An Inconvenient Truth About ESG Investing

By Sanjai Bhagat. He is a professor of finance at the University of Colorado. Excerpts:

"ESG funds certainly perform poorly in financial terms. In a recent Journal of Finance paper, University of Chicago researchers analyzed the Morningstar sustainability ratings of more than 20,000 mutual funds representing over $8 trillion of investor savings. Although the highest rated funds in terms of sustainability certainly attracted more capital than the lowest rated funds, none of the high sustainability funds outperformed any of the lowest rated funds."

"ESG funds don’t seem to deliver better ESG performance either."

"companies in the ESG portfolios had worse compliance record for both labor and environmental rules [than companies in non-ESG portfolios]."

"companies added to ESG portfolios did not subsequently improve compliance with labor or environmental regulations."

"A recent European Corporate Governance Institute paper compared the ESG scores of companies invested in by 684 U.S. institutional investors that signed the United Nation’s Principles of Responsible Investment (PRI) and 6,481 institutional investors that did not sign the PRI during 2013–2017. They did not detect any improvement in the ESG scores of companies held by PRI signatory funds subsequent to their signing . Furthermore, the financial returns were lower and the risk higher for the PRI signatories."

"setting ESG targets may actually distort decision making"

"also some evidence that companies publicly embrace ESG as a cover for poor business performance."

"when managers underperformed the earnings expectations (set by analysts following their company), they often publicly talked about their focus on ESG. But when they exceeded earnings expectations, they made few, if any, public statements related to ESG."

"funds investing in companies that publicly embrace ESG sacrifice financial returns without gaining much, if anything, in terms of actually furthering ESG interests."

Related posts

ESG Investing Can Do Good or Do Well, but Don’t Expect Both 

The hidden costs of corporate social responsibility

Why the Sustainable Investment Craze Is Flawed

C.E.O.s Are Qualified to Make Profits, Not Lead Society

ESG Investing in the Pandemic Shows Power of Luck

ESG Investing Shines in Market Turmoil, With Help From Big Tech: The strength of socially responsible funds suggests they have staying power; ‘ESG is not a fad’

Funds that market themselves as sustainable investments aren’t necessarily focused on companies that fight climate change, develop wind turbines or promote diverse boards

ESG Funds Draw SEC Scrutiny (companies that pursue strategies to address environmental, social or governance challenges)

Is it a retailer’s job to keep shoppers from their vices? (or Adam Smith vs. CVS pharmacy)

Can You Find Virtue by Investing in Vice?

What if companies pledge to adhere to social and environmental accountability guidelines?

Conspicuous Consumption, Conspicuous Virtue, Thorstein Veblen (and Adam Smith, too!) 

Data show that socially responsible investments can outperform the S&P 500 index
 
Is altruism a result of selfishness?

Do you have to be selfish to make more money?

Does collective self-deception mask selfish behavior?

Why Doing Good Makes It Easier to Be Bad

Businesses intentionally display their social and environmental performance in addition to their financial performance to stakeholders

Should you invest according to religious guidelines?

Companies Adapt to Activism by Athletes 

For a humorous view of this issue see

A Snickers a Day Keeps the Doctor Away: Why does CVS want to make my migraine cures hard to find? by Joseph C. Sternberg of the WSJ

Should CEOs serve stockholders' interests or stakeholders' interests?

In 1970, Milton Friedman said stockholders interests. See A Friedman doctrine‐- The Social Responsibility Of Business Is to Increase Its Profits. In fact, he thought it would be harmful if CEOs worked for stakeholders interests, that is, tried tried make their companies act based on social responsibility. The quotes given below from his article imply that we should be using the democratic process to achieve social objectives. He is often criticized for these views which many saw as giving corporations license to harm society.

But another article, from 2022, seems to argue a similar point. See I Wouldn’t Bet on the Kind of Democracy Big Business Is Selling Us. It is by Kim Phillips-Fein. She is a historian at New York University.

Both articles are from The New York Times. Friedman and Phillips-Fein are much different ideologically. Friedman advocated free markets and it seems obvious from her article that Phillips-Fein favors a great deal of government intervention.

But here are some excerpts from her article. She clearly does not believe in stakeholder capitalism. She wants social change to come from the democratic process. But that seems to be what Friedman also said (excerpts from his article follow hers).

"stakeholder capitalism — the idea that companies should engage the interests of workers, the environment and local communities alongside shareholders"

"But, however seductive it may be, stakeholder capitalism does not offer a real alternative. The ideal of an easy symbiosis between public and private sectors would undermine the kinds of political mobilizations, however difficult to organize and enact, that are needed for reform that benefits most Americans."

