 So I thank you for your spirit of cooperation, and so we won't waste any more time. I will just say a very few words of introduction about Michael Sandel. Michael is the NT and Robert M. Bass Professor of Government here at Harvard, since he literally needs no introduction. I may perhaps be forgiven if I begin with a few words of digression. I've known Michael for over 40 years. We met at a Rhodes Scholar interview more than 40 years ago. All I remember about him at that time is that he was very badly dressed, that he had a harpoon marks, hairdo, and that his life's ambition at that time was to be the second baseman for the Minnesota twins. Now, more than 40 years later, he's not achieved that ambition, but he is often described as a rock star, which I think might have satisfied him just as well. Michael is the rare public, celebrated public philosopher who has a unique capacity for presenting complex ideas to public audiences all over the world. He's the author of six books, which have been translated into 27 languages. His legendary Harvard College Justice course, which he has delivered to more than 15,000 Harvard undergraduates over the years, has been turned into a public television series that has been broadcast to tens of millions, tens of millions. I find that just a staggering figure, people around the world. And unlike many public philosophers, unlike many political philosophers, he has a rare capacity to bring public philosophy directly to bear on events of pressing public importance. More than 20 years ago, in his book, Democracy's Discontent, Michael wrote that the predominant liberal approach of celebrating individual rights and driving discussion of moral values and personal responsibility to the fringes of our politics and away from the public square would ultimately play into the hands of, and here I quote, those who would shore up our borders, harden the distinction between insiders and outsiders, and promise a politics to take back our culture and take back our country. With regard to the scope of Michael's audience, wouldn't it be at all surprised if Steve Bannon had read his book? I wish Hillary Clinton had read his book. I will be surprised if Donald Trump tweets about it, but one never knows. Apart from Michael's academic work and lecturing, he has served on the President's Council on Bioethics from 2002 to 2005. More recently, he has written equally trenchantly about the subject of his talk today, Markets and Morals. I could say more, but like the rest of you, I am eager to hear from Michael who always enlightens and always surprises, and so without further ado, Michael Sandow. Thank you, Dick. Thank you. Thank you, Dick. We go back, as Professor Fallin has said, for more than four decades of friendship, and so it's a special privilege for me to be introduced so generously by Dick Fallin, whom I've admired for all of those 40-plus years, and for whom I also feel a great affection, so thank you for that. Dick, and thank you for coming. The subject I would like to discuss with you today and I hope it will be a discussion, which is why we're hoping that people edge toward the center so we can hear one another. The subject is what should be the role of money and markets in relation to law? Increasingly in legal academia in recent decades, legal reasoning has been analyzed really as a branch of economic reasoning, and when we look at the world, legal and political practices are increasingly governed by market thinking and market practices, and the question I would like to put to you today is whether or to what extent that's a good thing or a worrying thing. Let me begin by giving a few examples of the way in which money and markets have just in the last couple of decades come to inform various legal practices. Example one, if you're ever sentenced to a jail term in Southern California, just in case, you should know that if you don't like the accommodations in the standard jail, you can, if you have the money, buy a prison cell upgrade. You already knew that? It's about $100 a night, depending on how lavish the facilities you could pay twice that much. In fact, there are city jails that in order to boost revenue, advertise for customers. Seal Beach is a town in California with such a jail, and they run ads in newspapers advertising themselves, looking for business. Seal Beach Detention Center, why spend your jail sentence of 365 days or less at the county jail? We offer the following amenities. This is from the ad. Work release, flat screen TVs, computer media room, clean facility, new beds. And then it gives you the place you can call or email to inquire about further details. They call it pay to stay. That's example number one. Here's the second example. Suppose you want to sit in on an oral argument before the U.S. Supreme Court. Let's say you're a member of the public, you're not a member of the bar. You want to go, you're on a trip to Washington with your family. Often, especially for big cases, there are very long lines. You've got to wait for a long time. And for really big cases, you can wait for the line starts forming three, four, five days in advance. A lot of people who want to hear Supreme Court oral arguments don't like to stand on long lines waiting like that. And now there's a solution. You can go to a company, pay them $50 an hour, and they will hire someone, often a homeless person or someone who needs the job to stand in the line for you. They'll pay that person maybe $10 or $12 or $15 an hour to wait for you to listen to the oral argument. In fact, in the same-sex marriage case, which was one of the most highly sought cases for attendance, the line started five days in advance. And if you work it out, $50 an hour, five days, many of the people who got to sit into the oral argument in the same-sex marriage case paid as much as $6,000 for the privilege. The leading company that provides this service is called linestanding.com. They too have an ad. You go online. Helping you out against the crowd. We provide persons to stand in line anywhere in the greater Washington, D.C. area. We specialize in U.S. congressional hearings as well as the U.S. Supreme Court. So they provide a service, linestanding, paid linestanding at the U.S. Supreme Court. That's the second example. Third example, if you're looking for an asset class that is not correlated to the general stock market, as many people do, you can now invest in other people's lawsuits. This is a growing kind of financial, part of the financial industry, the financialization of the economy over the past 20 years, litigation, finance, it's called. So, for example, it was a known practice for personal injury lawsuits some years ago. Increasingly, it's come to... The companies have begun investing in commercial lawsuits, but to take an example of a well-known Fox TV personality who recently, reportedly, settled a sexual harassment lawsuit for a reported $32 million. If you were the person... If you were looking for an investment, you could go to the person who had been agreed or alleged the offense, maybe