Utilitarianism is a Stupid Idea

I don’t know what it is about utility but I just can’t seem to read anything about it, with the exception of my boring old “mainstream” economics textbooks, without getting supremely disturbed.  I have spent a lot of effort trying to explain to Austrians how they don’t understand the concept as it is used in mainstream economics.  But whenever I read something by Sumner on the subject I find myself much more sympathetic to their (still misguided) complaints.  To be fair to Sumner, he might be the best monetary economist in the blogosphere and he is about as “conservative” a one as you will find anywhere.  So I agree with much of what he says on most subjects but he frequently disrupts my adoration by reminding me of his utilitarian ways.  Though he often claims to be a libertarian (and in many ways he is), in my opinion utilitarianism in its most common applications is inherently incompatible with individual liberty.

First, let me say that the standard economic definition of utility has nothing to do with utilitarianism.  In a strict economic sense, utility is meant only to represent a rank ordering of a person’s preferences across different bundles of goods or states of nature.  In this context it is nonsensical to compare one person’s utility (or marginal utility) to another’s nor does it matter if marginal utility is diminishing as the same ordinal preferences can be represented by many utility functions with either increasing, decreasing or constant marginal utility in any particular good.  This is all explained in any decent text and I am sure Sumner would not dispute this (I’m not accusing him of not understand the concept).

However, what utilitarians have in mind is something different.  It is the idea that “utility” represents some measure of happiness or satisfaction.  They further suppose that this happiness increases at a decreasing rate as consumption increases.  (It is worth noticing that Austrians also indulge in this assumption of diminishing marginal utility but they do so in an even more annoying way because they simultaneously deny the definition which makes it possible.)  The utilitarian then further supposes that the marginal happiness gained from additional consumption at different levels of consumption is roughly comparable across individuals and they still further suppose that, even though it is not measurable or observable in any way, it is the proper role of government to try to maximize the total utility of all people in society by redistributing wealth (or consumption if you prefer) among them.  This last supposition is where it becomes destructive.

Here’s an example.  A billionaire might get a great deal of satisfaction from a 400-foot yacht if his rival billionaire has a 300-foot yacht.  There is data that shows happiness increases all the way up the income scale.  So I do buy that argument.  But I would insist that roughly the same enjoyment would be gained from a 300-foot yacht if his rival had a 200-foot yacht.  If an 80% consumption tax reduces each billionaire’s consumption proportionately, then could it really impact their happiness?

Even though this definition of utility as a measure of happiness/fulfillment/satisfaction etc. is not useful scientifically, it is appealing because it seems like it reflects reality.  I’m not saying it doesn’t.  I agree that, in a very loose, non-scientific sense, the happiness I would gain from having an additional loaf of bread would be much less than that of a starving man who received the same loaf.  And what’s more, I act like a utilitarian to some degree in my personal life.  Every time someone donates food to the hungry or gives the foul ball they caught at a baseball game to the kid in the seat next to him, they are acting out of some form of this sentiment.

However, in those cases, they are still acting in accordance with their own personal preferences, it is just that those preferences have what might be called a utilitarian dimension to them.  They get more happiness out of giving the bread to the hungry than out of eating it or out of seeing a child smile and imagining him lying in bed clutching the foul ball and dreaming about being a major league ball-player than they would from throwing it in their closet and probably forgetting about it.

The problem with utilitarianism is when you try to apply it by force via the government.  The government I think Sumner would prefer is one which leaves people alone to make decisions about how to live their lives in most cases but just does a few things to spread the wealth around to increase total utility.  And I think Sumner’s ideal world would be a lot better than what we’ve got now.  But the problem is that that is not a suitable moral/philosophical foundation for such a system because this notion of utility is entirely imaginary which means it is entirely subjective which means that it can be used to justify any breach of individual property rights.

This way of thinking suggests that someone has a moral right to the possessions of others by virtue of being poorer than they are.  So while it is functionally possible that we could have a specific “progressive” tax system along with an entirely libertarian everything else and that would work pretty well if we had it, it would never lead to that.  The same notion of forced utility maximization across individuals, once accepted, would be (and for that matter is) used to justify all manner of other government interferences in the lives of individuals.

The land your house sits on might generate more “utility” with a highway there, or for that matter a shopping mall.  You will have higher utility if you save more money for retirement but you are too stupid to realize it so the government will just take some out of your paycheck and use it to pay you back later if you survive long enough (and to pay other older people in the interim).  Sure, maybe you could live another year or two if you got the million-dollar treatment for your cancer but would the utility you derived from that extra year really be more than that derived by all the poor children we could feed with that (“your”) money?  Yes, we’re sending you, against your will, to fight and probably die in a foreign country but your sacrifice can’t be compared to the extra utility that will be secured for future generations.  It’s not that we want to tell you what to put in your body, it’s just that when (certain) drugs are legal, crime increases and you can’t possible argue that the added utility you get from smoking dope outweighs the indirect harm that legalizing it does to your neighbors.  Plus we know that drugs are actually hurting you anyway, you are just, again, too stupid or weak to realize it, so we’re actually increasing your utility by taking them away too.  It’s win-win!  I could go on but hopefully you get the picture.

Utilitarianism, at its core, is just a made-up method of collective reasoning.  This type of collective reasoning is at the heart of every usurpation of individual liberty.  It is the foundation of every form of socialism, communism, fascism, etc.  The only alternative to collectivism is to elevate the rights of the individual above all such notions.  This means we have to be willing to look at a rich guy and a poor guy and think that it would be better if the rich guy cut back on his yachts to buy a house for the poor guy without also thinking that we aught to force him to do it.  Once you start down that path, forever will it dominate your destiny.