Made-up Social Problems

While writing this post about income inequality, I think I hit on a useful distinction. There are different kinds of social problems. Some are plainly real. An identifiable party is harmed, there is an identifiable malefactor, and the causal chain between the injuring party’s action and the injured parties harm is clear. Crime. Pollution. Mental illness (though in this case there probably is no malefactor). Unemployment (ditto).

Some social problems are basically made-up. Fake. Bullshit. They are structural features of society that exist in some aggregate sense and that some people find distasteful. But there is no malicious actor, no identifiable injury, no clear causal chain between on person’s actions and another’s harm. Income inequality is a good example. If you look at how people earn their income in an economy, you see a bunch of pairwise interactions between individual decision-makers. “Should I hire this person for such-and-such a wage? Yes!” or “Should I take this job for such-and-such a salary? Yes!” The hiring only happens if both parties agree to the transaction. Presumably the employer wouldn’t hire the person if his productivity didn’t justify his salary, and presumably the employee would not accept the offer if he could get a better deal elsewhere. We know that both parties benefit (at least on expectation, ex ante) because the transaction occurs. For all the talk about workers being exploited by their employers, those workers are free to go work elsewhere. If they don’t, it means their current “exploiter” is offering them a better deal than anyone else at the moment. (All things considered; of course there are non-wage perks or conditions that might make a lower-paying job more attractive than a higher-paying one.) If the employer is paying a surcharge to hire the worker (a surcharge above the worker's next best option), and the worker agrees to the terms, then it's very strange to describe this transaction as exploitation. 

“Trade deficits” are another bullshit social problem. It’s not even a useful concept, even as a summary term. We don’t have a “trade deficit” with China. We have billions of pairwise trades with China. Each of these trades is beneficial to both parties to the trade, otherwise (once again) the trade would not happen. Because of some stupid accounting tricks, some of these exchanges count money flowing in one direction and not the other. If I buy a $10 toy from a Chinese manufacturer, and the manufacturer turns around and invests $10 in an American company, that counts as $10 toward the “trade deficit” even though everybody benefited and everybody got what they wanted. It gets dumber. If a Chinese person buys my home for $500k and keeps it as a rental property, the trade deficit grows by $500k. But if the same person buys a manufactured home for $500k which gets shipped to China, the trade deficit doesn’t grow. In both cases a Chinese citizen bought something worth $500k from an American, but for some arbitrary reason one gets counted as an “export” and the other doesn’t. President Trump keeps harping on the multi-hundred-billion-dollar “trade deficit” with china. But it’s all noise to me, because the concept itself is completely meaningless. There is no injured party here. There’s no aggregate harm, no “emergent property” that exists on the aggregate scale that doesn’t exist in the individual trades. It’s a “problem” that was conjured out of thin air by an accounting trick (perhaps an unintentional accounting confusion?). Framing this as a “deficit” is backwards. If we’re getting a higher aggregate value of stuff shipped to us from China than the aggregate value of stuff we’re shipping to them, I’d call that a "surplus" if anything. But I probably don't want to call it that, either. A more helpful framing is that everyone is basically getting what they want because each individual trade is voluntary.

“Gentrification” seems like another one. If a bunch of upper-class people are moving into your neighborhood and you own your home, good news! You can sell your home for a higher value than what you bought it for and move out. If you rent and the cost of rent is going up, I guess that’s bad for you but it’s good for the person who moves into your apartment. If you don’t own your apartment, you hardly have a legitimate grievance against future renters who outbid you for it. That future renter has just as much claim to that apartment as you do. (Greater claim, actually, if they can manage to outbid you.) You can heap scorn upon the landlord for raising rent on his tenants, but the landlord is really just an intermediary in the market for housing. He’s responding to a market force (the greater demand for housing in an area), not creating it. He’s not simply “deciding” to raise the price of rent. Even if we can imagine a few hold-out "altruistic" landlords who don't raise their rents, they won't hold down prices for long. Their properties will be purchased by landlords who are savvier about market values and profit margins, and the "altruistic" landlords will find it very hard to resist their offers to buy them out. Rising rents are the result of market forces, not individual decisions. It’s not always clear that this process is bad, either. Can’t renters usually find similarly attractive housing elsewhere? (When I was in grad school I knew plenty of people who moved each year to a new rental property, though granted there were lots of people who stayed put for their entire grad school tenure.) Some people see “gentrification” as an insidious force: rich people are kicking poor people out of their homes (or something). Really, it’s just the economic process of stuff being shifted to its highest valued use and away from a lower-valued use. Adjusting to a changing world can be rough, even wrenching. But there’s no “malefactor” and no “externality” in any meaningful sense.

I can think of other examples. Stories about declining cities or communities always strike me this way. Does Detroit feel sad that it's "dying" or declining in population? No, of course not. It's conceivable that every single resident of Detroit (or any other declining community) could be made better off by moving to another city. There is no entity, no communal hive-mind called "Detroit", who would feel any pain. Some individuals might feel harmed. Property values decline because nobody wants to live there, there is less sense of community because all the people are leaving, there is less to do because the population isn't big enough to support little niche stores (or any stores at all perhaps). Still, I'm uncomfortable classifying this phenomenon as a "social problem" in the same sense that crime and pollution are social problems, because "problem" implies that there is a solution. (Which in this case means, what, enticing people to stay rather than leave? Thwarting the plans of individuals who see broader horizons elsewhere? All to preserve the comfortable, settled lives of people who prefer not to see anything change? Such a policy would create real problems in order to solve a fake one.)

This isn't an exhaustive list. I'm sure other examples will occur to me later. There are a lot of cases where people bemoan that "The world is this way, and I wish it were this other way." But not all of these are instances of real problems. Many of these "problems" are just instances of people wanting to re-engineer the world to meet their aesthetic preferences.