11

 

Repugnant, Forbidden . . . and Designed

IT’S ILLEGAL TO sell horsemeat at a restaurant in California. This isn’t some leftover law from the Wild West, when a horse was a man’s best friend. It’s part of the California Penal Code that was enacted by popular referendum—that is, by direct vote—in 1998, long after horses had ceased to be an important part of the California economy. Section 598 of the penal code states in part: “Horsemeat may not be offered for sale for human consumption. No restaurant, cafe, or other public eating place may offer horsemeat for human consumption.” The measure passed with 60 percent of the vote, with more than 4.6 million people voting for it.

This isn’t a law that seeks to protect the safety of consumers by governing the slaughter, sale, preparation, and labeling of animals used for food. It’s also different from laws prohibiting the inhumane treatment of animals, such as the rules on how farm animals can be raised or slaughtered, or the laws prohibiting cockfights.

In fact, it isn’t illegal in California to kill horses; the California law only forbids such killing “if that person knows or should have known that any part of that horse will be used for human consumption.” In other words, you can kill a horse in California and feed it to your dog; just don’t eat it yourself. Ironically, the use of horsemeat in pet food has declined in the face of growing demand in Europe for U.S. horsemeat for human consumption.

 

Repugnant Transactions

 

Let’s call a transaction repugnant if some people want to engage in it and other people don’t want them to.

The kinds of repugnant transactions I’m most interested in are those in which it isn’t easy to specify why some people object to them. Economists say transactions have “negative externalities” if they harm people who aren’t party to the transactions. If your neighbor opens a nightclub and throws loud parties at 2:00 a.m. and the noise wakes you up, that’s a negative externality. It’s easy to understand why you object to those parties, even if everyone who attends them is a consenting adult who happily pays the cover charge and has a great time. Zoning regulations might well prohibit anyone from operating a nightclub where you live, precisely so that you can enjoy quiet nights.

Transactions with obvious negative externalities aren’t my focus here, even though they may be transactions that some people want to engage in and other people don’t want them to. So, for the purposes of this book, I’ll reserve the word repugnant for transactions that some people want to engage in and that are objected to by people who may not themselves experience any direct harm.

Notice that repugnance is different from disgust. There’s no law in California against eating worms or bugs. You can’t find those meals in restaurants either, but that’s because hardly anyone wants to tuck into a plate of fried worms. But California is a state with a population that hails from all over the world, including some places where horsemeat is considered delicious. Indeed, if you search for “boucherie chevaline” or “Pferdefleisch” on Google, you will be directed to gourmet horsemeat butchers in French- and German-speaking parts of the world.

So something can be repugnant in one place but quite all right in another, and repugnant to some people but not others. The reason it’s against the law to eat horsemeat in California is not because no one wants to (in which case the law would serve no purpose), but because some people would like to and other people don’t want them to. Of course, a transaction can also be repugnant but not illegal: in California before the 1998 law was enacted, many people found it repugnant that restaurants were allowed to serve horsemeat.

Sometimes transactions are legal even though repugnant because not enough people find them repugnant to turn that repugnance into law. Other times transactions are legal even though repugnant because it’s too hard to enforce laws against things that enough people want to do, and trying to ban such transactions opens the door to black markets and crime. A classic case is the experience of the United States with banning the sale of alcohol.

In the name of public morality, the United States prohibited the sale of alcohol from 1920 to 1933 via the Eighteenth Amendment to the Constitution. This period, known as Prohibition, proved to be a disaster. It turned out that the national repugnance toward alcohol consumption and addiction wasn’t nearly as deeply or broadly felt as first thought, and Americans quickly turned into a population of lawbreakers and bootleggers, in turn feeding organized crime. In the end, the Eighteenth Amendment was repealed by the Twenty-First Amendment, although a few individual states and counties still retain a variety of restrictions beyond the universal regulations that prohibit the sale of alcohol to minors or driving while intoxicated.

The repeal of Prohibition didn’t just make alcohol legally available; it also knocked the underpinnings out from under the black markets that had provided such a thriving business for criminals. But the criminal organizations that had grown rich under Prohibition moved into other businesses and were a long-lasting reminder of how prohibiting a market is a ham-handed form of market design that doesn’t necessarily achieve even its main objectives.

It may help to explain repugnance to note that some transactions are just the opposite. Let’s call a transaction protected if many people would like to promote it, in the sense that they are eager to protect others’ rights to engage in it, even if they don’t wish to engage in it themselves. Farming by small farmers falls into this category, since farming is subsidized around the world in ways that try to keep small farms viable in the face of encroachment by big (and efficient) agribusinesses.