"The social responsibility trend in general undermines the idea of citizenship and of a public sphere as the place where decisions and arguments over economic and social policy play out."

"The reality is that there is no way to bypass the arduous, contentious work of building a politics that can sustain a more democratic culture." 

Now quotes from Friedman's article:

"IN a free‐enterprise, private‐property system, a corporate executive is an employe of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society"

"The whole justification for permitting the corporate executive to be selected by the stockholders is that the executive is an agent serving the interests of his principal. This justification disappears when the corporate executive imposes taxes and spends the proceeds for “social” purposes."

"The difficulty of exercising “social responsibility” illustrates, of course, the great virtue of private competitive enterprise — it forces people to be responsible for their own actions and makes it difficult for them to “exploit” other people for either selfish or unselfish purposes. They can do good—but only at their own expense.

Many a reader who has followed the argument this far may be tempted to remonstrate that it is all well and good to speak of government's having the responsibility to impose taxes and determine expenditures for such “social” purposes as controlling pollution or training the hard‐core unemployed, but that the problems are too urgent to wait on the slow course of political processes, that the exercise of social responsibility by businessmen is a quicker and surer way to solve pressing current problems.

Aside from the question of fact—I share Adam Smith's skepticism about the benefits that can be expected from “those who affected to trade for the public good”—this argument must be rejected on grounds of principle. What it amounts to is an assertion that those who favor the taxes and expenditures in question have failed to persuade a majority of their fellow citizens to be of like mind and that they are seeking to attain by undemocratic procedures what they cannot attain by democratic procedures. In a free society, it is hard for “good” people to do “good,” but that is a small price to pay for making it hard for “evil” people to do “evil,” especially since one man's good is anther's evil.

I HAVE, for simplicity, concentrated on the special case of the corporate executive, except only for the brief digression on trade unions. But precisely the same argument applies to the newer phenomenon of calling upon stockholders to require corporations to exercise social responsibility (the recent G.M. crusade, for example). In most of these cases, what is in effect involved is some stockholders trying to get other stockholders (or customers or employes) to contribute against their will to “social” causes favored by the activists. Insofar as they succeed, they are again imposing taxes and spending the proceeds."

"in a free society . . . “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception fraud.”"

Happiness Is Not What We Think It Is

By Seth Stephens-Davidowitz. He is the author of “Don’t Trust Your Gut: Using Data to Get What You Really Want in Life.” Excerpts:

"And money is not a reliable path to happiness. Matthew Killingsworth of the University of Pennsylvania has studied data from more than 30,000 adults, far larger than previous studies of money and happiness. He debunked a popular myth that there is no effect of money on happiness beyond $75,000 per year, but he did confirm a law of diminishing returns to money. In the end, Dr. Killingsworth found, the effects of money level off: You need to keep doubling your income to get the same happiness boost.

A study of thousands of millionaires led by researchers at Harvard Business School did find a gain in happiness that kicks in when people’s net worth rises above $8 million. But the effect was small: A net worth of $8 million offers a boost of happiness that is roughly half as large as the happiness boost from being married.

What, in addition to being married, tends to make people happy?

The most important happiness study, in my opinion, is the Mappiness project, founded by the British economists Susana Mourato and George MacKerron. The researchers pinged tens of thousands of people on their smartphones and asked them simple questions: Who are they with? What are they doing? How happy are they?"

"Many of us work far too hard at jobs with people we don’t like — not a likely path to happiness. Dr. MacKerron and the economist Alex Bryson found that work is the second-most-miserable activity; of 40 activities, only being sick in bed makes people less happy than working. The economist Steven Levitt found that when people are uncertain whether to quit a job, they can be nudged to quit. And when they quit, they report increased happiness months later.

"Many of us move to big cities and spend little time in nature — also not a path to happiness. A study by the economists Ed Glaeser and Josh Gottlieb ranked the happiness of every American metropolitan area. They found that New York City was just about the least happy. Boston, Los Angeles and San Francisco also scored low. The happiest places include Flagstaff, Ariz.; Naples, Fla., and pretty much all of Hawaii. And when people move out of unhappy cities to happy places, they report increased happiness."

"of 27 leisure activities, social media ranks dead last in how much happiness it brings. A randomized controlled trial on the effects of social media found that when people were paid to stop using Facebook, they spent more time socializing and reported higher subjective well-being."

