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Kurt Wallace: This is Kurt Wallace and our guest today on Rare is Russ Roberts. He’s a research fellow at Stanford University’s Hoover Institution; host of EconTalk at The Library of Economics and Liberty. His new book “How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness.” Russ, thanks for being with us today on Rare.
Russ Roberts: My pleasure.
Kurt Wallace: Russ, I was surprised to see that you are a co-creator of the Keynes Hayek rap videos. I actually have one of the t-shirts from the swag that they put out there.
Russ Roberts: That’s nice. I’m happy to hear it. Keep spreading the word.
Kurt Wallace: Well, it’s gotten so many views and people come up to me all the time, “What is that? What is Keynes Hayek?”
It’s such a great way to introduce the ideas of how economics works and how it actually is all about relationship and behavior and the natural order of things — or violating the natural order of relationship. Your book, it’s interesting. Let’s talk about relationship with ourselves and others, and the key element of thread throughout the book — Adam Smith’s ideas on Impartial Spectator.
Russ Roberts: Yes, what Smith says there is that he’s interested in why we do decent things, why we do the right things. What are we? We’re self-interested. We’re not greedy, most of us. But, we are self-interested. We put ourselves at the center of our universe. And, given that that’s part of human nature, why is it that we do good things? Why do we make sacrifices for others from time to time? Why do we rise to the occasion and help other people often?
So, to understand that Smith invokes the idea of an Impartial Spectator which is really a version of our conscience — but it’s a very special version — because what he has in mind isn’t lessons you got from your religion or your parents. What he really says is what keeps us on the straight and narrow and the occasional good path is that we imagine someone watching us who isn’t self-interested with our desires. Who isn’t — who’s impartial. Who doesn’t have a stake in the outcome and judges us. And, when we disappoint that Impartial Spectator, we imagine what someone else would think of us.
That keeps us from doing the worse things we might do and often can encourage us to do the right thing. So, that’s the mindset that he has for us. And, then in real life what happens as we go through life and do things that are sometimes not so good and sometimes glorious and honorable . . . we get the criticisms and the accolades, the cheers and boos of those around us who say, “Great job, that’s such a nice thing you did to take that food over to that person who was sick” or “Why did you take advantage like that. That wasn’t right. You shouldn’t have done that.” And, those actual spectators who judge us along with our imaginings of what the right thing to do is and how we might be judged are what keep us behaving well, for the most part. And, really helps us stay in civilization.
And, he’s really got a bold claim in the book that I’m writing about. His book is “The Theory of All Sentiments’. I’m taking the lessons from that book and trying to apply them to modern life. And, what Smith is helping us to do there with the Impartial Spectator is helping us be mindful. He’s helping us keep an eye on ourselves. He’s giving us a tool on how we might improve our behavior. So, it’s a wonderful way of thinking.
Kurt Wallace: Well, in that you reference the quote, “Man naturally desires not to only be loved but to be lovely.” Pursuing your dreams or being true to your own journey is what I interpret out of that. But, there’s a lot of divergence from the goal of becoming “lovely.”
Russ Roberts: And, of course, Smith is using the words “loved” and “lovely” in ways that people used them in the 18th century. He means when he says that: we want to be loved. He doesn’t mean just romantically loved. He means we want to be respected; we want to be honored. We want people around us to think highly of us — which I think is true today as it was in 1759.
And, he says we want to be lovely. We don’t just want to be loved. We want to earn that love, earn that respect, earn that honor by being people worthy of honor, love, and respect. And, that is a very high set of demands on ourselves. And, of course, we occasionally — as he concedes, we fool ourselves about how lovely we are. We tend to see ourselves in a rosier light and our behavior in a rosier light than others see us. But, that’s his argument for what creates true happiness, true serenity, true tranquility deep satisfaction with life is being respected and honored by those around us and earning that respect and love and honor in a way that’s true and honest and real and not faked and deceptive. And, that’s a fascinating perspective on human nature that I think is very powerful.
Kurt Wallace: In your chapter, “How Not to Fool Yourself” you’re talking about some of these ideas. We are prone to self-deception when we compromise ourselves with standards, real or perceived from outside of ourselves — being the Impartial Spectator or other people.
Russ Roberts: Well, it’s hard to accept the vision that other people have of us, right? We want to be — if you ask yourself — you can ask a murderer whether they think they did something bad. A lot of murderers would say — they explain why they were justified; they didn’t have a choice.
Very hard for us to judge ourselves the way others see us — the way others judge us. It’s very hard to perceive ourselves. We have a self-image, as Smith describes it, as we veil our true self from ourselves because it’s too painful.
