Munger on Voluntary Exchange
By Arnold Kling
Mike Munger and Russ Roberts discuss what makes an exchange truly voluntary. Munger suggests that if my best alternative to doing business with you is a really lousy alternative, then many people would deny that my decision to do the deal is voluntary. That explains why people are revolted by sweatshops. The economist says that working in a sweatshop beats the alternative of working in another grueling job for less money, but the non-economist is not satisfied with that analysis. The non-economist is troubled by the fact that the worker faces such a lousy alternative to taking the job in the sweatshop.
When people rant that health care is a right, not a commodity, they play on this intuition. If you don’t get health care, you’ll die! So make sure that nobody has to sacrifice a lot to get health care!
The thing is, though, the vast majority of medical procedures do not make a life-or-death difference. Maybe that colonoscopy screening reduces my risk of dying if colon cancer by a small amount. But I would not pound my fist on the table and insist that I have a right to that colonoscopy.
Anyway, I think Munger is onto something. It is worth understanding when we are up against the intuition that an exchange is wrong because one side has only dire alternatives.