Related posts: 

Psychologists uncover new details about how money influences the frequency and intensity of happiness.

What Brings More Happiness, More Time Or More Money? (this study found that people that chose more free time over more money tended to be happier)

Does Wealth Make Us Happier? (maybe wealth buys freedom that makes us happier)

Another interesting article is The pursuit of happiness: Author seeks to take its measure and find where people are most content. It quotes former University of Chicago psychologist Mihaly Csikszentmihalyi. He said "Without dreams, without risks, only a trivial semblance of living can be achieved."

Does Or Can Money Buy Happiness?

Interesting Book: Stumbling on Happiness

Does Money Make You Mean?

Money buys happiness after all

The happiness wars

Dagwood Bumpstead Explains The Hedonic Treadmill 

Do income and happiness tend to go together? Yes, both within and across countries . 

Science proves it: Money really can buy happiness .

More On The Economics Of Gift Giving.

Does Money Buy Happiness?

How Supply and Demand Explain Higher Wages for Teen Babysitters

See Teen Babysitters Are Charging $30 an Hour Now, Because They Can: Sitter shortage has parents treating teenagers like VIPs; ‘order anything you want for dinner’ by Rachel Wolfe of The WSJ. Excerpts:

"Before the pandemic, Dani Gantcher earned about $15 an hour babysitting in her hometown of Scarsdale, N.Y. Parents sometimes asked her to wash dishes or stay late.

Now, the 18-year-old is raking in $25 to $30 an hour."

"After two years of hunkering down at home with their children, parents are returning to their office jobs and social lives and are competing for part-time sitters at the same time [this represents an increase in demand or shift to the right in demand which raises price if supply is constant]. Teens are getting better snacks, doing fewer mundane chores and are commanding top dollar.

In Easton, Mass., 19-year-old Emma Sharkansky is making up to $30 an hour—up from $12 a few years ago."

"Child-care marketplace Care.com says babysitters on its site charged an average of $18.05 an hour in April. In 2020, that number was $14.72." [that is a 22.6% increase while the Consumer Price Index increased 12.8% from April 2020 to April 2022]

A tight labor market is creating one of the best summer-job markets for teens in years. Businesses facing a pandemic hiring crunch are scouring teen job fairs and offering bonuses and flexible schedules to young people. A daycare worker shortage is leaving parents scrambling to make alternative arrangements. Unemployment among teenagers is at its lowest level in decades.

Moms and dads are in no position to bargain or throw out lowball offers, Kidsit.com, an online babysitting resource, warned parents in a 2020 post: “It’s best to play it safe and offer your sitter a competitive rate up front. That way you minimize the chances of them getting poached from you.”"

I don't think there is a shortage of workers or sitters. If there was, it was temporary. It was eliminated by the higher pay the article sites. When price is below equilibrium, it will get forced up.

A shortage means that price is below equilibrium and quantity supplied is less than quantity demanded. This is shown in the next graph.

Now maybe there was a shortage temporarily. But sellers (sitters) would have quickly realized that demand must have gone up given since there were so many more people wanting their services. Then they could raise their price. Maybe there was a shortage but it did not last long.

Related posts:

Is There A Booze Shortage? (2022)

Car makers face ‘chipageddon’ (2021)  

Does the U.S. have a firefighter shortage (2021) 

Cold Snap Sparks Record Rise in Natural Gas Prices in Asia (2021) 

There is no truck driver shortage in the US (2021) 

Is there a shortage of homes? (2020) 

Why honey prices have climbed about 25% since 2013 (2019-This post is featured in Introduction to Microeconomics by Luís Cabral. He is chair of the economics department at New York University.)

Is there really a shortage of construction workers (2019) 

Was there really a shortage of meatless burgers? (2019)  

What Chocolate Shortage? Cocoa Prices Steady as Record Output Projected (2019)  

Is There A Christmas Tree Shortage? (2017)  

Is There Really A Honey Bee Shortage? (2013)  

Will There Be A Pumpkin Shortage This Year? (2011) 

Introduction to Microeconomics by Luís Cabral

Why the Baby-Formula Market Is a Mess: Low Competition, High Regulation

The WIC program and regulations tamp down competition, resulting in Similac and Enfamil controlling the bulk of an inflexible, $4 billion U.S. formula market. It cracked when a major factory halted production.