Russ Roberts
So, when we make a mistake or when I pull out into traffic and cut off somebody my first thought is “They were driving too fast”. I never say, “Oh, I shouldn’t have pulled out into traffic”. I have a story to explain why I did what I did. And, we do that with everything that we do. And, what Smith is suggesting — he says, that’s reality. We tend not to see ourselves. But, he says, the Impartial Spectator is there for us to step back and say, “Wow! I wonder if someone looking at me pulling out into traffic like that — say my son who was driving with me yesterday when I did that. “Dad you really pulled out in front of that car”. “Oh no! No, he was going 50 and it’s a 30 mph zone. That was his fault.” But, when the guy goes by me and honks, and my son doesn’t say anything — I kind of have to concede maybe I did the wrong thing there. And, that’s hard for us to do.
And, what Smith is saying is that there’s natural forces that force us to confront our own flaws sometimes. But, if we’re not careful, we can go very blissfully through life imagining we’re somebody that we’re not.
Kurt Wallace: Now as a libertarian the fundamental principle in me is nonaggression — nonaggression principle. But in this book, it started making me think about how do I apply the nonaggression principle to my own sense of well-being? Who I am? And, how do I look at myself and what do I allow? And what standards do I live up to? And, all of those elements. It was a very interesting read.
Russ Roberts: A little bit challenging and then we/you see yourself that way — and expecting as much from yourself as you expect in others — is a really uncomfortable thought. And, I think a very good one to make the world a better place.
When I talk about what would help advance libertarian principles, people say, “Well, we need to learn more economics. We ought to be reading books that explain libertarian philosophy and we need better arguments.” For me the single biggest thing that a person can do to make libertarian philosophy more appealing to other people is to be a nice person. Because a lot of what we do in picking our philosophical views depends on who else is in the club with us. And, if everybody else in the club is mean and obnoxious and selfish; I don’t care how good their logic is I don’t want to be in that club. Most people don’t want to be in that club. There’s a few people who enjoy that club, but it’s a very small group.
I believe, and I try to make this case in the book, that the way that we make the world a better place is not through top down government legislation and coercion. It’s through the voluntary way that we combine to help each other both commercially and through the nonprofit charity sector. And, I think that if you want to push that agenda, which I do, I want more voluntary things that make the world a better place and fewer coercive things — that we should be part of that.
We should be helping other people when we find it worthwhile and when we see that it’s achieving good ends. And, I want civil society which has philanthropy and other ways that we choose voluntarily to act collectively. I want that to have a larger sphere in American life.
I want there to be more private schools and fewer government schools — ideally zero. I want more private schools. And, by private schools, I don’t mean schools run by businesses. Whatever way that people would choose to send their kids and other ways that entrepreneurs — to create schools that would do so in a world where people aren’t being given a product away – now, the way it is. I think that would be a better school system. I could make that argument, I think. Certainly, can make the claim effectively that would be a better school system. I think even more importantly the fact that the kids would get a better education is the fact that that’s the kind of world that I want to live in where we choose to help each other rather than a world where the government forces us to help each other. And I think that’s incredibly important.
And, to make that a possibility you got to be a somewhat decent human being or other people are just gonna’ say, “Well, that just sounds selfish. You don’t want the government to help.” And, I don’t think it’s selfish at all. And, I think libertarians who care about civil society should get involved in ways to help people voluntarily help each other.
Kurt Wallace: Well, in a way it can be selfish to want your community to be as healthy as possible. Just organically, having people that are helping their neighbors and people in their community that are less fortunate, have physical or mental problems or whatever the case may be — it’s actually in your own best interest to lift those other people up.
Russ Roberts: Right, but if you’re not part of it because you say, “Let other people do it.” And, that could also be in your own self-interest. I think you’re cheating on the deal. I think you’re missing out on a chance to make the world a better place. And, Smith would say you’re not living a full human life. You’re not going to be loved or lovely if you just say, “I’ll let other people take care of it.”
Kurt Wallace: Now, in terms of economics and applying this to the whole philosophy here in the book. The exchange of money, or money in and of itself, is a way to relate.
Russ Roberts: And, Smith was a big fan of the role that capitalism, that commercial dealing, that buying and selling played in helping to civilize us. Because if I want to sell a product, I’ve got to put myself in your shoes. I’ve got to say, “What would my customer want? What would give my customer benefit and pleasure? How can I make this better for the customer?”
Under capitalism, that’s what you need to be thinking of as an entrepreneur. How do I serve my customers? And, Smith argued that’s a fundamentally civilizing influence that capitalism plays. Now, our culture doesn’t see that, our culture always says, “How can I exploit my customer?” I think that’s, well — that’s not a very profitable business strategy is the irony of that. But, it makes for good movies and television shows.