couldn't afford the full cost of the legal case, and you could buy a piece of that lawsuit. You could invest in an equity share in that person's grievance against the Fox news personality and in exchange for a share of the winnings, typically 30 to 40, sometimes 50%, that $32 million. So, litigation, finance, that's a third example. Now, in a moment, I want to get your thoughts on these. Let me give you a fourth. Paying criminals not to commit crimes. This is a new practice that has arisen in some communities that are struggling with ways to prevent crime. Pay criminals, provide them a cash incentive not to commit crimes. The model program for this developed in Richmond, California, which actually had a very high murder rate, 11 times that of New York City, not too long ago. There's a program there where it turned out that a relatively small number of people were committing these crimes. So they said, let's find them and pay them not to do it. And they have a program that pays the criminals $1,000 per month if they don't commit any crimes and also they have to develop a kind of life plan that involves some hope of pulling themselves together. And many cities, it did result in Richmond, California, in a sharp reduction in the murder rate, the $1,000 payments. And many other cities, including Washington, D.C., have been debating whether to enact a similar program. So I'd like just to begin to see what you think about these four examples of the use of money or market incentives in the law. Should we worry about this trend or is it instead the welcome application of market reasoning and efficiency considerations, market rationality to vexing legal problems or public needs? So we've got the pay-to-stay, the jail cell upgrade. Paid line standing at the Supreme Court, investing in other people's lawsuits, paying criminals not to kill. Which, if any of these practices, do you find objectionable? We'll do this just by a quick show of hands as I run down the list. Raise your hand if you find this program objectionable. Let's start with pay-to-stay, the jail cell upgrade. Most people object to that. Paid line standing at the U.S. Supreme Court. Fewer people object to that. Investing in other people's lawsuits, also roughly divided only a minority, I think, object. Paying criminals not to kill, even if it works? All right, let's start with the last. Is there someone who objects to... who finds all four of these cases objectionable? Is there someone who objected to all four of them? There must be only a handful of people. Let's start with the program of paying criminals a thousand dollars a month not to kill. And it'd be interesting to hear objections and then replies to those objections. I should tell you about this program. They interviewed the guy who runs it, and this is what he said when people pressed him with some objections. This is controversial, I get it, but what's really happening is that they're getting rewarded for doing really hard work and it's definitely hard work when you talk about stopping, picking up a gun to solve your problems. That's not easy, at least for the people in the program. And then they interviewed one of the people in the program, a recipient of the money. The money is a big part, he said. I can't count the number of times it has kept me from doing what I've got to do. That was his phrase. It stopped me from going in to hit that liquor store. And it's a relief to not have to go do this and endanger my life for a little income, robbing the liquor store because he's getting the money from the program. And then they described the somewhat mixed results, not everyone stays on the program, but one of the leaders of the program concluded as follows, we don't have any model fellows, we're not graduating law students here, all we're trying to do is to get these guys to stop killing each other. So the goal is relatively modest, I mean for a success. So let's take that one again. So how many, just that one, how many object to that, to pain? And how many don't object? How many think that that's worth trying? All right, let's start first from someone who does think it's worth trying. What would be your reason? Yes. All right, go ahead. The proposition is framed in this way if it is framed in this way, that you are trying to prevent criminals from being criminals again. In other words, that's... Hold it up so people... That's recidivism. In other words, if you try to prevent people from continuing in a life of crime, then that would be a good thing. It's a good thing. Let's say that it does work. Now the first year it cut the crime rate dramatically. Wait, wait, wait. The crime rate did climb a little after that. Subsequently it went back up, but still below the initial level. So let's assume that it works. So you would say if it works, it's a way of cutting the crime rate. Everyone benefits. So why not? Yeah? All right. Let's hear... All right, that's a pretty straightforward, plausible argument. Do you object or do you agree with it? No, I agree. All right, you agree. Tell us why. I think that in addition to the money, it's important to focus on the way the program worked in practice. In drug trials, for example, the people getting the placebo often respond positively because of the attention that they get that they wouldn't otherwise get. So I suspect here that in addition to the money, you're taking these people, talking to them, working with them. They do. And really trying to turn their lives around. Right. So it's the money, but it's more than just the money, it seems to be an appropriate motivator under these circumstances. Okay, yes. And what you've described is the case there. People who work with them and counsel them. All right, let's... Jim. Well, is it a government, program, or private initiative? Would that decide how you vote, by the way? You'd be against it in either case. Well, it's a... In D.C., the city council voted to adopt such a program. The mayor disagreed, so there's a conflict. So it is a public program, although the money to pay the $1,000 a month in the California case comes from private donations as a way of lessening public objection to it, although in principle it could be from public funds. So it depends on the place where this is... Some have been from private donations, but it's publicly sanctioned. And you're against, either way. So do you want to articulate? Let's get Professor Fleming the microphone. So give us the grounds of your objection. Well, I might view it slightly differently if it's a private initiative. I would then do it as like an institution of civil society rising to help address problems that government may not have the commitment to or the resources to address. But I'm troubled by it because it does seem to be displacing a governmental responsibility directly to address these social programs. And it seems... It borders on seeming like a form of extortion by the would-be criminals. Extortion? You pay me $1,000 and I won't kill and may have. Does the monetary payment seem like... Well, it's paying extortion, or is it bribing