By Jesse Newman and Annie Gasparro of The WSJ. Excerpts:

"Baby formula is one of the most tightly regulated food products in the country. That makes the barrier to new entrants high, and few brands have emerged as challengers to Similac and Enfamil, made by Abbott Laboratories ABT 0.50%▲ and Reckitt Benckiser Group, RBGLY 2.17%▲ respectively, since the two entered the market in the 1950s. Abbott and Reckitt were responsible for roughly 80% of infant and toddler formula sales in the U.S. last year, according to market-research firm Euromonitor.

Regulations also limit international brands from entering the U.S. from other countries.

The federal government is the product’s biggest buyer, via the Women, Infants and Children supplemental nutrition program, which provides formula at no cost to families. The program’s exclusive sales contract system ensures that in each state, one of the major formula brands has the majority of market share.

The result is a marketplace with little competition and little flexibility, making it vulnerable when something goes wrong."

"Baby formula first became scarce on store shelves in early 2020, as the Covid-19 pandemic and lockdowns disrupted supply chains. Reckitt has faced shipment delays, as well as longer lead times for some raw materials and packaging, according to company officials.

Then, this February, Abbott halted production at its biggest factory—responsible for one-fifth of U.S. formula—and issued a voluntary recall while food-safety regulators investigated a possible deadly contamination. The company said Monday that it reached an agreement with the FDA to reopen the Sturgis, Mich., plant. But it has said it would take two weeks to restart production, then six to eight weeks after that before new formula would hit store shelves.

On Wednesday, President Biden invoked the Defense Production Act, which will require suppliers to send ingredients to infant-formula makers before other customers.

The White House also directed government agencies to use Department of Defense commercial aircraft to pick up from overseas infant formula that meets U.S. standards."

"The Agriculture Department’s WIC program has deepened the hold that major manufacturers such as Abbott have over formula sales, in effect reducing the number of brands on offer. 

About half of the baby formula sold in the U.S. is purchased through the WIC program, according to the Biden administration. Under the program, which is federally funded but administered by states, states award exclusive sales contracts to a single formula manufacturer in exchange for discounts.

WIC program participants are required to use their vouchers for formula made by the winning manufacturer, dramatically increasing that company’s market share in a given state, while also boosting sales to non-WIC consumers because stores tend to stock and display the WIC brand."

"Due to the large portion of formula bought by WIC participants, stores offer WIC brands more shelf space and better product placement, according to the USDA. Participating stores are required to keep a minimum amount of the WIC formula brand in stock, and because smaller grocery stores have limited shelf space, those stores may stock the WIC brand exclusively.

Many hospitals have begun mirroring the federal program, contracting with just one formula manufacturer to get bulk discounts"

"While WIC’s design helps keep costs down for taxpayers, Dr. Abrams said it can exacerbate shortages in the event of supply-chain problems by offering a single WIC brand dominance in a given state."

"A 1980 law governing infant formula established high regulatory hurdles, beyond typical FDA requirements for other foods. Manufacturers seeking to create new formula brands must submit to the FDA detailed explanations for how their products are developed, studies regarding the nutrients included, details of quality-control measures in the manufacturing facility and more. The FDA then inspects the facility, observes the production process and collects samples for nutrient and microbiological analyses, the agency said."

"Regulatory hurdles also mean little formula comes into the country from abroad, although the U.S. eased some rules this week. The U.S. typically produces about 98% of formula consumed domestically, according to the FDA. Some formula is imported from Mexico, Ireland and the Netherlands, the FDA said, though some shipments are subject to strict FDA labeling and other requirements."

"U.S. Customs and Border Protection officers last year seized hundreds of cases of infant formula arriving from Germany and the Netherlands that the government said violated FDA import safety regulations."

"Because baby formula is a bulky, relatively low-price product by weight, formula makers’ bids for truck space are less competitive than producers of consumer electronics or other goods."

"Demand for baby formula has increased in recent months as U.S. birthrates ticked up slightly last year while breast-feeding rates have seemed to decline"

Primitive communism: Marx’s idea that societies were naturally egalitarian and communal before farming is widely influential and quite wrong (plus Ruth Benedict on property rights)

By Manvir Singh. He is an anthropologist and postdoctoral research fellow at the Institute for Advanced Study in Toulouse. Excerpts:

"It was on that first trip that [anthropologist Kim] Hill saw the Aché share their meat. A man returning from a hunt dropped an animal in the middle of camp. Another person, the butcher, prepared piles for each family. A third person distributed. ‘At the time, it seemed kind of logical to me,’ Hill said. The scene reminded him of a family barbecue where everyone gets a plate.

