Branko Milanović – Greatest Happiness for the Greatest Number. Or Not?

Something a bit different for the weekend.

Branko Milanović is an economist specialised in development and inequality. His new book “Capitalism, Alone: The Future of the System That Rules the World” should be appearing in October.

Cross-posted from Branko´s blog globalinequality

File:Reagans host a state dinner for Prince Charles and Princess Diana.jpg

People who follow my blog know that I travel a lot. Travelling for conferences and giving book talks has of course many advantages (and perks), among which not the least is meeting people in different countries under the basically same conditions (you are there to give a talk; period) and then observing how conventions with which you are received vary. Now, observing how conventions vary may be interesting because it provides you an inexhaustible supply of anecdotes with which to entertain your friends; it may be useful also if you plan to write a book on culture; but for an economist it is useful because it lets you see how very different arrangements and behaviours may be all, in some sense, optimal. In other words there is not only one, but many optimal arrangements—depending on what seems to be the desirable goal.

To be more concrete, let me relate one such story. Several years ago I was invited to one of the most beautiful cities of Italy to give a talk to an assembly of industrialists, entrepreneurs, professors and other regional “notables”. There were several of us who were supposed to be “keynote” speakers for the evening. We were put up In the best hotel in town, and treated super nicely. (The other keynote speakers, having come from the US, were paid business class fares.)

We delivered our talks in a beautiful villa that was specially opened for the occasion. The talks and the dinner that was to follow were attended by approximately 80-100 people, all beautiful-looking, fully international and conversant in English. Just after the talk, and seconds before we were to take our dinner seats, as the waiters were about to bring our first course, my “handler” came to direct me to an English-speaking table making sure I do not get lost in the crowd and accidentally end up sitting with the Italian audience. I thought it was a bit heavy-handed especially when he motioned me quite explicitly saying “you should sit there” –raising his hand somewhat dismissively—“with other people who do not speak Italian”. The dinner was delectable and my dinner companions great. I remember talking to a journalist from “The Economist” and his wife, and I found both interesting and charming.

Happiness was shared, it seemed obvious, by the Italian audience sitting at Italian-only tables and merrily chatting away. They were not there to hear what we had to say but to meet other people, share some gossip, and network in order to promote their businesses. They would have been equally–or probably more– delighted if instead of our talks they were treated to a performance of fire-eaters, snake charmers or a Balkan brass band, but that would not have been considered  socially acceptable. They would not have brought their wives or girlfriends nor would other people have come, thus wasting an opportunity to network. The keynoters’ task was to lend to the gathering an aura of respectability but not otherwise to interfere or spoil the dinner.

It is thus that myself, people at my table, and almost certainly everybody else in the room had the most pleasant dining experience.

Yet something was amiss. Wouldn’t it be more polite to treat the speakers as people who really had something to say and to intersperse them with the audience? Sure, there might have been some awkward moments, but we would have had a chance to hear each other and perhaps even learn something. It would have been also, according to the conventional rules of hospitality, more polite. Politeness however does not enter the economist’s toolkit, and, as I already mentioned, we were all happy with the arrangement. So was the handler’s decision right? Didn’t he manage to achieve the greatest happiness for the greatest number?

Yes. But at a (dynamic) cost of us failing to meet somebody new. Not only that: the handler’s decision projected a vision of society where everyone is happy meeting only people who speak their language, or share their culture or background, or religion or whatever. If such “compartmentalization” makes people happy—since they feel much more at ease with people with whom they share certain important characteristics—isn’t that an optimal arrangement? After all, to use an Italian economist’s name, our dinner table distribution was Pareto optimal: you could not improve anybody’s position without making somebody else’s worse. Even better: we had gone beyond Pareto: everybody might have been at his/her peak of satisfaction given the attendance present there. So all is for the best in all possible worlds?

Yet: do we really want to have societies where everyone is happy not interacting with anyone different from himself/herself?

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