Adam Smith Archives - The Pursuit of Happiness

No matter your political inclinations, we can all agree on one simple fact: 2016 was a crazy year. Anger and resentment became political focus points across the Western world. Foreign policy crises, especially the Syrian civil war, burned hot throughout the year with little resolution in sight. A flow of corruption and scandal took down government leaders on at least three different continents.

Everyone that you talk to will find different elements in 2016 to condemn and to celebrate. Some will be outraged by the presidential election results but thrilled with the big leftward steps taken in our culture and popular media. Plenty others will have precisely the opposite view, pleased with political victories but deeply unsettled about the broader direction of society. Wherever you fall personally, it seems safe to say that nobody will remember the last year as an apogee for optimism, warm-heartedness, or American unity.

What does that mean for your 2017? In the face of events or trends we dislike, it can be tempting to try to simply care less about the world around us. When the cable news gets too wearying, it seems like we should simply turn off the TV. Perhaps the prudent path forward is to pull up the informational drawbridges that connect us to the world and redirect our attention inward.

There is something noble in this instinct, but there is also something dangerous and destructive. A little social science can help us discern what to do.

First, let’s remember that these sensations are nothing new. Tragedies have always been part of life. That means there’s a surprisingly robust academic literature on the subject. And so, over the past couple of weeks, when I wasn’t hunting with my son Carlos over the holiday, I dug into some of the research that looks at our response to large-scale traumatic events. (First prize for nerdiest dad!) I outlined my findings in a recent New York Times column, but here are some of the basic takeaways:

It turns out that social scientists have a term for when people simply throw up their hands in response to overwhelming circumstances: “psychic numbing.” Some of the most interesting research on this topic comes from Paul Slovic, a psychologist at the University of Oregon. His body of work shows that when tragedy is large in magnitude and in a distant location, we become desensitized. Recent history shows us some of the depressing implications. For example, while many of us feel compassion for the refugees fleeing war-torn countries in Africa and the Middle East, the organized response to such events is muted at best.

Slovic wasn’t the first academic to talk about “psychic numbing.” Any fan of Adam Smith will likely recall a famous passage from his Theory of Moral Sentiments where Smith discusses Europeans responding to an apocalyptic earthquake in China:

“If he was to lose his little finger tomorrow, he would not sleep tonight; but, provided he never saw them, he will snore with the most profound security over the ruin of a hundred millions of his brethren, and the destruction of that immense multitude seems plainly an object less interesting to him, than this paltry misfortune of his own.”

Is there a solution to psychic numbing? Is there a better way forward than either feeling constant despair about events we can’t control or cauterizing our normal human empathy?

Absolutely, but it’s not what you might presuppose. When we hear of these tragedies, we often rush to grasp the big picture. Collect the data. Gather the evidence. Figure out what systemic changes we can demand from on high. Let me propose that this thinking is part of the problem. What if the real solution, on a personal level, is to do the opposite of “thinking big”?

Any readers who work in fundraising have likely heard some version of the saying, “One is greater than one million.” No, this isn’t bad math. It’s the real-world application of a “think small” philosophy. As I wrote in the Times column, “when it comes to people in need, one million is a statistic, while one is a human story.” Thinking small can simultaneously allow us to continue paying attention to trends or events that disturb us – but by focusing on individual victims instead of just on global systems, we are limiting the scope of our empathy to circumstances we may be able to actually improve through our own efforts.

I have seen this “1 > 1 million” axiom at work in my own life. As you all know, of late, there has been an incendiary bipartisan backlash against globalization and the notion of an interconnected world. But despite the short-term shift in political winds, my own personal and scholarly appreciation for globalization has only grown stronger.

I have contemplated the many lives I personally know who have been saved by our globalized world. While I know of many such stories, my thoughts always return to daughter, Marina. My wife and I adopted her 12 years ago from an orphanage in China. Fifty years ago, that would have been virtually impossible, and it would even be more difficult today, thanks to misguided government policies that limit foreign adoptions. Her presence in my life is not only a profound blessing. It is also a simple reminder that the walls of protectionism and restriction don’t only wall off the movement of physical capital and traded goods. They also close the valve of opportunity for millions of children around the world.