Yet the more he lived among the Aché, the more astonishing food-sharing seemed. Men were forbidden from eating meat they’d acquired. Their wives and children received no more than anyone else. When he later built detailed genealogies, he discovered that, contrary to his expectations, bandmates were often unrelated. Most importantly, food-sharing didn’t just happen on special days. It was a daily occurrence, a psychological and economic centrepiece of Aché society.

What he started to see, in other words, was ‘almost pure economic communalism – and I really didn’t think that was possible.’"

"In 1985, he started working with another group, the Hiwi of Venezuela. He didn’t expect dramatic differences from the Aché. The Hiwi, too, were hunter-gatherers."

"Then, there was food-sharing. In the primitive communism of the Aché, hunters had little control over distributions: they couldn’t favour their families, and food flowed according to need. None of these applied to the Hiwi. When meat came into a Hiwi village, the hunter’s family kept a larger batch for themselves, distributing shares to a measly three of 36 other families. In other words, as Hill and his colleagues wrote in 2000 in the journal Human Ecology, ‘most Hiwi families receive nothing when a food resource is brought into the village.’

By exercising control over distributions, hunters convert meat into relationships

Hiwi sharing tells us something important about primitive communism: hunter-gatherers are diverse. Most have been less communistic than the Aché. When we survey forager societies, for instance, we find that hunters in many communities enjoyed special rights. They kept trophies. They consumed organs and marrow before sharing. They received the tastiest parts and exclusive rights to a killed animal’s offspring.

The most important privilege hunters enjoyed was selecting who gets meat. Selective sharing is powerful. It extends a bond between giver and recipient that the giver can pull on when they are in need. Refusing to share, meanwhile, is a rejection of friendship, an expression of ill will. When the anthropologist Richard Lee lived among the Kalahari !Kung, he noticed that a hunter named N!eisi once ignored his sister’s husband while passing out warthog meat. When asked why, N!eisi replied harshly: ‘This one I want to eat with my friends.’ N!eisi’s brother-in-law took the hint and, three days later, left camp with his wives and children. By exercising control over distributions, hunters convert meat into relationships.

To own something, we say, means excluding others from enjoying its benefits. I own an apple when I can eat it and you cannot. You own a toothbrush when you can use it and I cannot. Hunters’ special privileges shifted property rights along a continuum from fully public to fully private. The more benefits they could monopolise – from trophies to organs to social capital – the more they could be said to own their meat.

Compared with the Aché, many mobile, band-living foragers lay closer to the private end of the property continuum. Agta hunters in the Philippines set aside meat to trade with farmers. Meat brought in by a solitary Efe hunter in Central Africa was ‘entirely his to allocate’. And among the Sirionó, an Amazonian people who speak a language closely related to the Aché, people could do little about food-hoarding ‘except to go out and look for their own’. Aché sharing might embody primitive communism. Yet, Hill admits, ‘the Aché are probably the extreme case.’

Hunters’ privileges are inconvenient for narratives about primitive communism. More damning, however, is a starker, simpler fact. All hunter-gatherers had private property, even the Aché.

Individual Aché owned bows, arrows, axes and cooking implements. Women owned the fruit they collected. Even meat became private property as it was handed out. Hill explained: ‘If I set my armadillo leg on [a fern leaf] and went out for a minute to take a pee in the forest and came back and somebody took it? Yeah, that was stealing.’

Some proponents of primitive communism concede that foragers owned small trinkets but insist they didn’t own wild resources. But this too is mistaken. Shoshone families owned eagle nests. Bearlake Athabaskans owned beaver dens and fishing sites. Especially common is the ownership of trees. When an Andaman Islander man stumbled upon a tree suitable for making canoes, he told his group mates about it. From then, it was his and his alone. Similar rules existed among the Deg Hit’an of Alaska, the Northern Paiute of the Great Basin, and the Enlhet of the arid Paraguayan plains. In fact, by one economist ’s estimate, more than 70 per cent of hunter-gatherer societies recognised private ownership over land or trees.

The respect for property rights is clearest when someone violates them. To appreciate this, consider the Mbuti, one of the short-statured (‘pygmy’) hunter-gatherers of Central Africa.

The Ute of Colorado whipped thieves. The Ainu of Japan sliced their earlobes off

Much of what we know about Mbuti society comes from Colin Turnbull, a British-American anthropologist who stayed with them in the late 1950s."

"his writings still undermine claims of primitive communism. He described a society in which theft was prohibited, and where even the most desperate members suffered for violating property rights.