the criminal not to pick up a gun? Both formulations seem apt. Okay, so Jim Fleming says it's kind of extortion and bribery, and that's morally objectionable. And sometimes extortion does work to stave off the things you're worried about, but it's nonetheless morally objectionable. And it may be displacing better governmental efforts to address the underlying problem. Although in Richmond, California, those governmental efforts, such as they were, led to 47 murders a year in a relatively small place. This is, you know, near Oakland. What do you think? So I didn't think it was... I didn't think it was objectionable at all. I think it's actually quite brilliant, but it's all about how you describe it. I would not call it a program to pay criminals not to kill. It's a new scholarship. It's a new scholarship. Now part of the criterion, part of the criteria is you have to have committed crimes in the past. To qualify for the scholarship. See, because what you're saying is you're trying to create a different level of incentive. For some of the folks, of course, it's not going to be enough. But for some of the folks, whether it's because they're getting that attention or whether because they're getting that $500 now, you're saying this is what we expect of you as a member of society. And we will give you some money. I think, Jim's thing of, you know, is it government or not? I actually think because it is useful, I'd be fine if it's government. I just think the taxpayers may not like it. So it's good to do a public-private partnership for this. Okay, so... All right, let's hear now. So we have had a very robust defense of this. Now we need to hear from someone who's against it in principle. Who's against it in principle. Yes. Tyler. Hi. Stand up. Thanks. Wow, it's cool to be here. I think that in a civil society, we're very concerned, or at least we should be concerned, with communal values. So I'm really interested in kind of the communal values that are displaced by a monetary incentive. In other words, if a criminal is paid to not commit a crime, then they choose to not commit the crime because of something individualistic, because of something sort of like a personal incentive. Because ideally, I think people should not commit crimes for the sake of the success of the society, which is more of a communal approach. So they're desisting from crime for the wrong reason. Yeah. If it's to get the scholarship, rather than because it's wrong to kill. Right. Yeah. Well, Professor Feldman, you want to... What about that? That's a pretty strong argument, isn't it? Sure. Do we have another microphone? No, that's absolutely correct. And ultimately, you would want someone acting in society for those communal instincts. But if you have someone who's not, what are you going to do? Are you just going to let that person be, or are you going to try to bring them into that societal way of thinking? And to me, it's about... it's better to try to bring them in in some way. All right, but here, I'm guessing what Tyler would say. And also, Jim, who said it's really a kind of extortion or a bribe. If your goal is to educate or re-educate people into the norms of a civilized society, aren't you teaching them the wrong reason not to kill? I think that's what I'm hearing in Tyler's book. And I think that's why I thought about this scholarship idea. It's all about how... No, really, how you frame it to the person. So it's not... Do they really say, we want to pay you money not to kill? Or are they saying here, we want to bring you into something where we will give you alternative income so you can leave that job you've been on and we're now training you to different jobs. That's what I think, that so much of this is about the framing. Yes. Long incentive for the first murderer. He'd have to go out and work for a living, but now he can just kill one person for free, serve his time, and he gets $1,000 a month for life. Who wants a program like that? Right. So you're afraid that some people, law abiding citizens, will say, I want to qualify for that scholarship. I'll pick up a gun. By the way, it's not for life. It runs for 18 months. You can't be honest. The scholarship has a limited duration. Yes. My concern is it replaces morality with money. Well, wait, you've got to say more then. That's a provocative thought. What do you mean by that? How does it replace morality by money? It defines a comfortable life. Put the mic closer. It defines a comfortable life as consisting solely of money and it guides society with money rather than any morality. And so that's what makes it wrong. Yes, sir. And so you would agree it's a kind of a bribe. No, more than that. Worse than extortion. No, it displaces the morality of the whole society. It displaces because it suggests that the reason we should treat one another with respect, or at least not kill one another, is for reasons of money, not morality. Yes, sir. Okay. So we've defined, I think, the question here, which is whether a monetary incentive that seems to work to achieve the goal may nonetheless be objectionable if it promulgates the wrong lesson, sends the wrong moral message, substitutes morality for money. Now, not everyone agrees that this program does that, but that's the issue. That's the question. I'd like to shift to test that tendency or the worry that, especially in the area of the law, it's a mistake to let money drive out or corrupt or crowd out morality with a less freighted example, a more mundane case, to do with parking tickets. Now, in downtown Boston, there are not enough parking places and there aren't places enough, even for delivery trucks to stop, UPS trucks, FedEx trucks. And so it's a common practice that delivery trucks, double park, incur tickets, a great many tickets per week, especially per month, per year, and they pay those tickets conscientiously and they consider it a cost of doing business. UPS over a couple of years in the city of Boston alone pays something like a million dollars in parking tickets. They're abiding, well, they're violating the law in the sense that they get the ticket, they double park, they're abiding by the law in the sense that they paid a penalty associated with it and they say that's a cost of doing business. It's as if they were paying an expensive parking fee. Now, there are other examples of this. In Massachusetts, there was until recently a law, an item pricing law that said retail stores, grocery stores and CVS and the like, had to put a sticker showing the price of each item on the item. It wasn't enough to post a sign over a shelf of goods to make sure that customers were not cheated, knew the cost of each item. And for big box stores, it was prohibitively expensive or so they said to hire the people to put a price sticker on each item and so they incurred the fine on a yearly basis which was much less than it would have cost them to hire the people to comply with the item pricing law. Now, take these examples. Companies who willingly and conscientiously pay the fines, say the parking tickets, have, here's the