When Less is More

by Russ Roberts on April 27, 2005

in Cooperation, Regulation

My co-host here at Cafe Hayek blogged recently on the question of whether firms should be required to reveal whether call center employees should be required to reveal whether they are taking our calls while living in a foreign land.  Don made the excellent point that location is just one question a caller might care about.  What about religiosity or sexual preference or social habits?  Where should we draw the line on what companies should be forced to reveal?

I want to argue here that most of us prefer trading with people in ignorance.

Hayek’s extended order of human cooperation, the specialization and division of labor that allows millions of strangers to cooperate in serving me a bagel or a pencil or a car would be impossible if we only traded with people we liked or agreed with or found to be of upstanding character.  The beauty of a modern decentralized economy is the willingness all of us have to trade with strangers who we willingly interact with in ignorance. 

One dimension of that ignorance is computational—how could be begin to assemble information on all the people who worked to create any of the products or services I enjoy?  But the second is a different level of practicality.  If I only trade with friends or family or people who I approve of then I will be very poor.

There is a flip side to the right to know as well.  Why should the questioning be only one-way?  When I call American Airlines in search of a lost bag and reach someone at a call center in India, should I be required to provide them information about me that they would be free to act on accordingly?  When I walk into my local dry cleaner, should I be required to reveal my country of origin, religion, political views and so on and have to meet the approval of the owner before he serves me?

That is, I suspect, is not only not required, but against the law.  But most of the time, that law is superfluous.  In America at least, our culture would be offended by an owner who only traded with people he approved of morally, politically and religiously.  Privacy is respected by both buyers and sellers.  The only disclosure requirement is the color of your money (or the validity of your credit card) and the quality of the product that is received in return.

That culture that respects privacy helps produce the extended order of human cooperation that sustains our well-being.

As for the call center guy in India, you can always tell he’s in India by the accent unless he’s an immigrant in Nebraska.  But then again, are you sure it’s OK for someone like myself who lives in Maryland to be served by someone in Nebraska?  Would it not be better to keep all the call center jobs in Maryland?  Or better yet, Montgomery County, where I live?  Or better yet, maybe I should refuse to deal with companies that hire people other than my friends and relatives for call center jobs.  That way lies not just madness, but poverty of the direst kind.

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