Here’s a little challenge for the beginning of this new year. Look back on the events or trends that disturbed you most in 2016. Then, instead of thinking about global, symbolic protest movements you can join or systematic changes you can demand from on high, contemplate a practical way to familiarize yourself with one human being who has been affected. Then, find a way to concretely help that individual.

Here’s another “aha” moment to remind us why we may want to be giving thanks this Thanksgiving to economic liberalism as well as the grocery store. Mark Perry of the Carpe Diem blog notes that in real dollars the cost of a Thanksgiving turkey in 2016 is 1.7 percent less than last year, and 20 percent less than in 1986. And the “time cost” used to prepare the traditional meal is also more affordable.

According to the American Farm Bureau Federation, a 16-pound turkey costs an average of $22.74 this year. That’s about $1.42 per pound, or 2 cents less per pound than in 2015.

Pumpkin and milk prices also fell this year due to improvements in production. Looking at a traditional basket of 12 food items served on Thanksgiving, the AFBF notes that for 10 people to eat to their heart’s content and have leftovers, the cost of a Thanksgiving dinner this year is $49.87. That may be only a few dimes lower than last year, but at the same time, overall consumer prices and hourly earnings both rose in the past year.

Perry notes the savings not only in dollars but in time.

Measured in time worked at the average hourly wage for all private production workers of $21.72 in October 2016, the “time cost” of this year’s classic turkey dinner is only 2.29 hours, down by 3 percent from 2.37 hours last year and at the lowest level since 2010. Compared to 1986 when the average American would have worked 3.21 hours to earn the income necessary to purchase the turkey dinner for 10, the “time cost” for a worker today (2.29 hours) is nearly 29 percent lower.

In a separate piece on how lucky we may want to consider ourselves, Perry notes that the average time spent is not only a matter of hours worked but convenience. He notes that you don’t have to call ahead to the grocery store or go down to the farm to order your bird. Everything you need is waiting for you at the supermarket in the size and quantity you need it. In fact, a Thanksgiving meal can be ordered and delivered in some cities through Amazon Prime.

The reason your Thanksgiving turkey was waiting for you without an advance order? Because of the economic concepts of “spontaneous order,” “self-interest,” and the “invisible hand” of the free market. Turkeys appeared in your local grocery stores primarily because of the “self-interest” (maybe even greed in some cases) of thousands of turkey farmers, truck drivers, and supermarket owners and employees who are complete strangers to you and your family. But all of those strangers throughout the turkey supply chain co-operated on your behalf and were led by the “invisible hand” to make sure your family had a turkey on the table to celebrate Thanksgiving this year. The “invisible hand” that was responsible for your holiday turkey is just one of millions of everyday examples of the “miracle of the marketplace” where “individual selfish decisions must lead to a collectively efficient outcome,” as economist Steven E. Landsburg observed.

Perry quotes a 2003 Boston Globe column by Jeff Jacoby that cites how the beauty of what Adam Smith termed “the invisible hand” is the ability of the free market to work in a coordinated, yet spontaneous manner. In other words, innumerable people, each working for his own gain, … promote ends that benefit many. Out of the seeming chaos of millions of uncoordinated private transactions emerges the spontaneous order of the market. Free human beings freely interact, and the result is an array of goods and services more immense than the human mind can comprehend. No dictator, no bureaucracy, no supercomputer plans it in advance. Indeed, the more an economy is planned, the more it is plagued by shortages, dislocation, and failure.”

Certainly, the economics question leads some to note the massive influence government has played in the agricultural sector (not to mention other markets). Between subsidies, rural zoning, food inspections, and other rules and regulations, who knows what the actual price of a turkey would cost without all the interference? This is not to say all the impacts of intervention are good or are bad, but that the true price could even be less.

But at the very least, Americans can eat well and cheaply despite all the market variables. In the meantime, getting to the meaning of gratitude, consider that a small donation to feed people in less fortunate circumstances goes a much longer way than it used to do.

Kinda makes you want to pay if forward and give thanks for all that you have.

Happy Thanksgiving.