question, have they done anything wrong? How many say that no, they've complied, they've violated the law but they've paid the fine and at the end of the day they've done nothing wrong. How many would say that? And how many would say even after they've paid the fine they've still done something wrong? Of course, Dana, why? Wait, here, go ahead. It seems to me that they paid a fine because they did something wrong. But after, here, but after they've paid, they complied. It doesn't make the act right. The moral value of the act isn't changed by having served a sentence or paid a fine. Hold it closer, they can't hear. The moral, let's say it again. I don't see how you're cleansed of moral guilt simply because you have gone through a rehabilitation program. Well, rehabilitation, they've just paid, they've written a check. Understood. They carry on doing it. Yes, why would we evaluate the act differently? Here, go ahead. Again, on the pricing on each item, that may or may not be a good decision and I have some questions on whether it's good. But the state decided that this was a good thing and the company should comply. Just paying the fine isn't what the government is saying. This is something we want you to do. Yes, they're being fine, I don't view that as being a reasonable cost of business. So it's a mistake. If they don't like that law, they could lobby against it, and we probably did, and they lost, and so I think the obligation is to follow the law and they should hire the people and if that causes prices to go up to the store then increase the prices and if people complain, they can complain to the legislature, all the prices are up. But I think just paying the fine isn't what the legislature is telling companies to do. They're saying, put the prices on each item. So they're wrong to treat this as a cost of doing business. Yes. What do you think? Yes. Go ahead. I think the companies like FedEx and UPSTracks don't have an alternative. Their goal is to deliver a package. Of course they should lobby the legislature to give them a waiver so they can double park for X number of minutes, which I thought was the case in New York and I may be wrong, but I think they're allowed to double park for 15 minutes because their goal is to deliver a package. I don't think they have an alternative but to do this in order to carry out their job. And so what do you say to the people who have said, and Dana said it's obviously wrong, they've broken the law. It's a mistake to just say, well, paying a fine is just like paying a fee. I don't think they have an alternative that's workable in order for them to keep their jobs and carry out their employment. What do you think, Ruben? Yeah. So I do think that this goes back to the morals question, I think. Money and morals. Yes. And if I could just frame it a little bit differently. One of the things that I've been involved with professionally is the trading of emission permits. Now, there is a certain way of looking at it that says if you really do have to have a certain amount of emissions of pollutants in a particular, if you really do have to have a certain amount of emissions of a particular pollutant in a given system, it makes a certain amount of sense to sort of auction off the permits. And you can say, look, you're buying a permit to emit. Right. And it's got to be worth enough to you to pay X amount, and if there's more demand for it, you're going to pay two times X and so forth. And nobody is saying that what you're doing is wrong. It's just that we can only allow so much of it to happen. Right. You're going to have to buy it if you want it. And if you can't justify that, you must be doing something wrong. I don't think that the double parking situation is analogous to that. We are not saying you can have this much double parking provided that you pay. We're really saying you shouldn't double park. If what we're really doing is selling permits to double park, we should have a discussion about whether that is the right social policy. If that is not the right social policy, then no, it isn't OK to just pay the ticket. The ticket should be two times or three times or four times more until people, in fact, stop double parking. Because the ticket, the fine embodies a social judgment that this is wrong. Correct. And for that very reason, I don't think that if a person goes to jail after they've committed a murder, that somehow makes it all OK. It isn't OK. The fact that you have to pay a penalty or suffer some form of punishment doesn't mean that you've expunged the wrong. But here the question is, is there a wrong? Wait, keep the microphone Ruben. You raised the analogy of carbon trading, which you say we should consider more like a fee than a fine. Correct. What about laws against littering? Suppose that I violate the law against littering. I toss a beer can out the car windows. I'm driving down the highway. Now that's, what's that? No, suppose I'm pulled over and I'm issued a ticket for littering and I willingly pay the ticket. I'm as willingly as the UPS company pays its tickets. And I consider it, suppose I'm a person of means. I don't like to clutter my car with beer cans. It's worth it to me to be able to just toss the beer can out the window. And I'm willing to pay the ticket or it's worth it to me to pay the ticket as the economist would say discounted by the probability that I'll actually be caught. And so how is that really any different Ruben from a littering fee? I think it is different because when you're driving you often see signs that say littering $1,000 or some ridiculous number. And that's in fact because they're trying to tell you don't think you can afford to do this. And now if there happens to be a guy, if a billionaire developer is driving his car and decides I don't really care how much it costs, I'm just going to toss it. He's still doing something he should be doing. Even if he pays. Absolutely. Because we just simply couldn't set the fine that high. Well there is a way to do it. Wait, there is a way. I've heard of a way to do this. And they do this in Finland with speeding tickets because there are some people who speed with impunity because they're wealthy and if they get a ticket they can pay it. And so in Finland they set speeding tickets in relation to the income of the offender. And they asked for your tax return and they said it's true. And there was a guy, a wealthy guy, I think he was one of the heirs of the Nokia company who was speeding way above the speed limit and he got a ticket and I think it was the world's most expensive speeding ticket. It was $17,000, something like that. So there is a way of doing it. I still don't think, let me give you a slightly different example. In the area of corruption, Foreign Corrupt Practices Act type enforcement, there is this concept of ability to pay. So the fines are sensitive to the... Right. So that's analogous. If it's going to put you out of business, if it's going to completely put you out of business there is a view, there's a policy that you shouldn't have to pay more