Worth remembering:
Norms matter. People work for money. But people also work for status, and people work because they take pride in a job well done. Ideas about what kinds of financial success merit high status and what kinds of jobs constitute a job well done are important. A doctor who bragged to you at a party about scoring a great deal on season tickets is doing something very different from a doctor who brags to you at a party about scoring season tickets after swindling a woman out of a bunch of money for unnecessary medical treatments. A doctor isn't supposed to be hustling patients. Everybody knows that.I think that this tendency to neglect the focus on norms has been the major cost of having a very legalistic culture. I remember this point being brought up in terms of the ability to "discover money" by acquiring a firm and then abandoning all of the previous cultural norms. If it isn't written down then it doesn't count. You might have joined ABC chemicals because they had a culture of being understanding when your children were sick. But the new owners don't care that you took a lower salary because of this -- they ask if you have anything in writing.
So we now need everything in writing. But how do you run a culture with such low levels of trust?
At a higher level, this is also a problem with the Randianism that has infiltrated our culture. If you use money as a marker of worth, the doctor who swindled a patient (in the exmaple above) is actually morally superior . . . so long as they can't be sued. How can this be a good way to govern interpersonal interactions?
Freshwater economists have been extremely hostile to the role that social norms and other cultural factors play in influencing behavior and the quality of their models have suffered as a result.
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