Money and Markets: Essays in Honor of Leland B. Yeager

216 Randall G. Holcombefreedom to attain other goals, because their happiness would be enhanced bythe trade.This raises the question of how we would know that people’s happiness wasenhanced by trading away some of their liberty. The contractarian answer is thatwe could judge that the trade-off was utility-enhancing for them if they agreed to it.This raises the question of what one means by agreement, but I set this asidebecause Yeager (2001: 210) also does. While Yeager argues that the utilitarianshould lay out his arguments about why he believes a policy will enhance people’swell-being, “His job is not to impose his views on anyone” (2001: 210). Thus,starting from the principle of liberty – derived through indirect utilitarianism – onereason to deviate from that principle would be that people agree that their wellbeingwould be enhanced by such a deviation. That is, there is a contractarianjustification for deviating from the principle of liberty that is consistent withYeager’s utilitarianism.Might there be other reasons? Yeager argues that sometimes people may notknow their own interests, or that people do not do a good job of judging how muchthe welfare of one individual should be sacrificed for the benefit of others. Thus,agreement cannot be the final determinant of what is collectively beneficial.Utilitarians must here make their best judgments and try to persuade others of theirarguments. Thus, it appears to me 7 that as Yeager himself argues, there are butrhetorical differences between his utilitarianism and contractarianism. Both theutilitarian and the contractarian argue that their policy recommendations willenhance the social welfare because if people knew their own interests (what wouldenhance their happiness, or what they would agree to from behind a veil ofignorance, or in a renegotiation from anarchy), they would favor the policies theutilitarian or contractarian advocates.Yeager (2001: 227–30) defends utilitarianism against the claim that it is vacuous,noting that critics argue that “Utilitarianism is called plastic or vacuous or tautological,evading challenge by transforming itself or wriggling away. In this respect itresembles its own criterion, ‘happiness’” (2001: 227). One bit of evidence Yeageroffers that utilitarianism is not vacuous is that there are many rival doctrines, and“If some of these doctrines, instead of being utilitarianism in disguise, turn out to beirreconcilable with it, that very fact helps to refute the charge that utilitarianism isvacuous” (2001: 230). As a philosophical foundation for ethics, this is true, but theproblem I see with Yeager’s utilitarianism is that for purposes of policy espousal itsrecommendations are so vague that one can come up with a utilitarian justificationfor just about any policy. Two Yeagerian utilitarians could argue with each otherabout a policy, one saying that the policy would further human happiness and theother arguing it would not.Consider an example related to one Yeager (2001: 114) raises. Mirrlees (1971)presents a model of optimal redistribution through income taxation where peoplehave identical utility functions, but some are more productive than others. Thus,the productive people have a comparative advantage in producing income, andwhile nobody has an absolute advantage in producing utility through spending