than that. Okay. I've got it. So what we're getting at here is the question of whether there is a distinction in principle between a fine and a fee and it comes up often in law and also in everyday life. I was... And it goes to this question about money and morals, whether they are commensurable. If they are, then there is no difference really between a fee and a fine. All fines are just costs of doing business. And yet we hesitate to embrace most of us the full implications of that commensurability of markets and morals, of fines and fees. It comes up all the time even in everyday life, not in exalted questions of policy and law. A couple of years ago I was visiting my son who was doing research in Uganda. He studies chimpanzees in the wild and I went to visit him. And we went to a national park and we're touring the park. And as in these places you're straining to see the really interesting animals hoping you will see lions and so on. And the driver of the vehicle, a local, was hoping to drive into areas where we could see the really interesting animals. And there are signs on the dirt road going through this national park saying off-road driving prohibited $250 fine. And the driver instantly looked at that sign and he said, what that sign says is it's not prohibited to drive off-road, it just costs $250. So he had a view about the blurriness of the distinction between a fee and a fine. Or even consider a library fine, books they find you when you turn books in late. Now they call it a fine. And it seems to embody, as Ruben was suggesting, a moral sanction. But compare that, this sort of dates me. But I remember when they had video rental stores before streaming, like Blockbuster, some of you here remember that. And you would go and my undergraduates would not say what. But if I would return videos late to the video store, that you had to make a payment for the late return. And the people behind the desk often would sort of scowl at me as if I should feel guilty for returning the video late. I thought the scowl was misdirected because I thought they were confusing a video store with a library. And I sort of said to myself, I'm not going to slink in here feeling guilty returning this video late. This isn't Weidner Library. It's Blockbuster. You're in business to make money. So if I pay a late fee, you should consider me a better customer. Not a worse one. But on the other hand, if you have that same attitude with the public library in your town or with Weidner Library, then you might be missing something, the distinction fee and a fine. But I actually, because you're depriving, I suppose, members of the public of access to a book that they're waiting for, on the other hand, I do incur a library fine. I suspect Dick Fallon doesn't. But I do keep books. Have you ever? Too cheap. For reasons of economy, he said he doesn't. But I've had library fines, and I consider it a cost of my research, sort of like the UPS cost of doing business. So I paid the fine to Weidner, and then I tried to submit it as a research expense for reimbursement months, and they turned it back. They said, no, you can't do that. So I think they were upholding, rightly, the distinction between a fine and a fee. But you can see how, whether in everyday life or in the law, this matters, and it's very much at stake in the broader question of what should be the role of monetary incentives and market thinking in designing rules, policies, and legal systems. Consider a more fateful, more consequential example. In Switzerland, a couple of years ago, they had to figure out a way to accommodate a certain number of refugees, mainly from Syria. And the Swiss parliament, the government decided to accept a certain number and to allocate each town in Switzerland, in accordance with its size and capacity, a certain number of refugees to accept. There was one small Swiss town, about 22,000 people, quite affluent, that said, we don't want refugees here and we are willing to pay the fine under the law, which was close to, it was a considerable fine, close to 300,000 US dollars per year for turning down their assigned refugees. They were only assigned 10 refugees and they said, we don't want to take them. We are willing to pay the 300,000 dollars. And it was the result of a referendum. By 52 to 48%, the town decided, democratically, we would rather pay the fine than take in these refugees. Now, they paid the fine. How many here, let's see what people think about the Swiss town. How many think that the Swiss town complied with the law, did nothing wrong, they turned down the refugees, but they paid the fine specified under the law. How many think that what they did was objectionable? Let's put it that way. And how many don't? How many think that what they did was acceptable, not objectionable? Okay, we'll get us started and tell us why. It depends on having some moral code separate from the law by which you are judging these various laws. It depends on having some moral code or moral principle separate from the law by which you're judging, and you think that there is no such moral principle. People not to murder is wrong because murder is malim in say, whereas accepting fines for double parking or for returning a video late to blockbuster, that's malim prohibitive. And the refugees? The refugees, I don't think that they have a moral obligation to accept the refugees. The town? Right, that's my own personal view. I understand that people who have a different morality would come to a different conclusion. I'm not saying there is no moral code, I'm just not trying to impose mine on everybody else. Yes. Okay, did we get you a microphone? Here, we've got one behind you. I think it's wrong to deny the refugees, and I thought all of your examples, the first one you gave were wrong except for the third one. I think when we belong to a community or a society, we assume certain obligations to behave in accordance with the norms of the society that are fairly decided. And when people get paid or are allowed to pay to avoid those obligations, it diminishes the power of the obligation of everybody else in the community, and I think it impoverishes this communal sense that is the thing that allows communities to exist. And you spoke of a norm being violated here. Is the norm, the humanitarian norm of taking in refugees, or is the norm the norm of abiding by the law enacted by the Swiss government? I think it's the latter. So they passed a law, they assigned the quotas. On the other hand, they also set a fine for not accepting the town paid the fine. So they've not abided by the law, having paid the fine? I understand the point. It still feels wrong to me to be able to buy your way out of a communal obligation. And once we allow people to buy their way out of communal obligations, what does it mean to be part of a community or a society? Yes, thank you. I think it also ends up creating inequality. You're basically saying that whoever can afford to pay these prices gets to exercise their morality as they choose, while the companies that can't afford