Tuesday, 5 April 2011

Harsh, but fair

I caught up with some of my podcasts today, including a freebie that the BBC sent.  I subscribe to the "More or Less" podcast with @TimHarford, so the Beeb guessed I might be interested in "The Story of Economics".  As its title suggests, it looks at the basics of economics with a slight historical bent.

The first episode (linked) looks at the moral underpinnings of economics.  Apparently, and this is news to me, Aristotle thought it unnatural to buy something that you did not need, something that you planned to sell on at a profit.  So even he looked down on speculators; banker-bashing may have a longer history than we think.  But the part I want to recount for you is the hypothetical question that they put to a group of sixth form economics students, to illustrate the moral side of economics.

Suppose, they said, you have to choose one new employee from a shortlist of three equally-qualified candidates, each with one significant and defining feature.  Angela, the first, is generally and non-specifically unwell, with an illness that could be treated if she gets the job and can pay for treatment.  Beatrice is depressed, but the sense of purpose that she will obtain from a new job will lift her out of that.  Clarissa is very poor; the income that she will obtain from the job will easily improve her well-being by an amount equal to the improvement in Angela's health or Beatrice's psychological state.  Which should we choose?

Needless to say, the students did not have a clue, and made this clear at length.  Sadly, the BBC did not provide us with an answer, presumably to show that some questions are insoluble.

It isn't, though.  There is a clear, obvious, and moral solution.  Have a moment to think about it, then scroll down for my answer.



First, and most obviously, it is impossible that all three will be equally qualified.  This never, ever happens.  So in real life, you choose the best-qualified. But, for the purpose of the question, I will assume that there has been a miracle and we do, indeed, have three perfectly even candidates.

In which case, applying a strictly moral and economic analysis, Clarissa is the obvious choice.  Why?  Well, the improvements for Angela and Beatrice are predictions, or assumptions, or estimates - whatever you want to call them, they are not 100% certain.  So we must assume that they may not come about.  In which case, Angela will take a lot of sick leave and will therefore be less productive.  Beatrice may well not take sick leave, but a depressive in the middle of the workplace will drag everyone else down, reducing productivity generally.  Clarissa's improvement, however, is bankable (literally).  So from the perspective of the business, Clarissa is the obvious choice.

Clarissa is also the moral choice.  Your job as the manager is to advance the ends of your business, which is why Clarissa should be chosen.  To choose otherwise is to shirk your responsibilities.  Angela, Beatrice, and many others like them can best be helped by a free medical care system, and by public amenities that create a pleasant living environment.  But that costs money, which will have to be raised from taxation of businesses such as the one employing Clarissa.  Therefore, by acting in the best interests of the business, you maximise the taxation income of the state and enable these to be provided for all, including Angela and Beatrice.

By choosing Clarissa, you help all of them.  Choose one of the others, and the tax take falls, and you may only be able to help two of them.

And that is why I hold the economic views that I do; it is because they are morally right.

(in my opinion)


  1. 1. You are discriminating against the rich. How can that be fair?

    2. Also, to be a pedant, Clarissa is unlikely to have made full use of her personal allowance so you may not be maximising "the taxation income of the state" by choosing Clarissa.

    3. You may be preventing Beatrice from committing suicide... ::[continues to wax lyrically]::

  2. discriminating against the rich

    No, I'm not discriminating, I'm making a rational business choice. Discrimination would be to reject one equally suitable candidate because they were in a government-approved category.

    Clarissa is unlikely to have made full use of her personal allowance

    First, that is the same for all three. But more importantly, Clarissa's productivity will improve the business more than the other two, so the business will do better, it will pay more corporation tax, its owners will pay more tax, it will sell more leading to more VAT, the local economy will grow leading to more tax via those businesses...

    The benefit from a productive employee to the business is far more than the cost of their salary - which is, of course, the economic case for hiring staff.

    preventing Beatrice from committing suicide

    She's way, way better off in the hands of a qualified medical practitioner, I suspect!

    ::[continues to wax lyrically]::

    I find razors are less painful.

  3. 1. I submit that you are discriminating against the rich because you are awarding the job solely on the basis that Clarissa is very poor. That is evidence of favouritism and therefore logically the other richer candidates are being discriminated against.

    2. How do you reconcile "Clarissa's productivity will improve the business more than the other two" with "we do, indeed, have three perfectly even candidates"?

