Does socialism cause dishonesty?

Here’s an interesting natural experiment.

For external, historical reasons, workers in one half of a culturally and linguistically unified but politically divided country had the right to organize unions to defend their interests against employers, while in the other half of that country workers’ organizations were state-controlled in the interests of management, and genuine union activity was punished by firing if not worse.  After that country was reunified, randomly chosen people from the union half and the non-union half were subjected to a standard psychological test measuring the propensity to cheat.  Those who had grown up under conditions were ordinary people could defend themselves openly from oppression by their bosses turned out to be more honest than their peers from the non-union part of the country.

Conclusion: Unionization makes people behave well, while union-busting makes them behave badly.

Of course, it’s not an entirely clean experiment. The non-union side (East Germany) was under foreign control, with a secret-police network that recruited as much as one-third of the population as informants. So possibly dishonesty is caused by living in a world of fear and distrust, rather than by the absence of workers’ rights alone.

Worse than that, the non-union half was systematically looted by the occupying power, while the union half was treated much better by its conquerors and became rich. So maybe it’s scarcity, rather than or in addition to denial of workers’ rights, that makes people dishonest.

Still and all, the result is what it is: a strong labor movement is associated with improved morality.

Only somehow that’s not the conclusion the authors of the study (including Dan Ariely, a perominent behavioral economist and the author of a good semi-popular book on the subject, Predictably Irrational) decided to draw. Instead, they focused on the fact that West Germany had, alongside wealth, the rule of law, personal freedom, and a strong trade-union movement, a primarily market-based economy, while East Germany was under the Soviet system - what Orwell accurately labeled “oligarchic collectivism” - with arbitrary government, no rule of law, and no respect for human rights; residents could be and were shot for trying to emigrate, and many tried to leave just the same.

Using a definition favored only by Bolsheviki and fans of plutocracy, Ariely et al. elect to call the East German tyranny “socialism,” and pretend that their study shows that living under “socialism” worsens the morals of a population.

Having reached an extreme conclusion from a single poorly-defined case study, Ariely and his colleagues then stop, without trying to test their conclusion out of sample. Sweden, for example, has great personal liberty, honest government, and the rule of law, but much more state ownership of enterprise, more tightly regulated markets, and a far more redistributive tax-and-transfer system than Germany.  Swedes are also (if we restrict our attention to mostly-Lutheran Northern Germany) culturally similar to Germans.

Would Ariely and his co-authors be willing to bet that Swedes are less honest than Germans (or Norwegians, living under a regime closer to German mixed capitalism than to Swedish social democracy)?  If so, I’m happy to take the other end of the bet.

The same applies if we were to compare Israelis raised in explicitly socialist kibbutzim to other Israelis, or  Englishpeople raised before the Thatcher era with those raised after, or Canadians with Americans. (After all, the same people who use the word “socialist” to describe Stalinist tyranny also use it to describe national health insurance.)

Of course in all of those cases one could name other factors that might influence the outcomes. But that’s precisely the point: the same is true of the German case. Yet Ariely and his co-authors seem to think they’ve proven something, and the Economist and Alex Tabarrok (who certainly knows better) at Marginal Revolution and Mark J. Perry at AEI (who may not know better) swallow it whole, without raising a single methodological red flag. “When it comes to ethics, a capitalist upbringing appears to trump a socialist one,” trumpets the Economist, hoping that its readers will vote to help the rich get richer and the poor get poorer while “reforming” union power out of the labor markets.

To call this a “mistake” would, it seems to me, be far too generous. A blunder that extreme only happens when the people making it want to fool themselves and others. It’s an example of what Dan Kahan calls “motivated cognition.”

Do the thought experiment for yourself.   Imagine that the results had come out the other way: say, showing that Chileans became less honest while Pinochet’s minions were gouging out their opponents’ eyeballs and Milton Friedman was gushing about the “miracle of Chile”? How do you think the paper would read, and what do you think the Economist, Marginal Revolution, and AEI would have had to say about its methods? 

I know that some of my libertarian friends consider my views of their movement uncharitable, but honest to God, the combination of high IQ and good formal economics training with great willingness to believe and repeat obvious nonsense that characterizes that group is really hard to take.  Of course con-cons and professional lefties also believe some truly stupid sh*t,  but neither group is as good as the glibertarians at pretending to be Serious Social Scientists.

Here’s a Pro Tip: If you never reach and publish a conclusion that doesn’t support  your prejudices, no one has any reason to take any of your results seriously.