can't exercise their morality as they choose. It is true. You're suspecting this is a wealthy town. And you're right. Actually, there were some 300 millionaires in that town. It was pretty well off town. So there are really two objections here. One of them is about not buying your way out of a communal obligation, not allowing money to drive out morality or moral motivations or social norms. And a different objection has to do with inequality and unfairness, not every town. But let me press you on that a little bit. This was a wealthy town. They could afford it. Other Swiss towns might not be so wealthy. They couldn't afford the luxury of paying their way out of the refugee quota. Do you think that if the, hypothetically, if it were a roughly equal society where all towns had similar means, then it would be okay? No, I think this is a secondary argument, but I still believe that there is a moral obligation to accept the refugees. Okay, so it's a secondary argument. So it is interesting that there are two arguments, two objections that arise in debates about whether communities or individuals to go to the littering case should be able to buy their way out of norms set down by the law for that matter, moral norms. One having to do with the unequal distribution of resources and the unfairness of rich people toss beer cans. But then that isn't, what's your name? Luna. Luna, but as Luna points out, that's not really the only objection because in the littering case too, if we said suppose everyone could afford it to litter and pay the fine, or suppose everyone could afford to speed as in the graduated speeding fine system, then would it be okay? And Luna is saying, well no, not necessarily because there is this background norm that's independent of the distributive consideration, the fairness consideration, yeah. Distinctions as to different sanctions. You have the felony. Hold it closer. You have the felony. You have the misdemeanor. You have the fine. And the legislature is capable of making these distinctions. They have made distinctions, for example, that murder is a felony and that certain other things are misdemeanors and certain other things are only to be paid in fines. In fact, the normal collection of fines are done administratively in most cases and not with a full court panoply. And that there are probably many more things which are deemed communally immoral, but there is no sanction. The legislature goes back and forth over the years as to what is to be criminalized and that if you're really serious that something ought to be done, you could criminalize it. For example, you could arrest the driver who has double part and you could charge him with a misdemeanor. At that point, it's not a cost to business because the moral decision has been legislatively made that you're a criminal. To the extent that there is only a civil fine, it's a much grayer aspect to the whole thing. So how did you vote in the case of the Swiss town that turned down the refugees? Well, to that point, the legislature sort of set it up with a civil fine. It's not different from Obamacare, where you can opt out by paying a fine to tax according to the United States Supreme Court, which they did to make it legitimate, but it affects the people who are opting out of Obamacare by paying the fine. So in the case of those who paid the fine, and the Swiss town paid the fine, having made that choice, they've abided by the law, have they? Yes. Because they paid the fine? And if the law was such that there was also an ability for the Swiss government to bring the town fathers up, and to, let's say... To put them in jail. Put them in jail. Then, I think, it would have been different because there was a different determination, collectively, as to the level of wrongness. All right, the level of wrong. We've been distinguishing between fines and fees. The fine, what the Swiss town paid, the monetary payment was a fine. And we've been debating whether they did wrong even after they paid the fine. Here's a way of pushing on the distinction between a fine and a fee. In relation to the refugee question, consider the question of allocating refugees not once the rules are already in place, but at the point when a legal body or a political community is trying to decide how to allocate refugee quotas. The European community's been struggling with this, trying to persuade member states to accept a certain number of refugees. And there are negotiations among countries about this. Just as there are negotiations among countries about emissions, carbon emissions reductions. But in the case of the refugees, the EU is trying to persuade countries to accept greater numbers of refugees. One law professor proposed a market solution to make countries readyer to accept larger numbers of refugees. We can set the quotas based on the wealth and capacity of each country, but include a provision in the global or in the EU level agreement. Include a provision that allows a country to satisfy its obligations under the treaty either by accepting its assigned number of refugees or by paying some other country to take them. So the idea, the proposal is to incorporate a market mechanism, tradable refugee quotas as an option for countries. Now the argument for the advance by the law professor, creating a market for refugees in Europe was that countries will accept more ambitious quotas if they know they can either accept those refugees or hire some other country to take them instead. Some will object, the law professor wrote, that the market element offends morality by commodifying refugees, but if trading protects more refugees than the status quo does, the newly protected will surely welcome it just as environmentalists now endorse the trading of pollution rights, which goes back to Ruben's example. So what do you think? Let's see what people think about this proposal. If you were, now this is not a question of compliance, it's a question of what the rule should be in the first place, whether you would favor or oppose the tradable refugee quota provision in the agreement to set the quotas. How many would be in favor of tradable refugee quotas if it would lead to countries accepting larger quotas? Let's add that in. And how many would be opposed? So the majority are in favor, even including some among us who worry about money driving out morality. All right, so the minority here object. So let's start with the objections. Why would you object? Dana? Probably because one basis for objection would be that the outcome would be probably the opposite of what you want from a public policy perspective where the jurisdictions least able to handle the refugee flow would be the ones most burdened. Poor countries who need the money. But suppose there were certain minimal standards of care that could be enforced. All right, then, then. Wait, wait, what about then? What? Depends. How much? I don't know. You're getting into details. Not details. They have to be treated decently. They can't be abused. If they are assured of conditions that are equal to first world