Princeton in the nation's service: What does that mean?

In yesterday's commentary on Boutique Medicine, I described two extreme ideological visions for our health system: the egalitarian and the libertarian vision. The first of these appealed to a generation of Americans that had suffered the Great Depression and the vagaries of Word War II. The experience drove home to them the idea that good economic fortune in life really is mainly just that, good luck, and that the spoils of good fortune should be shared with the less fortunate. In that spirit they embraced the Social Security System, the GI Bill, the Medicare program for the elderly, the Medicaid and welfare programs for the poor and the more ambitious War on Poverty. During the 1960s and 1970s, they spoke boldly of going on to introduce to the U.S. the comprehensive, universal health-insurance long taken for granted by citizens of all other industrialized nations.

The politically dominant mass of their children and grandchildren, however, tend to lean more toward the libertarian vision. That preference seems to be based on the assumption that good luck plays but a minor part in a person's place in the income distribution — that ours is a genuine meritocracy. That libertarian credo, in turn, has strong intellectual roots in the economic profession's "marginal productivity theory," which has been hammered into the minds of millions upon millions of college students by thousands upon thousands of economics professors all across the land.

According to this theory, one's position in the nation's income distribution reflects mainly one's own marginal contribution to society. At the deft hand of economists, the marginal productivity theory is made to embrace even the social contribution made by a person's monetary wealth, be it inherited or however else begotten. For example, if a person inherits $100 million and invests them in the economy, her or his marginal social contribution will be judged by economists to exceed by many multiples that of, say, a 2nd lieutenant in the 101st U.S. Airborne Division standing guard in Afghanistan (or of a firefighter standing ready daily to risk his life for fellow citizens). It is so, say economists, because the marginal social contribution made by the millionaire's capital is judged by "the American people" (i.e., "the market") to be far above the soldier's salary of $25,000 or so, which is the valuation put upon the soldier's marginal social contribution by the United States Congress, ostensibly the representative of the American people.

The economist's marginal productivity theory morphs smoothly into the libertarian's ethical doctrine that the prevailing pretax distribution of income in the nation is just, and that tinkering with it through taxes and transfers is unjust. Furthermore, among many Baby Boomers and GenXers the theory has led just as smoothly to the proposition that well-to-do Americans and their offspring — that is, families assumed to have made larger social contributions — "deserve" superior access to the nation's three basic human-services sectors: justice, education and health care. Boutique medicine and the rationing of health care by income class is merely a natural (and rather innocent) expression of this social ethic, as is a system of justice in which, de facto if not de jure, personal wealth remains the best legal defense against execution for murder.

All of which confronts young Princetonians with the somber question what to make of this university's much-mouthed slogan: "Princeton in the Nation's Service." What do its mouthers actually have in mind? In his Inaugural Address, President John F. Kennedy famously exhorted America's youth: "Ask not what your country can do for you, but what you can do for your country." In his recent State of the Union Address, President George W. Bush spoke movingly of the virtue of "volunteerism." Concretely, what do all of these mellifluous slogans actually mean for the average graduating Princetonian?

Literally as if on cue, Harvard University's much celebrated economics professor Robert J. Barro has provided the economist's answer to this question in his regular column in Business Week (February 25, 2002; p. 30). Taking sharp issue with President Bush's embrace of volunteerism in his State of the Union address, economist Barro advises that as a general tendency, it is better if people operate from self-interest than from a desire to serve the public good. So, volunteer work may be a route to self-fulfillment, but it is not an especially great thing for society.

To be sure, any ECO 102 professor worth his or her pay can swiftly reduce Barro's dictum to a mere tautology, because the altruistic pursuit of self-fulfillment through volunteer work — or through voluntary military service — is styled in economic theory as just another pursuit of self-interest. In the economist's eyes, altruists merely trade cash income for the psychic income they derive from their altruistic acts. Perhaps then Princeton's, Kennedy's and Bush's exhortations mean that, for the sake of America, young people should be willing to trade some cash income for the psychic income that comes from modestly paid service to the nation?

Alas, the psychic income earned through altruistic service to the nation cannot be taken to the bank, nor does it buy health care, a good education for one's children or justice before the bar. To think about their alma mater's or President's felicitous slogans, then, young Princetonians might put themselves into the shoes of parents whose youngster, about to graduate from Princeton, is contemplating a choice between, say, investment banking or voluntary military service. How many parents would, in good conscience, encourage their offspring to serve America in military uniform, rather than as an investment banker? "Remember," a parent might counsel the offspring, "you are asked to make this choice in a nation that increasingly judges a person's social contribution mainly by the monetary wealth he or she manages to accumulate, a nation that thinks nothing of housing thousands of soldiers and their families in substandard dwellings (The New York Times, February 25, 2001; p. A30) and that seems ever more bent upon marching to the tune of social ethic according to which the children of a wealthy investment banker "deserve" a better education, "deserve" superior access to justice, "deserve" better housing and, yes, "deserve" better health care than do the children of a probably much less opulent current or former soldier."

Can anyone really take issue with this advice? Uwe Reinhardt is the James Madison professor of Political Economy. He can be reached at reinhard@princeton.edu.