    3. Well, that is a cop out. The logical extension is let's treat Angela's illness and let's give Clarissa money.

    ::[splitting hairs? Nah. It feels more like plucking them out individually because it is a very difficult moral dilemma.]::


  4. Nicely analysed, Patently.

    As with history and the reliability of sources, common sense does help a lot.

    Not everything we are told is true, and some things are truer than others.

    Best regards

  5. I think the key point here is that it is your job as a business person to promote the success of your business within the law as it stands. If you want to give either of the two less healthy ladies a leg up you should pay them less to compensate for their likely lower productivity.

  6. A manager once told me to choose the best candidate.

    "Anyone with a sickness record, a criminal record, or a poor employment record for any reasons is a big risk. If they work out, no one will thank you, except maybe that person.
    If they don't work out .. the bosses question will be "why the hell did you employ them? You idiot!"

    A manager of mine insists on employing people with tough track records. Its because he came from a gang culture background himself, got a break and has been a very successful senior manager for 20 years.

    But he has at least twice the problems other managers have who don't take on risk candidates.

  7. I chose Clarrisa for the same reasons. Clarrisa can immediately start productive work for the company. The other two *might* do so, but until they get better (undetermined time period) they won't. The health problems of the other two are not the concern of the company. The company only wants productive workers, anyone else is just a burden.

    The dilema is easily solved once you take emotion out of the equation. A company is looking to maximise profit. How it does it doesn't matter.

  8. I agree: choose Clarissa, but I have slightly different reasons. I think her needs are more basic and therefore, she has a more moral claim to them.


    I submit that you are discriminating against the rich because you are awarding the job solely on the basis that Clarissa is very poor.

    No, not solely. That would be the case if the other two candidates did not have draw-backs of their own. As it is, there are good rational reasons not to choose them, which do not apply to Clarissa. Therefore Patently is not choosing Clarissa solely because of her poverty, and neither is he discriminating against the rich.

    Of course, the whole idea of morality in economics is interesting. Surely economics is simply a (pseudo) science: it tells you how things work (or it tries to!) and it attempts to predict what will happen if you do X or Y. The moral question of whether you do X or Y isn't in itself an economic one, but a philosophical or theological question.

  9. Right answer Albert, wrong reason :-D

    SBML - spot on, but Albert may have kittens at seeing it in such black and white terms.

    BQ - thank you, that illustrates the nature of profit that I hoped would come out. To him, the profit from the business came in more than just a monetary form. The satisfaction of seeing former reprobates made good, of giving others the same chances that were given to him, is a form of profit. That adjusted his equation, and he choose (freely) to adjust his business methods accordingly. It is vital that he had that freedom to choose, and just as vital that others are free to choose the method that they believe will maximise their definition of profit.

    BE - couldn't agree more. Good also to see the important qualification "within the law as it stands"; provided that the lawmakers realise the limits of how far they should tread, and thereby maintain the proper level of respect for the law.

    Nigel - some kind words, and some words to remember. Thanks!

    Measured - not sure if you're being serious or trying to tease...!

  10. Albert may have kittens at seeing it in such black and white terms

    No. Until the company has employed the other two, I cannot see that the company has any specific duty towards them (beyond the duty anyone else in society has) and so the reasoning there seems fine.

    The only disagreeable bit in SBML's comment is this one:

    A company is looking to maximise profit. How it does it doesn't matter.

    But I don't expect he means it in such absolute terms, as it would allow literally any abuse to enable profit.

    BTW, I can't help thinking your own position is a little socialist/communitarian.

  11. Patently,

    Well, perhaps there was a bit of cheekiness going on. Remember the old days of Letters from a Tory?

    Economically Clarissa is undeniably the best bet. From the existing workforce's point of view she is also the obvious choice as she will most likely be the most grateful and not introduce bad vibes.

    You chose to have another point of view. A moral point of view. I reckon I can argue whoever you choose can be deemed to be the wrong choice. It is like those games, Who shall we throw out of the hot air balloon basket?

    In this way an objective and transparent selection procedure is surely the only fair way to proceed. This is possibly where ethics come into it. If such a recruitment process did take place, I am sure Clarissa would again be chosen, but she is not suffering. She is just poor. There is never much room for compassion in business. On this occasion this is totally understandable. The well-being of the business is far more important, albeit that it may have tragic consequences for the individual.

    BTW, I can't help thinking your own position is a little socialist/communitarian.
    Albert, I tend to agree.

    ::[dives for the hair removal lotion]::