Both repugnant and protected transactions are in the eye of the beholder. Religious worship is a protected transaction in the United States, enshrined in the First Amendment to the Constitution. But words such as blasphemy, apostasy, and heresy convey the repugnance that some people feel toward the ways other people worship. As I write this in 2014, wars are being waged between followers of different schools of Islam, much as Europe experienced wars over different strands of Christianity in centuries past. Similarly, the American right to own guns, protected by the Second Amendment, is nevertheless a hot political issue in the United States, in tension with gun control proposals related to the negative externalities that guns produce in many American communities.

So repugnance is different in different places, and it can last for a long time. But when it changes, it can change very fast.

One timely example is same-sex marriage. This is a transaction that some people want to engage in—they want to marry each other—and other people think they shouldn’t. In most of the world for most of history, marriage, and the special social and legal status it offers as a protected transaction, was reserved for a man and a woman, or, in polygynous societies, a man and one or more women.

In the United States, same-sex marriage first became legal in a single state, Massachusetts, in 2004. The ban on gay marriage was lifted in Massachusetts by a court ruling that allowing only heterosexuals to get married violated the state constitution’s guarantee of equal protection to all citizens. The Massachusetts court decision is an example of how a legally enforced repugnance was ended quite suddenly.

But same-sex marriage remains an issue about which Americans are divided. As I write in 2014, close to forty states have legalized same-sex marriage or are close to doing so (some through the courts, others through legislation), while a handful of others have actively reaffirmed their laws against it (although these bans may yet be struck down in court). Surveys suggest that repugnance toward same-sex marriage is now concentrated among older voters. So I suspect this repugnance will fade away with time.

When we look back at marriage, however, we can see that changes in repugnance over time go both ways. For example, polygamy, as chronicled in the biblical stories of King David and others, survived in various forms for many years and is still accepted in the Islamic world. But polygamy was forbidden among European Jews more than a thousand years ago, and it is illegal today in every American state. That said, there are dissident communities that openly practice polygamy in Utah and elsewhere, and of course private polygamy no doubt persists. Polygamy advocates have also begun to join the discussion involving the new same-sex marriage laws in order to question laws against plural marriage—suggesting that sometime in the future, history may turn again.

So it isn’t the case that as we get all modern, we just abandon old repugnances. Sometimes we revisit them—or develop new ones.

Slavery is an obvious example of a market that is now repugnant and illegal even where it was once accepted, as it was in the United States. Of course, slavery wasn’t a voluntary transaction as far as the slave was concerned, but today we find servitude so repugnant that a person may not even voluntarily sell himself into slavery or indentured servitude. Yet indentured servitude—term-limited slavery, entered into voluntarily—was once a common way for Europeans to buy passage across the Atlantic to America.

Today all forms of involuntary servitude are forbidden by the Thirteenth Amendment to the U.S. Constitution, ratified in 1865 after a bloody Civil War. It states: “Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.”

Another important repugnance that has changed over time is lending money with interest. For centuries in medieval Europe, the church forbade charging interest on loans and enforced this ban on Christians. For a long time after that, the notion of charging interest continued to arouse repugnance. (Shakespeare devoted a whole play, The Merchant of Venice, to moneylending, and in Hamlet the Bard has Polonius advise Laertes, “Neither a borrower nor a lender be.”)

That situation has obviously changed today, when the banking industry is a prominent part of the global economy (although Islamic law is commonly interpreted as forbidding interest as such). Finance is such a large industry (which can inspire a certain repugnance of its own) that it can be hard to fully appreciate what a giant change in public attitudes took place just a few centuries ago. But it’s worth considering that change, to get some idea of the importance of public attitudes in determining what kinds of markets we allow.

Near the beginning of his long essay The Protestant Ethic and the Spirit of Capitalism, Max Weber quotes Benjamin Franklin on the virtues of responsible lending and borrowing. Franklin’s view was the opposite of Polonius’s: he felt that responsible borrowing and lending were Puritan virtues, and he offered advice about how to use credit responsibly. In 1748 he wrote an essay on the subject entitled “Advice to a Young Tradesman, Written by an Old One.” (Franklin’s essay is most famous for the aphorism “Remember that TIME is Money,” but it also includes the parallel advice “Remember that CREDIT is Money.”) Near the end of his own essay, Weber asks, “Now, how could activity, which was at best ethically tolerated, turn into a calling in the sense of Benjamin Franklin?”