conditions, then I would reconsider. All right. Who else has an objection? An objection in principle to this. Who finds it morally troubling? Yeah. Well, I thought we were just doing hand raising, but sure, I'll talk. I think one question I have is whether the first instance, the moment of commoditizing the refugees, in fact, devalues them in a way that makes the result that more are taken in. It kind of undermines the increased value in a moral sense because the mechanism that got you there was kind of inherently devaluing the people. You came with a price on your head, and that's demeaning you feel. Yeah. It's demeaning of the refugees that they'd be haggled over, bought and sold. What about that? Starvation and death are demeaning also that there'd be fewer homes for refugees. If it's a choice between accomplishing the same practical goal in a better, more morally elevating way and a less morally elevating way, then yes, let's opt for the more explicit elevation of all of the participating country's values with respect to refugees. But if it is, as a starker choice as you've posed, then it's very hard having a moral conversation that says moral perfection trumps human salvation. Do you disagree? It's Luna. What do you say? And if so, how many people should die for the sake of moral perfection? Okay, Luna, you got your word cut out for you. That we want to promote. And in the long term, I think that this policy is basically treating the refugees as a burden to be dealt with and not as human lives. So it's not just about the numbers and how many lives get saved in the end, but how much these lives are valued, not as burdens, but as lives that have to be saved. So it's treating the refugees as burdens. There is some symbolic or expressive meaning to this market mechanism that demeans the refugees and treats them as burdens. Okay, do you want to reply? No, you keep... All right, go ahead. Would those who subscribe to that view think the refugees would make the same argument? Okay, well, what about... Let's get another microphone. With the caveat that at one point or another many of us, at least ancestrally, were refugees. So what if the refugees themselves would say, put a price on my head, consider me a burden, if it will make it more likely I'll find a place? What about that, Luna? I asked myself the same question. I think that what resolves the situation in my mind in the end are the morals that we want to promote as a society. I understand that the refugees might make this choice, but I still believe that as a society we should not make this choice. In the back. How makes it less appropriate, less morally elevated? And I wonder if those people would ask the same thing about a nurse who gets compensated for her care or a teacher who gets compensated for teaching. The fact is that we all do many, many good things and get compensated for them and at the same time to take in a refugee or a student has a cost and to provide appropriate care those costs have to be met. So I think to allow compensation is to encourage people to be more caring and to provide appropriate care. Would you hang on to the microphone for a moment? It is true that we pay salaries to caregivers, to nurses. We pay salaries to teachers, to professors. And yet, suppose we paid... suppose we wanted to increase the size of the classes and offered to pay teachers more who would accept more people in their classes. What about that? Would you be in favor of that? I think we see it happen all the time. Our children went to the University of Chicago and some of those classes were very, very large. But I think the... I'm not sure that's the right context here. Let me go to another point that was raised, that the refugees are burdens. Some are probably burdens, some are probably assets. Frankly, you may have countries bidding to get refugees. So I think the discussion is partly acontextual and I think that makes it hard to really look at what the issues are. Yes, the woman in just third row from the back. I was going to say, so for your analogy of teaching, I mean the marginal cost of teaching 100 students versus 80 students, it doesn't really make a difference to the teacher. But I think, I don't know for sure, but I think like with foster children, when people are put in foster care, their parents, they're paid something to cover the cost of the children because you have to clothe the child, you have to feed the child similar, I think that's more similar to the refugee. I mean there are going to be costs incurred to actually house people or care for people in some meaningful way so they have a chance. Okay, well we've been in discussing, we've had two versions of a refugee question. One having to do with the law already in place that specifies a fine for non-compliance. And then we questioned whether that fine should be considered, so to speak, a cost of doing business, a choice, a democratic choice available to that town, or whether in exercising that choice by turning down the refugees, the town is doing something wrong. Some people argued that the town was doing something wrong because it was failing to answer to an obligation as defined by the larger community. And then we took another refugee case that also is about finding more places for refugees but where the law is not yet in place, the rules are being debated, and the question there is whether to use a market mechanism, the tradable permits in this case, to implement the goal, the desirable goal of finding more places for refugees. In all of these examples, whether the speeding ticket, or the littering, or the library fine, we've been pressing on the distinction between a fine and a fee as a way of getting a testing the terms of relation between market values and non-market values and norms that in some cases seem challenged, maybe corrupted or degraded by market value and exchange. That's the larger issue here. Now, economists often assume that markets are inert, inert in the sense that they don't touch or taint or change the meaning or the value of the goods being exchanged. This assumption may be true enough if we're talking about the buying and selling of material goods, cars, toasters, flat screen televisions. If you sell me a flat screen television or give me one as a gift, it will work the same. The value of the television will be the same either way. But the same may not be true outside the domain of material goods, commodities. The same may not be true when we're talking about personal relations or social life, education, dealing with the environment, deliberating about refugees. It may not be true when markets and market reasoning enter into the domains of civic life or journalism or the law. In these domains, it's not enough just to ask whether markets will make transactions more efficient. It's not even enough to ask whether there will be less emission or less litter or more refugees accommodated. Those questions matter, those consequences, those outcomes. But among the outcomes we care about when we're talking about law and social arrangements are attitudes