“The problem with [a] spending freeze is you’re using a hatchet where you need a scalpel.” -Barack Obama, 2007 presidential debate
The implication of the metaphor above is that it’s important to use the right tool for the job; you wouldn’t attempt surgery with a hatchet, after all. It’s a good line, especially when talking about cutting. But, of course, you wouldn’t try to perform a surgery only using a scalpel either. The list of surgical instruments is long, and the procedures are complex enough that there is no single tool that can itself get the entire job done.
McDonald’s and Wages
This idea that any single tool is likely inadequate for a complicated job has been on my mind lately, following an interesting debate about the wage that McDonald’s pays its employees. In particular, Business Insider’s Henry Blodget and Josh Barro have nicely captured this debate in competing posts (and in the short video debate below).
Blodget says McDonald’s just needs to suck it up and freely choose to make less profit in order to pay its workers more. Barro makes a standard economic argument to the contrary, suggesting that should McDonald’s do so, they will suffer for it:
Nor is the enforcement of such a moral norm likely to be an effective way to advance the interest of workers… If McDonald’s decides to pay more than it must, it can be outcompeted by competitors who will feel no such obligation.
Instead, he says, better public policy is the answer. Even there, though, there are limits. A higher minimum wage would almost certainly be good policy, for instance, but raise it too high, Barro argues, and you will start discouraging the hiring of low-wage workers. (Here’s a primer I wrote on the minimum wage a while back.)
If you care about the plight of low-wage workers, this can all be a bit depressing. Simply demanding that companies treat their workers better seems problematic, and at least some relevant public policies have their limits.
The answer, it seems to me, is to rely on multiple tools simultaneously. To pressure companies to treat workers better, while also raising the minimum wage, expanding the earned income tax credit, pursuing sound macroeconomic policy, etc. Rather than relying on any single approach to solve the problem on its own, hope that a number of levers can each make a dent.
Using the Whole Toolbox
There’s nothing original about the idea that thorny problems are unlikely to be solved via a single mechanism, and no doubt this point has been made by many authors in many contexts. But I want to build off one such formulation, offered by Lawrence Lessig in his book Code 2.0. His point, visualized below, is that behavior is shaped by laws, social norms, the market, and by physical architecture. He goes on to suggest that software defines the “architecture” of our online behavior.
As I’ve been thinking about issues like the one above, I’ve kept coming back to Lessig’s drawing, but have mentally added several components. Here’s a very non-pretty articulation of what I’ve been thinking of:
Technology: I’ve renamed “Architecture” here, to focus on the role that technology can play in solving a given problem.
Peer production: Though likely not relevant in the wages scenario, peer production – best articulated by Yochai Benkler – is a powerful new tool for thinking about a host of issues. It involves lage-scale collaborative production, often enabled by the internet and typically lacking hierarchical decision-making structures. Think Wikipedia, Linux, etc. I situated it between norms and technology to reflect its reliance on both.
Norms: Our commonly held knowledge, customs, expecations, etc.
Social enterprise: Situated between norms and markets, any commercial effort that is explicit in its desire to improve human well-being in ways that diverge from profit maximization. If a company decided to pay its workers more, for instance, not out of a belief that doing so would increase their share price, but because they felt it was the right thing to do, that would count. An enterprise specifically devoted to making a product or delivering a service because that product or service would help solve a certain social problem would also count.
Market: In my view, it’s wise to frequently ask, when confronted with a problem, could competitive markets solve this? And it’s wiser still never to assume the answer will be ‘yes’.
Market-based policy: Any policy that seeks to channel the benefits of markets. For example, “sin taxes” on things like booze, cigarettes, or soda seek to utilize market incentives to discourage unhealthy behavior. Cap-and-trade for climate change would be another example.
Law and policy: Any attempt to solve a problem through legislation or government rule-making.
Oftentimes, I end up approaching social problems primarily through the lens of policy. What’s the most efficient legislative fix to the issue? Or I might consider what role markets could play, or technology. But seldom do I consciously approach a problem with this entire toolbox in mind. It’s a goal of mine to do so more regularly.
I’m sure in some cases utilizing multiple tools could lead to some crowding out, where the use of one tool disrupts the use of another. But my guess is that in our messy world, we’re most often better off utilizing not just a hatchet, or even a scalpel, but the full range of tools at our disposal.