could spare you terrible suffering. The inability(?) to treat these patients is a huge ethical concern, but also, it's a drain on society's resources. For every person suffering from Hep-C who cannot be treated, they can't work, can't take care of themselves and their families and from an economists point of view, that is bad, no? We could cure all sufferers and prevent new sufferers from being created by eliminating the disease and, therefore, risk of transmission. But, greed. So, your theory doesn't hold for big pharma. They won't allow costs to be driven down even by demand. The US government should be able to ask for a volume discount, right? Especially since we – the taxpayers – funded the research. But, no. Because greed. So, what say you, Economist? How can the free (rigged) market respond in a way that allows people not to suffer because doubling their $4 Billion investment in 9 months wasn't sufficient.

  47. I like your videos and presentation , and agree that many things would work given perfect market conditions. I also agree that in the main many of the worlds advances have come from the free market. Unfortunately like many economists you've fallen prey to the notion that Adam Smiths preconditions are already in place.For example.
    i) Open Markets
    ii) there cannot be just one buyer or one seller who can control product prices
    iii) No producer can hold a pivotal private technology,
    iV) there must be more or less truthful information across the whole market (available to all)
    v) Governments must enforce property and contracts.

    Under conditions like these your models might work. Unfortunately , rarely do any of the above hold true. As any neoliberal will admit , there has to be a tax dollar to provide for the government to enforce these (no-one, not even Nozick, has found a way to allow government to be market function in a democracy).
    Indeed most big business make it part of their function to break those preconditions , it would be naive to think otherwise.

    In europe Pollution trading permits have failed utterly, due to mismanagement , vested interests , corruption, market manipulation etc etc. It would be interesting for you to have a look at this case study and perhaps go a little deeper into the way that market economics really works. I would be interested to see how open minded you are when presented with these real word scenarios

  48. 1. Kidneys

    But wouldn't the poor still not be able to afford kidneys?

    I know you'll say "charity". Charity is nice and all but there's never enough charity.

    I think that people should be able to sell their kidneys but it should go through the government. People should sell their kidneys for a fixed price to the government, instead of making the recipient pay, or only have the recipient pay a small portion of it (while having the government pick up the tab if the recipient doesn't have the money).

    2. Pollution

    This isn't really what I believe, but I would like to play devil's advocate here. Why isn't someone else's pollution going onto my property without my consent considered vandalism or tresspassing? If you take the private property rights are sacrosanct argument to its logical conclusion all pollution should require unanimous consent from anyone who owns property where the pollution enters. Arguably it should require unanimous consent from everyone who exists since everyone at least owns their own body.

  49. Cap and trade on CO2 failed in the EU. Ten years ago I thought it was great market solution! Now I don't. I think it is time to try a carbon tax!

  50. take any animal on this planet , and you have a capitalist .
    thats why some humans are socialist .
    we can do better if you just understand the long term result of greed .

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