I was wondering if I could get some feedback from you all. In reading through Keynes, I was struck by the following:
Keynes devalues ethics/morality as a structure for stabilizing the economy. However, his motivations for having an intellectual controlling force over the economy seems to stem from empathy, therefore the ethics/morality he is speaking against.
While I understand the contrast between Keynes and Ruskin:
Keynes proposes that there is a need for fluctuating principles and only calculated interference from a governing intellectual body in order to maintain a stable economy
Ruskin proposes that morality can be used as a trellis for the economy, providing structure/a guiding hand to stabilize the economy.
The question is, excluding a sense of human empathy and ethical obligation, why is it necessary to control the market at all?
A free market is certainly not stable, but it finds equilibrium through the natural balancing forces of supply and demand.
Take for example the housing market in Vancouver. If the government lets the market take its course, people who cannot afford to live in Vancouver will move to cheaper locations. Eventually, there will be a lack of labour–take baristas at Starbucks, for example. If Starbucks refuses to pay its employees enough so that they can live in Vancouver, they will have to shut down their businesses. As other businesses follow suit, the city will become a less desirable place to live. This will bring down the cost of housing, and people will be able to move back into the city. The cycle now starts over again.
The only thing preventing us from letting “the nature of the market” take its course is our humanity. We recognize that moving away and finding a new job could mean up-rooting people and their families. This ethical dilemma is what drives us to find systems (like Keynes’) that can foresee and prevent market situations like this.
So my question:
When Keynes denounces ethics as a form of market control, isn’t he undermining the very motivations for his theory to begin with?
I’d like to add something about potential employees moving out of Vancouver, and the frustration that this “employee exodus” causes employers. Recently, there has apparently been proposals by big tech companies in Vancouver to solve this issue by buying entire apartment buildings, or a few floors, solely for their employees. Although this action has only been proposed and not put into effect, you can see still see the results of this form of corporate real estate purchase in popular tech hubs like San Francisco. Therefore, as long as you work at the company, you have a guaranteed place to live at a cheaper rent, thus creating an incentive to move to a city to work. Real estate in San Francisco, like in Vancouver, is incredibly expensive but, if corporations are willing to partially subsidize their employees rent, the city can still attain a desirable appeal for potential employees. This doesn’t answer your question, just merely adding to the discussion about the housing market and potential solutions for employees.
Hi Liam,
That is an interesting idea. If companies can make this work, it seems like a viable solution for those employees, but it doesn’t deal with the rising cost of housing for everyone else.
Case Study:
The system you are talking about exists (in an alternative form) in Whistler: with two main differences:
1. Whistler provides cheaper dorm-like living for employees
http://www.whistlerblackcomb.com/employment/staff-housing-and-registration
2. The industry underpinning the city of Whistler (tourism) is not as multi-faceted as the one that underpins Vancouver.
By providing cheaper housing options for its employees, we would guess that Whistler/Blackcomb has a good model for attracting employees and customers.
However, in recent news, rising housing costs in Whistler are becoming an issue for residents. So, although this system may work for some employees (particularly those willing to live in the style of subsidized-housing provided by employers), it doesn’t address the issue of rising housing costs.
http://www.cbc.ca/news/canada/british-columbia/hot-real-estate-market-in-whistler-puts-pressure-on-stable-housing-for-residents-1.3477208
Any other thoughts?