Merit Goods

One of the most pervasive critiques of capitalism is its stubborn persistence in producing goods and services having little or no merit in the eyes of its critics.

Those determined to reverse global warming blame capitalism, its markets, its consumers and its governance, for creating and thriving on a hydro-carbon energy system.

Other critics bemoan “affluenza” and “consumerism” as almost an intentional capitalist conspiracy to undermine humanity’s moral nobility with cheapness of things and vulgar materialism.  Capitalism is said to be a system made by and for a “nouveau riche” sensibility, a deplorable middle class, middlebrow indulgence in trivial pursuits and enjoyments lacking any redemptive meaning in our cosmos.

Welfare economists have come up with a notion of “merit” goods which speaks to the value of what is either produced and sold through markets or provided by the state to the deserving as welfare goods and services.

I very much agree that the categories of merit goods and services and un-meritorious goods and services are sound and important for us to keep in mind.  Un-meritorious goods are not really needed in a good society or a wholesome culture.

But my problem with these two categories is my problem with any ethic or morality or with the legitimacy of any authority: “Who says?”

Should we listen to a pope or a tzar to learn what has merit and what must be shunned and excluded from our purchases?  What about following the opinions of bad people?  Or of stupid people who can’t see the consequences for the immediacy of their pleasurable satisfaction in consuming whatever it is they salivate for?

Or just look to good people and ape their consumption patterns?

Who is a good person anyway?  They don’t come from the womb having that label branded on their foreheads for all of us to see.

The free markets of capitalism can’t solve this justification conundrum.  Markets are value-neutral; they facilitate production of what people want.  If there are customers with ready money who know what they want, the history of our species suggests that someone will step forward to meet that demand, be it for guns, sex, drugs, pornography, stolen goods, ad infinitum.

Providing only merit goods is a great challenge to free societies.  We need to do a better job but there seems to be no way to easily and correctly cut the Gordian Knot of convoluted, intertwining, human desiring and free us from sin in demanding that which has no merit.

I recently saw an article for parents on what watching video games does to a child’s brain.  The article makes clear that video games, as intentionally designed by sellers, are not merit goods.

Video games cause the mind to release dopamine which is pleasurable.  The level of dopamine released – the pleasure experienced – rose with a progression of success at the game.  The more difficult the challenges, the better the scores, the better the players got vis-à-vis themselves and others, the more dopamine was released and the less homework got done.  Game designers excel intentionally in arranging for the release of lots of dopamine to keep the gamers at their consoles.

Requests, escalating into demands from parents to stop playing and eat dinner or do homework triggered anger in the child, confrontation with the parents, rejection of authority and a deterioration in the child’s emotional well-being and sociability.

Children give up playing with Legos when asked much more easily.

Then, I saw an article in our local paper here in St. Paul that Creative Kidstuff is going out of business.  There, we bought toys – old fashion toys – which require imagination and creative play – for our grandchildren.  The owner gave as a principal reason for giving up the business that now “children are more likely to play games on electronic devices.”  Can’t buy Legos there anymore but they can still be ordered on Amazon.

A 2017 study found that children and young adults who played video games four or more hours a day for six or seven days a week showed more symptoms of depression than those who put in less time in such self-entertainment.  Now, to me, becoming depressed as the result of using a consumer purchase is not a merit good for anyone.

So, should we outlaw video games?

Secondly, the American drug store chain Walgreens is testing tobacco-free stores under pressure from government health regulators but has no plans to give up selling cigarettes.  But the chain is trying to sell more smoking cessation products and has reduced the visibility of tobacco products to customers.

In a report on Juul, the maker of an alternative to cigarettes, it was said that: “Just two months after agreeing to no longer sell its flavored pods in stores, e-cigarette company Juul is planning to launch its first television ad campaign.  The ads, which are expected to air this summer, will feature testimonials from adults who have used Juul to help them stop smoking cigarettes,” Business Insider reports.  Juul removed its flavored pods from stores amid criticism that the pods specifically target teens.  It also deleted its Facebook and Instagram accounts promoting the flavored pods and has asked Twitter to “police” its posts so they’re not shown to underage users.  The television ads will reportedly cost Juul $10 million and will air on national cable channels after 10:00 pm.  According to executives, the ads are targeted at adults 35 and older and include testimonials from smokers between the ages of 37 and 54.

Thirdly, Big Data, soon to be put on steroids by artificial intelligence, brings to us many benefits, including social media, lower costs, more knowledge of what’s going on, quicker response times, etc.  But in the wrong hands, is it still a merit service?

Micro-targeting of customers by analysis of Big Data memory banks enables companies to enhance their return on advertising, politicians to adroitly stoke the emotions of their followers and autocrats to summon forth willing obedience from citizens.

Today, Facebook is trying to minimize the ability of its WhatsApp communications system in India to contaminate the forthcoming election with falsehoods and demagogic, divisive emotionalism.

Facebook founder and CEO Mark Zuckerberg has now called for government regulation of social media, dependent on Big Data for its ability to sell ads to companies.  He wants government to set rules for the restriction of free speech, the freedom of his suppliers to say whatever they want on his internet platforms, to prevent un-meritorious communications with harmful content, endangering election integrity, abusing privacy and misusing data portability.

The Wall Street Journal, in an editorial, wryly suggested: “Before he invites the protection of the political class, Mr. Zuckerberg should have Facebook fix Facebook.”

In other words, providing merit goods is part of corporate social responsibility.

Another commentator pointed out that once complex regulation is in force, only the big companies like Facebook will have the money to hire the lawyers and technicians to work in and around the rules and regulations and appeal process.  Small, innovative upstart companies will encounter barriers to entry as competitors of Facebook, to the great profit advantage of Mark Zuckerberg.

I note in this connection with a call for Facebook to be more socially responsible that Facebook paid App developers to secretly include Facebook software in their Apps so that users of the Apps unknowingly were sending very personal data to Facebook for the company to sell.  One App, Flo Period and Ovulation tracker with 25 million users, obtained the most intimate information on women’s menstruation cycles on behalf of Facebook.

With respect to free and fair elections, the problem is not the ads which partisans pay to display on Facebook but the very essence of Facebook – exacerbating “poisonous politics by creating filter bubbles of like-minded partisans, spreading hoaxes and inaccuracies, inducing anxiety and paranoia and rewarding clickbait and outrage.”  In other words, it is the Facebook service itself which lacks merit, in many respects.

When we start to think about what to do to promote merit goods and discourage un-meritorious goods, we are on the edge of important innovation.