You Can't Take it With You
By Amy Willis
In this week’s episode, EconTalk host Russ Roberts and Stanford University economist Ran Abramitzky explore the economic mystery of kibbutzim, communities in Israel that for many years were based on full equality in income. The greatest mystery of the kibbutz, according to Roberts, is just why that have lasted as long as they have. Calling Abramitzky’s book, The Mystery of the Kibbutz, a fantastic example of applied microeconomics, Roberts also praises the book’s illustration that economics may be about more than just incentives.
Though much has changed in kibbutzim today, there is still a lot we can learn from these radical experiments in “voluntary socialism.” What would an economist today have advised the founders of the kibbutzim nearly a century ago? (Or what would George Stigler have thought of Wikipedia, as Russ mused during the conversation?) How do you inculcate ideals in a community’s members that will prevent problems of free-riding? What happens when opportunities outside the community become ever more attractive, as has been the case in Israel? Would you- or have you- ever lived on a kibbutz?
1- What sort of social sanctions and peer pressure were used to replace market signals in the kibbutzim, and how have these practices evolved since their founding? To what extent can such practices be “scaled up?” (Roberts reminds us here of the work of Elinor Ostrom…)
2- What does Abramitzky mean when he says toward the end of the conversation that if you’re like him, “you risk seeing kibbutzim everywhere?”
3- What did you conclude about the role of education in the kibbutzim from this week’s conversation? Abramitzky bemoans the lack of success in educating the same ideals of the founders into the second and third generations. He said, “They could not inculcate in their children and grandchildren a romance that would help overcome the incentives that make it challenging.” … “And they had total control over the education of these kids. They had limited understanding of what was going on outside. And yet they still struggled to make it appealing for those future generations.” So what went wrong? To what extent is it possible to uphold ideals via education generally?
4- Abramitzky asks, “Why do we have such high status for derivative traders and not for nurses?” How would you answer this question? Roberts notes that many economists would call this choice (that is, derivatives trading over nursing)”inefficient.” To what extent is that true? Abramitzky muses, “I can imagine a world in which encouraging you to study something with high social value but low private value actually increases the size of the pie.” How might incentives be realigned so that “caring” professions (nursing and teaching) attracted the most talented and made the “pie” bigger?
5- Related to the question above, Abramitzky claims,”one way in which kibbutzim were successful is exactly–it’s a higher status to be a nurse that is so smart that you knew that she could have been a derivative trader, but chose to be a nurse instead. How amazing is that? As opposed to just go for something that is really only mostly beneficial for you…” To what extent would former EconTalk guest Will MacAskill agree that choosing to be a nurse is the more socially beneficial choice? With whom are you more inclined to agree, and why?