Because markets are usually enmeshed in a web of connections to other markets, changes in repugnance can have far-reaching effects. For instance, evolving attitudes toward debt and involuntary servitude interacted with each other to change how we think about bankruptcy. In colonial America and the early years of the Republic, insolvent debtors could be imprisoned or sentenced to indentured servitude. But as involuntary servitude became more repugnant and debts less repugnant, bankruptcy laws were rewritten to be less punitive toward debtors.

The interconnectedness of markets sometimes allows their participants to avoid particular repugnant transactions but still achieve similar ends. For example, credit markets are very connected to asset markets, which is just to say that people borrow money in order to buy things. And although charging interest on borrowed money is repugnant under Islamic law, charging rent on assets is not. So while a conventional Western savings and loan company might lend you money to buy your house and charge you interest on the loan, in Islamic finance those transactions are sometimes structured so that a bank lends you money to buy a house, assumes part ownership of the house, and then charges you rent.

Just as repugnance toward existing transactions can change over time, new technologies make new kinds of transactions possible, and can in turn arouse new kinds of repugnance. Today it’s feasible to purchase, in some places at least, the whole “supply chain” needed to produce a human birth. You can buy human sperm and eggs, and have the egg fertilized and then brought to term in a surrogate womb. This possibility has given rise to “fertility tourism” among people who are desperate to have children after ordinary methods have failed but who live in countries where surrogacy is illegal, or illegal to pay for. They find their way to countries where legal contracts can be made for these services. India is a big market for surrogate babies, and so, to a lesser extent, is the (more expensive) United States. But even in the United States, the laws vary, and as I write this in 2014, it is fully legal to pay a surrogate in California and many other states, but illegal in New York.

All these examples make clear that some kinds of transactions are repugnant in some places but not in others, and that repugnance can shift over time. Repugnance is very much in the eye of the beholder, and the beholder is observing other people’s transactions. This makes repugnance hard to predict, let alone prescribe.

One common occurrence is that some transactions that may not be repugnant—and may even be protected—when no cash changes hands become repugnant when money is added to the mix. These are worth examining more closely, because they shed light both on repugnance itself and on the different kinds of markets and marketplaces that can, or sometimes can’t, be designed to fill different needs.

 

Cash and Care: Buying Is Sometimes a Repugnant Way to Get Things

 

Some gifts and in-kind exchanges become repugnant once money is brought to the table.

The historical repugnance toward charging interest for loans seems to fall into this class, as do prohibitions on paying birth mothers of children put up for adoption and perhaps even on prostitution. Loans, adoption of children, and love are widely regarded as good things when offered freely, even when their commercial counterparts are regarded negatively.

We can all identify at least some occasions when we would agree that cash is inappropriate. For example, dinner guests at your home may reciprocate in kind by bringing wine or inviting you to dinner in return, but they would likely not be invited back if they offered to pay for their dinner.

Debates about what can be bought and sold for money touch on some of the most fundamental issues of democracy. We’re pretty sure that votes shouldn’t be bought outright, but we have considerable disagreement about what the role of money should be in political campaigns and decisions. During the Civil War, soldiers drafted into the Union army could pay substitutes to serve for them, but it was harder to avoid conscription for America’s wars in the twentieth century.

At the end of the Vietnam War, the United States abolished conscription altogether and today has an all-volunteer force. Those volunteers are attracted to serve partly through improvements in the pay and benefits that come with military service, as well as by their sense of duty, patriotism, and adventure. Critics argued that this would result in the ranks of our armed forces being filled by low-income citizens who, practically speaking, had little choice, while wealthier citizens would be free to ignore their traditional duty to their country. Opinions may differ on how much this has come to pass, but the fears that it would be the very poorest of the poor who served have not been realized; not everyone who might like to join can qualify, and it’s a badge of honor to serve. I’ll come back to this in a moment.

To return to the question of kidney sales, virtually no one objects to kidney donation for transplantation. But many people clearly regard monetary compensation for organ donation as a very bad idea, maybe even the kind of bad idea that only bad people have.

Such concerns about the monetization of transactions seem to fall into three principal classes.

One concern is objectification, the fear that the act of putting a price on certain things—and then buying or selling them—might move them into a class of impersonal objects to which they should not belong. That is, they risk losing their moral value.

Another fear is coercion, that substantial monetary payments might prove coercive—“an offer you can’t refuse”—and leave poor people open to exploitation, from which they deserve protection.