Take, for instance, Pepei, a Mbuti man who in 1958 was 19 years old and still unmarried. Unlike most bachelors, who slept next to the fire, Pepei lived in a hut with his younger brother. But instead of collecting building materials, he swiped them. He snuck around at night, plucking a leaf from this hut and a sapling from that. He also filched food. He was an orphan after all, and a bachelor, so he had few people to help him prepare meals. When food mysteriously disappeared, Pepei always claimed to have seen a dog snatch it.

‘Nobody really minded Pepei’s stealing,’ wrote Turnbull, ‘because he was a born comic and a great storyteller. But he had gone too far in stealing from old Sau.’

Old Sau was a skinny, feisty widow. She lived a couple of huts down from Pepei, and one night caught him skulking around in her hut. As he lifted the lid of a pot, she smacked him with a pestle, grabbed his arm, twisted it behind his back, and shoved him into the open.

Justice was brutal. Men ran out and held Pepei, while youths broke off thorny branches and thrashed him. Eventually Pepei broke away and ran into the forest crying. After 24 hours, he returned to camp and went straight to his hut unseen. ‘His hut was between mine and Sau’s,’ wrote Turnbull, ‘and I heard him come in, and I heard him crying softly because even his brother wouldn’t speak to him.’

Other foragers punished stealing, too. The Ute of Colorado whipped thieves. The Ainu of Japan sliced their earlobes off. For the Yaghan of Tierra del Fuego, accusing someone of robbery was a ‘deadly insult’. Lorna Marshall, who spent years living with the Kalahari !Kung, reported that a man was once killed for taking honey. Through violence towards offenders, foragers reified private property.

Is primitive communism another seductive but incorrect anthropological myth? On the one hand, no hunter-gatherer society lacked private property. And although they all shared food, most balanced sharing with special rights. On the other hand, living in a society like the Aché’s was a masterclass in reallocation. It’s hard to imagine farmers engaging in need-based redistribution on that scale.

Whatever we call it, the sharing economy that Hill observed with the Aché does not reflect some lost Edenic goodness. Rather, it sprang from a simpler source: interdependence. Aché families relied on each other for survival. We share with you today so that you can share with us next week, or when we get sick, or when we are pregnant. Hill once saw a man fall from a tree and break his hip. ‘He couldn’t walk for three months, and in those three months, he produced zero food,’ Hill said. ‘And you would think that he would have starved to death and his family would have starved to death. But, of course, nothing happened like that, because everybody provisioned him the whole time.’

This is partly about reciprocity. But it’s also about something deeper. When people are locked in networks of interdependence, they become invested in each other’s welfare. If I rely on three other families to keep me alive and get me food when I cannot, then not only do I want to maintain bonds with them – I also want them to be healthy and strong and capable.

Interdependence might seem enviable. Yet it begets a cruelty often overlooked in talk about primitive communism. When a person goes from a lifeline to a long-term burden, reasons to keep them alive can vanish. In their book Aché Life History (1996), Hill and the anthropologist Ana Magdalena Hurtado listed many Aché people who were killed, abandoned or buried alive: widows, sick people, a blind woman, an infant born too soon, a boy with a paralysed hand, a child who was ‘funny looking’, a girl with bad haemorrhoids. Such opportunism suffuses all social interactions. But it is acute for foragers living at the edge of subsistence, for whom cooperation is essential and wasted efforts can be fatal.

Once that need to survive dissipated, even friends could become disposable

Consider, for example, how the Aché treated orphans. ‘We really hate orphans,’ said an Aché person in 1978. Another Aché person was recorded after seeing jaguar tracks:

    Don’t cry now. Are you crying because you want your mother to die? Do you want to be buried with your dead mother? Do you want to be thrown in the grave with your mother and stepped on until your excrement comes out? Your mother is going to die if you keep crying. When you are an orphan nobody will ever take care of you again.

The Aché had among the highest infanticide and child homicide rates ever reported. Of children born in the forest, 14 per cent of boys and 23 per cent of girls were killed before the age of 10, nearly all of them orphans. An infant who lost their mother during the first year of life was always killed.

(Since acculturation, many Aché have regretted killing children and infants. In Aché Life History, Hill and Hurtado reported an interview with a man who strangled a 13-year-old girl nearly 20 years earlier. He ‘asked for our forgiveness’, they wrote, ‘and acknowledged that he never should have carried out the task and simply “wasn’t thinking”.’)