and dispositions, orientations toward the goods that constitute social life, civic life, a society governed by law. And if that's true, then we have to take into account the possibility that in some cases, at least, market thinking, market valuation and exchange can corrupt or crowd out non-market values worth caring about. There are examples of the way this works in social life. There was a study done of daycare centers in Israel that you may have read about this. It's by now quite a famous study where they had a problem familiar to daycare centers everywhere, parents coming late to pick up their kids. So with the help of some economists, they instituted a fine for late arrivals. What do you suppose happened? More people came late. Now from the standpoint of standard economic analysis, this is a puzzle, it's an anomaly. Because the price effect on which economists and economic reasoning rely, the price effect says, if you impose the price or raise the price, fewer people, not more people, will consume that good, will do that thing. Here, when they instituted a fine, more parents came late. Why was that? Why was that? They treated the fine as if it were a fee for permission, a conveyed permission. Before, when parents came late, they felt guilty for imposing on the teachers with their child. But now, the monetary payment, they treated the fine as if it were a fee, it was like a babysitting fee. And why feel guilty if you're hiring a babysitter? You're paying for a service. Now, some economists will say, well, what this proves is that the fine was too low. And to some extent, that's true. If they set the fine at a million dollars for a late arrival, probably the price effect would kick in and swamp, override, overpower, what we might call the crowding out effect. The corrosive effect on attitudes, norms, the obligation to show up. But that's not the point. The point is that the price effect is not the only thing that matters. The reason there is some crowding out effect is that the monetary payment gives permission. It confers a certain kind of moral judgment that changes the nature of the practice, the meaning of showing up late. Attitudes change, even though you can override that if you make the fine big enough. One interesting thing about this experiment is that when they discovered this paradoxical result, they removed the fine. But the new increased pattern of late arrivals persisted, which suggests that once attitudes and norms are eroded, crowded out, it's not so easy to turn them back on again as if flipping a switch. And this is a cautionary note about the corrosive effects that market thinking and market reasoning can have on social practices and on law. Now this idea that markets don't change the value of the goods being exchanged, this runs deep in economic thinking. So does another idea that reinforces it. The idea that virtue or civic spirit is a scarce resource that we should try to conserve by relying on it to the extent we can. Years ago, a sociologist named Richard Titmuss wrote a book on blood donations, and he compared the system in the U.S. and in the U.K. of blood donation. In the U.S. you could either give blood or sell it. In Britain, you were not allowed to sell blood for donation for transfusion. You could only donate blood. He compared the two systems, and he found, this is in the early 60s, that on efficiency grounds, he found the British system was better, actually more efficient. It delivered a more reliable supply, less tainted blood, and so on. But he also argued that it was preferable on moral grounds because he worried, or he hypothesized, that in the American system where you could sell blood or give it, the practice of selling would undermine the altruistic attitudes associated with giving, that over time fewer and fewer people would give out of altruism if others, if there was a market system in place that put a price on blood. One of the most famous economists of the time, Kenneth Arrow, wrote a critical book review of Tintmas' book about blood, and he found it puzzling that the creation of a market for blood would decrease the altruism embodied in giving blood. People are still free, he argued, if they want to give blood to give blood, whether or not somebody else is selling it. There's no reason in principle, Kenneth Arrow wrote, to assume that that would have any effect. And then he made another argument against relying wholly on donation. He said, the market has the following virtue. It saves altruism for the times when we really need it. Here's how he put it. Like many economists, I do not want to rely too heavily on substituting ethics for self-interest. I think it's best on the whole that the requirement of ethical behavior be confined to those circumstances where the price system breaks down. We do not wish to use up recklessly the scarce resources of altruistic motivation. So this idea of the economy of virtue runs deep. Now, a generation later, a famous Harvard economist made a similar argument. He was actually giving what they call the morning prayer in the Memorial Church here at Harvard. And he concluded his morning prayer as follows. We all have only so much altruism in us. Economists like me think of altruism as a valuable and rare good that needs conserving, far better to conserve it. By designing a system in which the nuance will be satisfied by individuals being selfish and saving that altruism for our families, our friends and the many social problems in this world that markets cannot solve. So the idea is that virtues of benevolence and sympathy and altruism and solidarity and virtue, even love are in scarce supply as if fixed by nature, like the supply of fossil fuels. The more we use, the less we have. We should avoid spending it down too quickly or too recklessly. This idea runs deep. It's an economistic view of virtue. And you can see how it fuels a faith in markets and helps propel their reach into places where they don't belong. But the metaphor, it seems to me, is misleading. Altruism, generosity, solidarity and civic spirit, these are not like commodities that are depleted with use. More plausible, I think, is to regard them as like muscles that develop and grow stronger to exercise one of the dangers of a facing altogether the distinction between fines and fees, of construing legal reasoning as simply a branch of market reasoning. One of the dangers of doing this is to let these virtues, these practices, these attitudes and norms languish rather than to articulate them to really appreciate the respect for law in a democratic society. And for that matter, to find our way to a vigorous public life animated by civic virtues, it seems to me that we need to exercise and cultivate these moral and civic sentiments more strenuously. And it seems to me that the tendency, both in the academy to assimilate law to economics and the legal and political practices we've discussed today that substitute market reasoning for moral reasoning contribute to the impoverishment of a rich democratic life. Thank you all very much. Thank you.