Human Dignity and the Principle Of Trade

Every July, I draw inspiration from some of the best and brightest high school students. They come with big dreams to the two-week residential Snider Enterprise & Leadership Fellows (SELF) program at the University of Maryland.

At the cusp of adulthood, each participant is armed with a vision of making the world a better place by solving problems they find personally meaningful.

Quentin, a senior from Amherst, Ma., loves math and aspires to provide useful information through a career in analytics.

Emem, a senior from Beltsville, Md., prefers design. She recently switched her professional ambitions from medicine to visual marketing to align better with her abilities.

Priya, a senior from Laurel, Md., is drawn to science. She dreams of becoming a pediatrician, and watching happy, healthy kids playing in a park.

Former executives of France Télécom, previously a state-owned company that now operates privately as Orange, have more modest goals. As they await the verdict in a high-profile criminal trial, they just want to stay out of jail.

An ocean of difference separates the Maryland classroom and Paris courtroom. But the concurrent events illustrate important lessons about human dignity and the principle of trade.

Fellows in the SELF program experience the trader principle through a game involving Kit Kats, Hershey’s Kisses and other treats. They start with a randomly assigned allotment of candy and try to improve their situation through exchange, first within groups and then more broadly with anyone in the room.

After each round, something wonderful happens. The perceived aggregate value goes up, even though the amount and variety of candy in the room stays the same.

Voluntary trade enables each participant to swap less desired items for alternatives more suited to their tastes. As the “benevolent planner,” I lack information about individual preferences, but I allow participants to sort things out for themselves.

Students get the connection between choice and enhanced satisfaction, but they also understand that life does not hinge on candy.

I raise the stakes by asking them to imagine a system where master planners dole out jobs rather than treats and then restrict freedom to choose, experiment and move across careers.

I sense each individual viscerally recoil at the notion of such a dystopian world.

Quentin with his analytical mind shudders at the thought of being trapped in a sales career. Emem with her artistic flair flinches at the idea of being stuck reading spreadsheets. And Priya with her passion for science slumps in her chair at the prospect of not being able to deliver quality care to children.

All quickly note that productivity would drop at the individual, organizational and societal levels due to the lack of alignment with aspirations and abilities.

These young adults could cope short-term with imposed jobs. But they would suffocate if society forced them to live somebody else’s dream for a minimum of 40 hours a week, 48 weeks a year for the next 50 years.

As humans, dignity depends on the freedom to choose what projects to work on, with whom and how. This is true for employees and employers alike.

"A trader does not treat others as masters or slaves, but as independent equals," Ayn Rand writes. “He deals with men by means of a free, voluntary exchange — an exchange which benefits both parties by their own independent judgment."

Following the trade activity, I left the classroom personally fueled by the focused energy and attention of all 35 students.

The very next day, I read about the French case. The article depicted the same dystopia I had just described to my students as hypothetical, and I experienced the same visceral reaction as them.

The former executives of Orange stood trial for “moral harassment” following allegations that they willfully made employees’ lives as miserable as possible in a scheme to drive resignations and reduce labor costs.

Feeling unbearably stuck in the hostile environment, 35 employees committed suicide.

I do not condone the actions of the former executives. As someone who studies enterprise and markets, however, my reaction stems from something not on trial in France: An underlying system that thwarts mobility.

Rather than allowing people to move freely, France sets up its state workers as employees for life.

The idea is to protect workers from unemployment and preserve their dignity. Unfortunately, efforts to enforce stability of current jobs cut both ways. Rules against firing also mean less hiring because positions rarely come open.

My research with Evan Starr at Maryland and Justin Frake at Michigan shows that in labor markets with higher levels of constrained workers, even those who are unconstrained receive lower job offers, are less likely to move, and have lower wages.

People cling to their positions whether they like them or not because they have nowhere to go.

Executives with limited power to restructure their organizations also grow frantic. As market conditions change, they need the ability to hire, fire and reassign workers to keep pace with evolving customer demand.

In the case of Orange, laws against layoffs contributed to $50 billion in debt as sales lagged. The former executives got desperate, and now they face charges of corporate murder.

The SELF students have learned how to become the CEO of ME, Inc. They have defined their purpose, set a strategic course and are taking ownership of their lives.

But without trade, they cannot succeed. The economy will stagnate, mobility will cease and dreams will die.

Ultimately, lack of exchange robs humans of their humanity. The people in France deserve better. And so do Quentin, Emem and Priya.

This article originally appeared in Forbes.com. It is reprinted with permission of the author.

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Rajshree Agarwal

Rajshree Agarwal is the director of the Ed Snider Center for Enterprise and Markets at the University of Maryland’s Robert H. Smith School of Business and a Cato adjunct scholar.

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