Hunter-gatherers shared because they had to. They put food into their bandmates’ stomachs because their survival depended on it. But once that need dissipated, even friends could become disposable.

The popularity of the idea of primitive communism, especially in the face of contradictory evidence, tells us something important about why narratives succeed. Primitive communism may misrepresent forager societies. But it is simple, and it accords with widespread beliefs about the arc of human history. If we assume that societies went from small to big, or from egalitarian to despotic, then it makes sense that they transitioned from property-less harmony to selfish competition, too. Even if the facts of primitive communism are off, the story feels right.

More important than its simplicity and narrative resonance, however, is primitive communism’s political expediency. For anyone hoping to critique existing institutions, primitive communism conveniently casts modern society as a perversion of a more prosocial human nature. Yet this storytelling is counterproductive. By drawing a contrast between an angelic past and our greedy present, primitive communism blinds us to the true determinants of trust, freedom and equity. If we want to build better societies, the way forward is neither to live as hunter-gatherers nor to bang the drum of a make-believe state of nature. Rather, it is to work with humans as they are, warts and all."

Singh's article reminded me of a passage about the Kwakiutl from Ruth Benedict's book "Patterns of Culture." Click here to go to a link that has her entire book online. It indicates that they may have had strong property rights

"The tribes of the North-West Coast had great possessions, and these possessions were strictly owned. They were property in the sense of heirlooms, but heirlooms, with them, were the very basis of society. There were two classes of possessions. The land and sea were owned by a group of relatives in common and passed down to all its members. There were no cultivated fields, but the relationship group owned hunting territories, and even wild-berrying and wild-root territories, and no one could trespass upon the property of the family. The family owned fishing territories just as strictly. A local group often had to go great distances to those strips of the shore where they could dig clams, and the shore near their village might be owned by another lineage. These grounds had been held as property so long that the village-sites had changed, but not the ownership of the clam-beds. Not only the shore, but even deep-sea areas were strict property. For halibut fishing the area belonging to a given family was bounded by sighting along double landmarks. The rivers, also, were divided up into owned sections for the candlefish hauls in the spring, and families came from great distances to fish their own section of the river."

A Barter Game To Teach The Value Of Money As A Medium Of Exchange (and maybe spontaneous order?)

I created a barter game that I use in class. Each student gets a handout that lists 10 items that they own and ten items they need to get. Every trade has to be one item for one item. The students also get a sheet to record each trade they make. I set the time limit at around 20 minutes and they get extra credit for each item on their want list that they end up getting.

The table at the end of this post first shows the items they each own at the start of the game and then shows the items they need to get. What every player has and needs to get is different. There are only 12 unique players. So if more than 12 students show up, I start giving out player sheets that duplicate some that are already being used. Those students are probably in competition with each other and so may have a harder time than others. But I am not sure how to avoid this since I don't know ahead of time for sure how many students will show up. The game is set up for 12 players and, theoretically, they should all be able to trade for what is on their want list. If I set it up for more players, say 20, and not enough students showed up, then some students will have a hard time finding items on their list since the player sheet that has the items they need will not be in the game.

The link below will take you to a PDF file that has the 12 record sheets for each player. Each one has a table to record all the trades they made. Underneath that on each sheet is a table that shows the 10 items they start with ("Has") and then a list of the 10 items they want. My rules say that every trade is one item for one item (and Vitamins, for example, counts as just one item).

 

BarterRecordSheets.pdf.

 

One issue is how hard to make the game. In the real world, if you had to rely on barter, you would probably have to make several trades before you got what you wanted (like trading good A to get good B, then trade B to get C, and finally trade good C to get good D). So I tried to set things up so that it would be hard to get some goods on your want list (requiring several trades) while others would need fewer trades to get.

For example, using the information from the table below, player #1 could make the following trades

Apple for Blender with player #11
Blender for Belt with player #9
Belt for Bed with player #7
Bed for Baseball with player #5
Baseball for Bag with player #3

Bag is on the want list for player #1. This takes 5 trades, quite alot of work (one issue in setting up these tables is that I have to make sure some of the other goods that each player has or wants can't be used-for example, in the case above, what if player #3 wanted a bottle-then he could trade his bag to player #1 for the bottle and only one trade needs to take place-this would make the game too easy).

In this example, player #1 has to make 5 trades. But the other players only make one trade, getting an item they want from player #1, so the game won't always be that hard. The story above involving player #1 finally getting his bag works for him getting his bottle and checkers. He would make 5 trades with those same five players involving other goods.

