Preface to a Thought-Experiment on Labor, Capital, and Income Distribution
Mark Thoma goes to something called the Business Ethics Blog for an economics thought-experiment:
A Montreal accessories company has taken its policy of using no animal products beyond the rack and has forbidden its staff from eating meat and fish at work.
A former employee says the policy violated her rights as a non-vegetarian….
It’s an interesting experiment for many reasons, none of which deal directly with economics as it is currently taught. For one thing, it is a dictated change in a contract with workers. As a standard microeconomics problem, there is a negotiation, the worker’s preferences are examined, and the student is asked to find an economic balance that will satisfy the worker, with the implication that the employer desiring the change with provide compensation. (Note that the standard intermediate or graduate-level microeconomics problem merely teaches math, with dollars and preferences substituted for widgets and variables.)
For another, there is insufficient information to discuss externalities. (Aside to Brad DeLong: it’s not only, or even most importantly, Irving Fisher who is forgotten; Alfred Marshall appears to have been stripped from the curriculum as it transmogrified into a Libertarian Wet Dream.) Absent evidence, we cannot know if the company had a legitimate reason for banning meat eating. Perhaps chemicals used in their processes combine with some proteins and produce a marginally higher level of cancer in those exposed for long periods. Perhaps the maintenance crew has discovered multiple rat nests because the workers have not been attentive to clean-up requirements, leaving enough pieces of pork, chicken, beef, and tripe around to make the building a desirable habitat. We do not have sufficient information.
We do, however, know that bars that permit smoking produce lung, throat, and other cancers in even the non-smoking bartenders and wait staff. It may be unlikely that the aggressive hormone and radiation treatment given to meat these days produces a similar effect—radiation and drug treatment, after all, are both perfectly safe—but it is also possible that the company has seen recent research that indicates otherwise and fears for its future health-care costs.
We also do not know whether the company provides eating areas for its staff, or under what conditions it does. Is there a company cafeteria (or eating spaces on various floors) that provides napkins and utensils to those who bring their own food? Is eating at one’s desk permitted? (I have worked places where it is not.) In such a case, we cannot even model the type of microeconomics problem referenced above, because we do not know the extent to which the workers are being told to give up something. (Smokers having to leave the building has positive externalities for them, such as work breaks others do not get and social networking opportunities that provide compensation.) We cannot, in short, know the value of the widgets or the identities of the variables.
The question then becomes whether this is an economics problem at all. And, if we assume it is, what does that mean for other. more standard, problems? On the Next Rock: capital, labor, and taxation.
I have a puzzled reaction to this post. I would consider take it or leave it offers from management to be one of the standard options in economics 101. In fact, I’d consider bargaining under conditions of bilateral monopoly due to firm specific human capital and turnover costs to be an advanced topic. I am teaching economics 101 for the first time this year.
My view of the early economics 101 lecture (warn students this result follows from extreme assumptions and will not hold throughout the course) is as follows.
There is no problem. If the employee wants to eat meat, the employee can just go work for another firm. The wonder of the market system means that vegitarians and non-vegitarians don’t have to share work spaces if they don’t want to. The requirement to eat no meat at work, like the requirement to pray to aqua buddha at work in no way damages anyone’s rights or freedom, because the employee is free to quit and has no right to the job.
The (early lectures of) economics 101 assume frictionless perfectly competitive markets so there is no need for anyone to ever bargain. Employers choose what to demand from employees. Employees don’t work for employers who don’t compensate for any inconvenient demands with higher wages. The result is presumably that vegetarians who don’t want meat eating anywhere near them costlessly segregate from non vegetarians.
I would have thought that one had to get well into economics 101 before one can even understand why anyone ever baragains (sorry out of time class but I should have explained to you that your job is not like a vegetable market).
And honestly I don’t see an unusual legal or even moral problem. My first thought is that if one owns a firm one can offer employment on whatever terms one choses (well except for requiring employees to break the law — or change their religion — or well a finite number of restrictions which don’t have anything to do with salami). That the worker is perfectly free to eat meat at lunch, because the worker is perfectly free to quit that job. I note that I live in Italy, where such free-market ideology is totally alien and incomprehensible (see below) *and* I am supposed to be revising and resubmitting a paper which argues in favor of restrictions on firing.
By the way, I am also teaching labor economics to Italians. I had a strange experience yesterday. I told them that in the USA to fire someone for no particular reason, on a whim, is legal. They didn’t believe their ears. One asked (in Italian) you mean “illegal” ? I said “legal.” Another asked “you mean illegal” ? I said no, in the USA, according to the law employers can, in general, fire employees on a whim. They laughed and looked amazed. Then I went on to explain civil service protections and the fact that large firms typically have required procedures and don’t allow low level managers to fire on a whim.
The (early lectures of) economics 101 model is incomprehensible over here. The idea that a job is not valuable so workers are perfectly free if they are free to quit is absurd over there, but here it is unimaginable.
Sorry for the long comment, but I just can’t stop. I’m now moving on to the last lecture of my economics 101 course (it is so far off in the longed for dreamed of future that I didn’t think of it). It is on principal agent models. But wait in such models the standard assumption is that the principal choses a contract which is optimal to the principal subject to an IC and an IR constraint. The IR constraint is that the agent doesn’t quit (or the principal can hire an agent or the principal can replace the previous agent who just quit).
Bargaining over incentive contracts is an advanced topic and I sure won’t get to it.
Is business qualified to make this kind of contract?
Contracts be damned in this case as business is ill-equipped to be, or even become, the final arbiter on a reflective and ethical discussion. Business needs to justify itself rather than have others justify their actions. Sure we could discuss the finer points of contracts, or make or brake deals and just start looking for another job; but the fact of the matter is that business does not have the intellectual, ethical or philosophical horsepower to justify this much control over people’s lives. (Religion does a much nicer job at it.)
For a profit seeking entity to require any behavior,thought or idea, seems out of place. I do not make confession to my manager, nor should I be expected to live to his or her ethical and moral system; as business entities are amoral and should never become the source of any ethical thought other than business related(What is the best way to do business?).