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  • Here's a question we need to rethink together:

  • What should be the role of money

  • and markets in our societies?

  • Today, there are very few things

  • that money can't buy.

  • If you're sentenced to a jail term

  • in Santa Barbara, California,

  • you should know

  • that if you don't like the standard accommodations,

  • you can buy a prison cell upgrade.

  • It's true. For how much, do you think?

  • What would you guess?

  • Five hundred dollars?

  • It's not the Ritz-Carlton. It's a jail!

  • Eighty-two dollars a night.

  • Eighty-two dollars a night.

  • If you go to an amusement park

  • and don't want to stand in the long lines

  • for the popular rides,

  • there is now a solution.

  • In many theme parks, you can pay extra

  • to jump to the head of the line.

  • They call them Fast Track or VIP tickets.

  • And this isn't only happening in amusement parks.

  • In Washington, D.C., long lines,

  • queues sometimes form

  • for important Congressional hearings.

  • Now some people don't like to wait in long queues,

  • maybe overnight, even in the rain.

  • So now, for lobbyists and others

  • who are very keen to attend these hearings

  • but don't like to wait, there are companies,

  • line-standing companies,

  • and you can go to them.

  • You can pay them a certain amount of money,

  • they hire homeless people and others who need a job

  • to stand waiting in the line for as long as it takes,

  • and the lobbyist, just before the hearing begins,

  • can take his or her place at the head of the line

  • and a seat in the front of the room.

  • Paid line standing.

  • It's happening, the recourse to market mechanisms

  • and market thinking and market solutions,

  • in bigger arenas.

  • Take the way we fight our wars.

  • Did you know that, in Iraq and Afghanistan,

  • there were more private military contractors on the ground

  • than there were U.S. military troops?

  • Now this isn't because we had a public debate

  • about whether we wanted to outsource war

  • to private companies,

  • but this is what has happened.

  • Over the past three decades,

  • we have lived through a quiet revolution.

  • We've drifted almost without realizing it

  • from having a market economy

  • to becoming market societies.

  • The difference is this: A market economy is a tool,

  • a valuable and effective tool,

  • for organizing productive activity,

  • but a market society is a place where

  • almost everything is up for sale.

  • It's a way of life, in which market thinking

  • and market values begin to dominate

  • every aspect of life:

  • personal relations, family life, health, education,

  • politics, law, civic life.

  • Now, why worry? Why worry about our becoming

  • market societies?

  • For two reasons, I think.

  • One of them has to do with inequality.

  • The more things money can buy,

  • the more affluence, or the lack of it, matters.

  • If the only thing that money determined

  • was access to yachts or fancy vacations or BMWs,

  • then inequality wouldn't matter very much.

  • But when money comes increasingly to govern

  • access to the essentials of the good life --

  • decent health care, access to the best education,

  • political voice and influence in campaigns --

  • when money comes to govern all of those things,

  • inequality matters a great deal.

  • And so the marketization of everything

  • sharpens the sting of inequality

  • and its social and civic consequence.

  • That's one reason to worry.

  • There's a second reason

  • apart from the worry about inequality,

  • and it's this:

  • with some social goods and practices,

  • when market thinking and market values enter,

  • they may change the meaning of those practices

  • and crowd out attitudes and norms

  • worth caring about.

  • I'd like to take an example

  • of a controversial use of a market mechanism,

  • a cash incentive, and see what you think about it.

  • Many schools struggle with the challenge

  • of motivating kids, especially kids

  • from disadvantaged backgrounds, to study hard,

  • to do well in school, to apply themselves.

  • Some economists have proposed a market solution:

  • Offer cash incentives to kids for getting good grades

  • or high test scores

  • or for reading books.

  • They've tried this, actually.

  • They've done some experiments

  • in some major American cities.

  • In New York, in Chicago, in Washington, D.C.,

  • they've tried this, offering 50 dollars for an A,

  • 35 dollars for a B.

  • In Dallas, Texas, they have a program that offers

  • eight-year-olds two dollars for each book they read.

  • So let's see what -- Some people are in favor,

  • some people are opposed to this cash incentive

  • to motivate achievement.

  • Let's see what people here think about it.

  • Imagine that you are the head of a major school system,

  • and someone comes to you with this proposal.

  • And let's say it's a foundation. They will provide the funds.

  • You don't have to take it out of your budget.

  • How many would be in favor

  • and how many would be opposed to giving it a try?

  • Let's see by a show of hands.

  • First, how many think it might at least be worth a try

  • to see if it would work? Raise your hand.

