Almost one year ago the HPR’s Max Novendstern wrote an article entitled, “Are payday loans like unprotected sex?” This article certainly got my heart rate up. The topic was dead sexy but the take was dead wrong.
In his article, Max responds to a post by Tyler Cowen where Cowen compares the right of an individual to engage in unprotected sex to an individual’s right to borrow money at high risk. Max rather misses the point and defends sex in general (instead of just unprotected sex) against the evils of risky lending and Capitalism. Max’s indignation about the comparison and passionate appeals to the moral superiority of sex over market transactions largely drowns out a valid point. Why do we allow risks in the bedroom but not in the boardroom? Furthermore, and much to Max’s presumed chagrin, I found his article provoked quite a few connections between sex and Capitalism.
Max starts off by pointing out the obvious; sex is not APR financing. I could be wrong, but I doubt Cowen ever meant having sex was literally like taking out a loan. If so, someone should tell him he’s doing it wrong. More likely, Cowen was comparing the financial risks involved in payday loans and the sexually transmitted risks involved in unprotected sex. Yet only a superficial look at most payday loan recipients shows that the vast majority understand the risks and pay back the loan when due. In fact, the removal of payday loans hurts the borrowers as well as the lenders (why would they take out a payday loan if they didn’t need it?) Even the New York Fed does not consider payday loans “predatory.”
Cowen’s point is a good one. When two consenting adults can engage in risky behavior with their personal lives why not with their livelihoods? To allow one but not the other would suggest the government cares less about your health risks than your wealth risks. How shallow!
Then Max goes on to make his larger point, “love-making is not a market transaction.” This is not exactly a controversial claim but let’s see how he proceeds to justify it. Unlike in the free market, he argues, love is not meant for profit or pleasure maximization on the individual basis.
Well frankly, I find this point arguable. Consider love without individual interest or selfish motivation. That makes for a rather awkward Valentine’s Day; “Roses are red, violets are blue, I take no pleasure or profit from being with you.”
Max further maintains that the risk of unprotected sex is a “a byproduct of something otherwise wholesome and a demonstrably positive sum.” The same can be said about risky financial decisions. Any trip to the New York Stock Exchange shows that borrowing can also be a ‘demonstrably positive sum.’ The free market, or as Robert Nozick famously described it, “Capitalist acts between consenting adults,” can be a beautiful thing.
Now I’m not saying that Greg Mankiw wrote the book on love, but I do think love has both value and conditions like any other market transaction. One thing I took away from my intro economics course is that money is nominal, not real. So let’s substitute other values for money. It sounds morally repugnant to put a price on someone’s head but it’s safe to say that you value the one you love. Now the value may be beyond money, but there are still conditions. The condition to love someone is, as Josh Groban puts it, ‘You’re still you,’ or ‘he’s still him,’ ‘she’s still her’ and ‘it’s still it’ (in some circles). This condition must stand. Imagine the person you love with one less identifying feature of their personality. For example, they gain weight or change political parties. You would still love them probably (depending on which political party) but imagine them without any recognizable feature of their previous self. Of course you would no longer love them. In fact, you would probably stop loving that person long before they became a completely different person. Why? Because love has conditions. That’s what makes it love. Imagine the reverse; what if you loved someone without conditions. You would still love “them” if they had the emotional or intellectual depth of a sponge! Now that is the devaluation of love.
The way I see it, economics is ultimately the study of incentives and I simply cannot think of a greater incentive than sex or love. Max goes so far as to call “sex without consequences” the “anticapitalist experience par excellence.” Well I think sex with consequences is what makes it love, and love with a hint of Capitalism makes it the summum bonum.
Photo Credit: Sarah Siskind
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