In this next case, player #1 only has to make three trades

Desk for Drums with player #4
Drums for Folder with player #7
Folder for Fries with player #10

Something similar would happen with the glove and lock.

In this next case, player #1 only has to make two trades

Organ for Phone with player #5
Phone for Plates with player #9

Something similar would happen with the radio and socks.

In the last case, only one trade has to be made. Player #1 trades his turkey to player #2 for his TV. Then players #3 & #4 can make just one trade to get a good. The same is true for the rest of the pairs of players.

So some trades are easy and others harder. Students have to walk around and find people to trade with. It does not take them long to realize that they have to form little groups and discuss what everyone has and wants. Then someone starts saying things like "if you trade me A for my B then you can trade B to get C from this other guy, which is on your list." This happens spontaneously, without me, the teacher, telling them to do this. What at first glance seems like it would be very disorganized or chaotic, ends up going fairly smoothly with quite a bit of cooperation. Often if someone says "I need good A" another student will say "that guy Joe over there has good A" or "you have good C? that woman over there needs it." Again, that is done voluntarily, without any direction from me. So an orderly process emerges without my directing it (I've see scalpers at sporting events try to find other scalpers who might have what you want if they don't).

I do tell them at the beginning that they will often have to make several trades to get what they want, but that is it. Then I just say "start trading" and give them a five minute warning before time is up. I might remind them during the game that if they trade for a good that they now own it and can trade it for something they want.

Once the game is over, I ask them questions such as "how would you like to do something like this every time you go to the store?" No one says yes because they just experienced how hard that would really be. It is much easier getting what you want with money.

1	Apple	Bottle	Checkers	Desk	Glove	Lock	Organ	Radio	Socks	Turkey
2	Backpack	Bread	Cheese	Dog	Guitar	Magazine	Pen	Raisins	Soda	TV
3	Bag	Burger	Chicken	Door	Hammer	Map	Pencil	Rake	Spoons	Umbrella
4	Banana	Cake	Coat	Drums	Hat	Matches	Pepper	Rope	Straws	Vase
5	Baseball	Candles	Coffee	Fish	Honey	Milk	Phone	Rug	Sugar	Violin
6	Basketball	Candy	Comb	Flute	Ice Cream	Mirror	Piano	Ruler	Syrup	Vitamins
7	Bed	Car	Compass	Folder	Iron	Mustard	Pie	Salt	Table	Wagon
8	Beer	Carrot	Computer	Football	Jelly	Napkins	Pillow	Screwdriver	Tape	Wallet
9	Belt	Cat	Corn	Forks	Juice	Newspaper	Plates	Shirt	Tea	Watch
10	Bike	Cereal	Couch	Fries	Ketchup	Notebook	Popcorn	Shoes	Toothbrush	Wine
11	Blender	Chain	Crackers	Frisbee	Knives	Nuts	Printer	Shorts	Towel	Wrench
12	Book	Chair	Cups	Glasses	Light Bulbs	Oranges	Puzzle	Shovel	Trumpet	Yogurt
1	Bag	Burger	Chicken	Fries	Ketchup	Notebook	Plates	Shirt	Tea	TV
2	Banana	Cake	Coat	Frisbee	Knives	Nuts	Popcorn	Shoes	Toothbrush	Turkey
3	Baseball	Candles	Coffee	Glasses	Light Bulbs	Oranges	Printer	Shorts	Towel	Vase
4	Basketball	Candy	Comb	Desk	Glove	Lock	Puzzle	Shovel	Trumpet	Umbrella
5	Bed	Car	Compass	Dog	Guitar	Magazine	Organ	Radio	Socks	Vitamins
6	Beer	Carrot	Computer	Door	Hammer	Map	Pen	Raisins	Soda	Violin
7	Belt	Cat	Corn	Drums	Hat	Matches	Pencil	Rake	Spoons	Wallet
8	Bike	Cereal	Couch	Fish	Honey	Milk	Pepper	Rope	Straws	Wagon
9	Blender	Chain	Crackers	Flute	Ice Cream	Mirror	Phone	Rug	Sugar	Wine
10	Book	Chair	Cups	Folder	Iron	Mustard	Piano	Ruler	Syrup	Watch
11	Apple	Bottle	Checkers	Football	Jelly	Napkins	Pie	Salt	Table	Yogurt
12	Backpack	Bread	Cheese	Forks	Juice	Newspaper	Pillow	Screwdriver	Tape	Wrench

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