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The Manners of the Market

Sometime after watching that remarkable video clip of the Los Angeles police beating Rodney King, I found myself thinking of another run-in between the police and a wrong-doer. This other case involved a drunken, abusive trespasser onto the grounds of a private club having a party. The lout repeatedly pushed through the surrounding hedge and tried to approach the building to crash the party; two security guards repeatedly intercepted him and escorted him out the gate. I watched in uneasy anticipation as the guards’ embarrassment and anger visibly increased and the torrent of profanity rose. This will come to blows, I thought; I held my breath before the inevitable violence. But it never happened. With incredible restraint, the guards simply waited him out, pushing him back where necessary, saying steadily but firmly, “I’m sorry, sir; this is a private party. You’ll have to leave.”

Here are two sets of police dealing very differently with wrongdoers. Though Rodney King was cowering on the ground, he was beaten vigorously. Though the would-be party crasher was threatening and abusive, he was treated with respect. How do we explain the striking difference in the civility of the respective behavior?

My brother told me of an annoying experience he had in his local post office some years ago at Christmas. The office was busy, with long lines at each of three open windows. As he approached the front, the clerk at one of the windows finished serving a customer, turned to her colleague at the next window, and said, “I’m goin’ on break. I haven’t had me a break all day.” With that she put the “Next Window “ sign in her window, and walked away. At Christmas especially, I always try to deal with a nearby business called The Packaging Store. Even though it gets crowded, I generally don’t have to wait too long, primarily because when the number of customers builds up, more people seem to emerge from the back, saying ”Can I help you?“; they also hire extra help during the Christmas rush.

Here are two different organizations in the business of delivering items from one place to another. One regularly responds with indifference to customers’ needs (we all have our post office stories); the other responds by putting on more people to serve customers. How do we explain the difference in attentiveness to the needs of those they serve?

In Washington, D.C., a few weeks ago, a large number of public school teachers staged a “sick out” to protest their being furloughed for several days due to a budget shortfall. En masse, the teachers called in sick without notice, virtually shutting down the schools at which they worked for the day; the kids showed up, but classes were impossible. I thought of the teachers I have known at some private schools in Baltimore serving the African-American community – Bethel Christian School, New Psalmist Country Day, St. Frances-Charles Hall Academy, and Monroe Saunders School. Teachers at those schools are paid far less than public school teachers, yet many of them come early and stay late of their own accord. I simply cannot imagine their willfully leaving their classrooms without teachers, or facing their principals if they did. If their pay is not enough, they give notice and leave, giving the principals time to adjust and look for a replacement.

Here are two different kinds of schools, their teachers showing very different behavior in respect to their pay (I add that many, perhaps most, public school teachers would refuse to use pressure tactics such as a “sick out.”) Higher-paid public school teachers not infrequently hold the children hostage for higher pay still; lower-paid private school teachers generally either work or leave. How do we explain the difference in means of seeking higher salaries?

Markets Lead to Manners

In each of these cases, and in thousands of others like them, we can explain the differences in terms of whether coercion or free choice underlies the relationships among people. Where coercion determines associations–where people are forced into relationships they would not choose if free–the general tendency is to ill treatment, disrespect, disregard, abuse of power–in brief, to bad manners and worse. Where free choice determines associations–where people may participate or not participate in a relationship as they see fit–the general tendency is to self-restraint, civility, consideration of the needs of others–in brief, to good manners.

To say the same thing in economic terms, market relationships provide strong incentives to mannerly behavior that are lacking in coerced relationships. Markets lead to manners.

Rodney King was beaten by policemen whose salaries are paid through coercion–taxation. The citizens of Los Angeles do not continually choose to support the LAPD by engaging in voluntary contracts with them at frequent intervals. (Furthermore, as agents of the state, the LAPD is generally immune from kinds of civil procedures that people are able to bring against one another, when we feel we have been mistreated; the Rodney King case is a rare exception of government policemen being held publicly accountable.) The consequence of the coercive relationship between the LAPD and the people of Los Angeles is that the policemen’s salaries do not depend very closely on satisfying those who pay them. They get paid regardless, and accordingly when they are angry and frustrated, they have little holding them back from abusive behavior.

By contrast, the security guards at the party, employees of a private security company, depend for their livelihood on pleasing their customers, with whom they must contract and recontract at frequent intervals. When the incident ended, ever the economist, I thought to myself, “Ah, the market at work!” The club will not rehire a security agency whose guards make an ugly scene; furthermore, the security agency knows that it can be sued for use of excessive force. Their incentives to restraint are strong. It wasn’t strength of character or saintly gentleness that restrained those guards from clobbering their rude antagonist; it was market forces.

The same goes for mail clerks and teachers. Postal Service employees and public school teachers, because they get paid regardless of what respect and consideration they show those they serve, have relatively little incentive to consider others before they consider themselves. (The Postal Service, holding a legal monopoly on delivery of first-class mail, consistently loses money and is heavily subsidized by taxes; public schools, of course, are tax-supported.) If a postal clerk goes for coffee in the midst of a rush, my brother has nowhere else to take his postcards. If public school teachers don’t show up for work, and distract their schools with dissension over pay, they needn’t worry that parents will withdraw their children in disgust: those parents have already been forced to pay the salaries, and have nowhere to take their children.

With the Packaging Store and Baltimore’s Christian schools, however, the clerks and teachers have a powerful incentive to treat those they serve with courtesy and consideration. The more they do so, the better they fare. My Packaging Store has lots of nearby competition. Baltimore parents who send their kids to independent schools (when they have already paid once, through taxes, for public) sacrifice significantly. Hence, if these private institutions displease their customers, they will lose them almost at once. Because of the voluntary nature of the interactions, there is a powerful incentive to mannerly behavior.

I do not say that the LAPD and the USPS and bad public schools are totally unresponsive to the public, only that they are very unresponsive. But market institutions are necessarily much more responsive, because the public’s influence is immediate: All we must do is take our business elsewhere. Likewise I do not say that market forces lead uniformly to good manners. Of course not. As long as people have both good and bad qualities, there will be bad manners, unkindness, and lack of consideration in all human institutions, whether voluntary or coercive. I claim simply that market forces push us toward politeness. Why is it said that “the customer is always right,” with all that implies for treating the customer with deference and politeness? Because in a market setting, success depends on pleasing the customer: not just with a good product, but with courtesy and consideration as well.

Manners Lead to Markets

Let me close with another perspective on this topic: Not only does the market lead to manners; the market is based on manners. Borrowing phrasing from my friend John K. Williams, a fundamental principle of human interaction is that we accord one another the freedom to conceive our own vision of the good life, and pursue that to the best of our ability (so long as we grant others equal freedom). Decent, mannerly people do not impose on others. They do not take what belongs to others; they do not force their will or values on (peaceful) others. This is simple decency.

If followed generally, it leads to markets, as well as non-profit institutions, charities, clubs, athletic organizations, and all the other sorts of voluntary interactions in which we engage. Markets grow up naturally out of people’s inclinations to exchange their various talents, and the products thereof. As long as people are willing to treat one another with respect and considerations, allowing them to carry out agreeable exchanges and other interactions with one another, markets will be part of the human landscape.

Decent people deal with one another not by force, but by voluntary agreement and exchange. The mannerly society, then, is one characterized not by political, but by market processes.