The Davos non-paradox

Branko Milanovic is good on the apparent paradox of Davos – that plutocrats who preside over massive inequality “speak the language of equality, respect, participation, and transparency”:

They are loath to pay a living wage, but they will fund a philharmonic orchestra. They will ban unions, but they will organize a workshop on transparency in government.

Doug McWilliams, a man not hitherto noted as a class warrior, calls it “virtue signalling paid for by money in effect stolen from shareholders.”

This juxtaposition deserves closer inspection. For one thing, it is a relatively new phenomenon. Thatcherites never felt the need to appear virtuous, and Thatcher herself was contemptuous of those who “drool and drivel they care.”

And for another, the case for capitalist does not rest at all upon the character of individual capitalists. Adam Smith famously wrote:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love.

Insofar as capitalism is a good thing, it is because competition forces up wages and working conditions and compels capitalists to offer consumers good deals. This is an emergent process which it is independent of the virtue or not of capitalists.

Why, then, the PC talk? Why not just get on with business?

The answer might lie in a version of Maslow’s hierarchy of needs. Once you have more money than you’ll ever need, you want other things like self-esteem. Or it might be that people want what Richard Sennett called “purified identities”, and this wish encourages the belief that you can do well by doing good.

Whatever the motive, there are two potential effects here.

One arises from the fact that people take others at face value. Cameron Anderson and Sebastien Brion have shown that recruiters hire people who are irrationally overconfident because they send out “competence cues”. A similar thing might happen at Davos. Plutocrats who give out virtue cues are taken by journalists – an emergently naïve bunch – to be actually virtuous. (We see a similar thing with attitudes to Alexis Sanchez; he is assumed to be more passionate and driven than his former team-mates because he waves his arms and shouts a lot.)

But there’s more, revealed by some experiments (pdf) by Benoit Monin and Dale Miller. They gave subjects the chance to signal their non-sexist virtues with cheap talk. They found that those who did so went on to act in more inegalitarian ways:

Participants who established non-sexist credentials, either by dismissing a series of blatantly sexist statements…or by selecting a female or African American candidate in an initial job recruitment task… were subsequently more likely to express prejudiced-sounding attitudes.

More recent experiments by John List and Fatemeh Momeni have corroborated this (pdf). They’ve found that corporate social responsibility can lead employees to cheat more.

What’s going on here is a form of moral self-licensing. Once you’ve convinced yourself that you’re the good guy, you can go on to behave appallingly. Why not steal from shareholders or workers if you’re going to give some of the money to good causes? As Roland Benabou and Jean Tirole put it (pdf):

Good behavior in one context may “justify” a more mediocre one in another, and people who have recently “done good” in one dimension may feel immunized against negative (social or self) inferences, and thus later on act less morally constrained.

Carillion, for example, wibbled about “visionary engagement” whilst at the same time blacklisting trades unionists and shafting sub-contractors.

Perhaps, therefore, there is no real paradox between talking about equality whilst perpetuating inequality. The two actually co-exist very conveniently.

Comments

[James Cranch]

"It is a relatively new phenomenon"

I'm not sure! It reminds me of the Victorian industrialist W H Lever, who built the model village Port Sunlight on the Wirral. His paternalistic reasoning for doing so was, "It would not do you much good if you send it down your throats in the form of bottles of whisky, bags of sweets, or fat geese at Christmas. On the other hand, if you leave the money with me, I shall use it to provide for you everything that makes life pleasant – nice houses, comfortable homes, and healthy recreation."

[Roy Lonergan]

The well known pint after the gym effect.

[Andy S]

Is the converse also true?- Those who show unusually good/altruistic behaviour are trying to atone for guilt of some kind? Think Jimmy Savile and his charity fundraising.

[Robert Lindwall]

What do you think of the Sanchez trade?

(Great post by the way)

[Dave Timoney]

I wonder what the overlap in attendance between Davos and the President's Club charity gala is?

[kernel]

Nasty side-effect is right-wing propaganda painting the Left as the Global "Elite", redirecting working-class anger and resentment towards authoritarian populism (see Trump, Brexit).

At least, I hope that it's an unintended side-effect...