  • And how many would be opposed? How many would --

  • So the majority here are opposed,

  • but a sizable minority are in favor.

  • Let's have a discussion.

  • Let's start with those of you who object,

  • who would rule it out even before trying.

  • What would be your reason?

  • Who will get our discussion started? Yes?

  • Heike Moses: Hello everyone, I'm Heike,

  • and I think it just kills the intrinsic motivation,

  • so in the respect that children, if they would like to read,

  • you just take this incentive away

  • in just paying them, so it just changes behavior.

  • Michael Sandel: Takes the intrinsic incentive away.

  • What is, or should be, the intrinsic motivation?

  • HM: Well, the intrinsic motivation

  • should be to learn.

  • MS: To learn. HM: To get to know the world.

  • And then, if you stop paying them, what happens then?

  • Then they stop reading?

  • MS: Now, let's see if there's someone who favors,

  • who thinks it's worth trying this.

  • Elizabeth Loftus: I'm Elizabeth Loftus,

  • and you said worth a try, so why not try it

  • and do the experiment and measure things?

  • MS: And measure. And what would you measure?

  • You'd measure how many --

  • EL: How many books they read

  • and how many books they continued to read

  • after you stopped paying them.

  • MS: Oh, after you stopped paying.

  • All right, what about that?

  • HM: To be frank, I just think

  • this is, not to offend anyone, a very American way.

  • (Laughter) (Applause)

  • MS: All right. What's emerged from this discussion

  • is the following question:

  • Will the cash incentive drive out or corrupt

  • or crowd out the higher motivation,

  • the intrinsic lesson that we hope to convey,

  • which is to learn to love to learn and to read

  • for their own sakes?

  • And people disagree about what the effect will be,

  • but that seems to be the question,

  • that somehow a market mechanism

  • or a cash incentive teaches the wrong lesson,

  • and if it does, what will become of these children later?

  • I should tell you what's happened with these experiments.

  • The cash for good grades has had very mixed results,

  • for the most part has not resulted in higher grades.

  • The two dollars for each book

  • did lead those kids to read more books.

  • It also led them to read shorter books.

  • (Laughter)

  • But the real question is,

  • what will become of these kids later?

  • Will they have learned that reading is a chore,

  • a form of piecework to be done for pay, that's the worry,

  • or may it lead them to read maybe for the wrong reason initially

  • but then lead them to fall in love with reading for its own sake?

  • Now, what this, even this brief debate, brings out

  • is something that many economists overlook.

  • Economists often assume

  • that markets are inert,

  • that they do not touch or taint the goods they exchange.

  • Market exchange, they assume,

  • doesn't change the meaning or value

  • of the goods being exchanged.

  • This may be true enough

  • if we're talking about material goods.

  • If you sell me a flat screen television

  • or give me one as a gift,

  • it will be the same good.

  • It will work the same either way.

  • But the same may not be true

  • if we're talking about nonmaterial goods

  • and social practices such as teaching and learning

  • or engaging together in civic life.

  • In those domains, bringing market mechanisms

  • and cash incentives may undermine

  • or crowd out nonmarket values and attitudes

  • worth caring about.

  • Once we see

  • that markets and commerce,

  • when extended beyond the material domain,

  • can change the character of the goods themselves,

  • can change the meaning of the social practices,

  • as in the example of teaching and learning,

  • we have to ask where markets belong

  • and where they don't,

  • where they may actually undermine

  • values and attitudes worth caring about.

  • But to have this debate,

  • we have to do something we're not very good at,

  • and that is to reason together in public

  • about the value and the meaning

  • of the social practices we prize,

  • from our bodies to family life

  • to personal relations to health

  • to teaching and learning to civic life.

  • Now these are controversial questions,

  • and so we tend to shrink from them.

  • In fact, during the past three decades,

  • when market reasoning and market thinking

  • have gathered force and gained prestige,

  • our public discourse during this time

  • has become hollowed out,

  • empty of larger moral meaning.

  • For fear of disagreement, we shrink from these questions.

  • But once we see that markets

  • change the character of goods,

  • we have to debate among ourselves

  • these bigger questions

  • about how to value goods.

  • One of the most corrosive effects

  • of putting a price on everything

  • is on commonality,

  • the sense that we are all in it together.

  • Against the background of rising inequality,

  • marketizing every aspect of life

  • leads to a condition where those who are affluent

  • and those who are of modest means

  • increasingly live separate lives.

  • We live and work and shop and play

  • in different places.