But, with Smith capitalism and commercial dealing and trade and exchange as a way that we care about each other — we’re forced to care about each other — through that process. Because if I don’t please you, you’ll go shop elsewhere. George Mason economist, Walter Williams, liked to say, “Here’s my relationship with my grocery. I don’t tell them when I’m coming. I don’t tell them what I want to buy and I don’t tell them how much I want of each product. But, if they don’t have it when I get there, I’m not going to show up again.” That’s capitalism. And, if you ignore your customers and say, “Oh, I’m not going to worry about them”, you’re not going to have them for very long because the world is a competitive place.
Kurt Wallace: Now, in the chapter “How To Be Good”, it’s interesting to me because being good can really be perception. The people that attacked us on 9/11. The people that are fighting for Islamic beliefs that are extreme. They think that they are good people. They think that they’re doing the right thing. There’s a myriad of ideas of what good means, and it really depends on what side of good you are.
Russ Roberts: Yeah, Smith’s answer to that is Smith doesn’t deal with that. Smith was living in 18th century Scottish society where people who were surrounding him shared most of his views of what was good. And, what was good then taking care of your family and being a good friend in the time of need and a shoulder to cry on and those kind of obvious daily human interactions. And, Smith said to be good, you have to be both proper and virtuous. Proper meaning: you have to meet other people’s expectations about what’s polite and not disappoint those expectations and that’s a minimum standard.
To be more than that to be good — you’ve got to be more than just proper, you’ve got to be virtuous. And, by virtuous he meant you have to take care of yourself. So, prudence was one of his big virtues. Justice — and by that he meant often: don’t hurt other people. And, beneficent and by that he meant: help people when they’re in trouble. So, those are the big three: Take care of yourself, don’t hurt other people and when you can, help them. And, I think Smith was obviously very aware that sometimes when you go to help other people we’re not effective. It’s not just enough to want to help, but you have to actually help them.
Kurt Wallace: And then in helping, it depends on what the perception of help is. Because in some ways, the act of helping or thinking that one is going out to help; it requires judgment. And, in that way it could be counter intuitive, it could create the opposite effect.
Russ Roberts: Absolutely, that’s the law of unintended consequences. You go to help your kid. If you do their homework for them, you’re not helping them. They might think you’re helping them. You might convince yourself you’re helping them, but ultimately you’re doing them a disservice. And, you’re right; there’s a lot. Helping — and Smith is very aware of this — the laws of beneficent; the laws of helping other people are very challenging. They’re not black and white.
The laws of justice, he says, they’re black and white. Don’t steal from other people. Don’t beat them up. We understand those. The laws of how to make people’s lives better who need your help, that’s a lot trickier. He says that those rules are loose, vague and indeterminate. They’re hard to nail down. So, that’s more of an art than a science, for sure.
Kurt Wallace: I love the part where you talk about Milton Friedman in the book. Small effects amounting to something significant. And, discussing pride and shame are sort of the winds that grab the sails of our good and bad behaviors. Those sort of things.
Russ Roberts: Yeah. So, I use the Friedman example. Friedman would say, “The sum of negligible effects need not to be negligible.” That is, if I go out, if I’ve never eaten apples before, and I try them and like them and now I start buying a dozen apples a week, it’s probably not going to drive up the price of apples. But, if every American decided to start eating — let’s say an extra dozen apples a week; the price of apples would rise certainly in the short run because there wouldn’t be enough apples to go around. And, that extra demand and beyond the supply would push up the price until the market was close to what people wanted — was equal to what was available.
And, that I think — what I suggest is — that’s what Smith says is happening when you and I in a personal encounter, where somebody does something that we think is honorable and we say, “Great job.” That little bit, all that does is maybe on the surface affect our relationship with a friend. But, what Smith argues is that ripples through all of society. That encourages the friend to be good again. And if the friend misbehaves and I judge the friend and say, “Why’d you do that?” I also send a signal. The way my demand for apples sends a signal to make more or fewer apples through the price. Eventually certain things become honorable and certain things become dishonorable. And, they can change over time. One example could be littering. In 1960, when I was a six-year-old, people threw stuff out the window driving down the highway and didn’t think about it twice. Now, if you throw something out the car or window, you might get a road rage thing against you. Somebody might pull up and say, “What’s wrong with you?” and start screaming at you.
And those norms — that’s happened mainly through people trying to push and encourage that behavior. And, how did that push and encouragement actually get affected? It was through the individual choices we made day-to-day and how we looked at other people who made their choices. And, that’s the same idea as a campaign to eat more apples to fight cancer. Eventually it pushes up the price of apples. Which encourages growers of apples to produce more apples. And, those kind of small steps leading to bigger impacts work, according to Smith, in the morality market. The same way they work similarly to how they work in the product or goods market.
Kurt Wallace: Sort of a spontaneous evolution of enlightenment.
Russ Roberts: Yep — civilization.
Kurt Wallace: Russ Roberts author of “How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness.” Thanks for being with us today on Rare.
Russ Roberts: My pleasure, Kurt.