A more complex concern is that allowing things such as kidneys to be bought and paid for might start us on a slippery slope toward a less sympathetic society than we would like to live in. The concern, often not clearly articulated, is that monetizing certain transactions might not itself be objectionable but could ultimately cause other changes that we would regret. That slide might begin, for example, by reduced public enthusiasm for existing forms of support for the poor and vulnerable in ways that might make them feel that they needed to sell, say, a kidney.

When I speak to diverse audiences about these concerns in regard to kidneys, I find that lots of people nod their heads and think my words summarize why it’s obvious that we shouldn’t allow kidneys to be bought and sold. Another large group gets mad and thinks that people who don’t want to sell kidneys shouldn’t do so—but that they have no business stopping well-informed adults from engaging in an exchange that benefits both sides, that is voluntarily entered into, and that saves lives.

To help the two sides understand each other’s viewpoints, I ask members of the audience to raise their hands if they’re willing to consider carefully regulated sales of live kidneys. Even in a group of economists, not everyone raises his or her hand, and even in a group of noneconomists, some people do. I ask everyone to look around and get a sense of the distribution. Then I ask them, How about carefully regulated sales of live hearts? Selling hearts would, I remind them, kill the seller.

Most hands go down at that point, although there are almost always a few hardy souls who keep their hands up. It’s not that there wouldn’t be some supply, as well as considerable demand, for transplantable hearts: healthy people do sometimes kill themselves, and sometimes others as well, and they might be persuaded, instead, to also save a life and support their survivors financially if they could sell their heart. But most people still think that would be quite a bad idea.

My point is that most people find some transactions repugnant. That’s a reason to treat other people’s intuitions about repugnant transactions with respect, even if they don’t raise and lower their hands at the same moments we do.

 

Repugnance as a Challenge to Market Design

 

What does treating repugnance with respect—even (or especially) other people’s repugnance—mean for market design? In particular, how should we think about a situation in which there are some kinds of transactions that don’t have the support needed to make a market, but for which there’s substantial demand, and which might substantially improve some people’s welfare?

Islamic finance is an example worth recalling. Islamic law forbids charging interest on loans, but people who live in Islamic countries, or who observe Islamic law wherever they live, still need to buy houses and other things, and they don’t necessarily want to wait until they can pay cash. So they have the demand for something that would work like conventional mortgages or loans, even though they don’t want to take out a loan that charges interest. A variety of financial instruments have been invented in response to this demand, which are more or less widely accepted as being compliant with Islamic law. They function somewhat like interest-bearing loans, but instead involve rent, deferred payments, or some other alternative way of structuring the transaction. These financial inventions bring to the Islamic world some of the big benefits that credit has brought to the wider world economy, and some of the hazards as well.

In a somewhat similar way, the widespread repugnance toward cash for kidneys, together with the equally universal shortage of kidneys, presents a big challenge for market design. The only country in which it is legal to buy and sell kidneys from living donor/sellers is the Islamic Republic of Iran. Legal markets were permitted there after the need for kidneys spiked during the Iran-Iraq War. Kidney donor/sellers in Iran also receive exemption from military service. We might be able to learn something of value about designing such markets by carefully studying the Iranian market. (Ironically, you could circumvent the repugnance toward interest on loans in Iran by financing a purchase with the proceeds from the sale of your kidney.)

Kidney exchange is a market design invention that succeeded in increasing the number of transplants through in-kind exchange of a kidney for a kidney, without running afoul of repugnance. Kidney exchange has not only become a standard form of transplantation in the United States, but it is spreading around the world. By U.S. law, a kidney must be a gift, either from a deceased donor or from a living donor.

But kidney exchange by itself doesn’t end the shortage of kidneys. Today there are 100,000 people waiting for a kidney transplant in the United States alone. Meanwhile, we have only enough donated kidneys of any sort to perform about 17,000 transplants a year. That enormous shortfall—which wouldn’t be filled even if every possible deceased donor donated two kidneys—is a heartbreaking reminder that altruistic donation alone is not filling the need.

Consequently, there’s a lively ongoing debate about whether and how kidney donors might be treated more generously. Many doctors, hospitals, foundations, and patients argue that the law should be changed to allow living kidneys to be bought, so that the supply of kidneys can keep up with the demand.

Economists have long been accustomed to the fact that cash payments can fill such gaps by providing incentives to increase supply. Adam Smith, in his book An Inquiry into the Nature and Causes of the Wealth of Nations (1776), famously observed, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” Economists mostly think that allowing some incentives, monetary or otherwise, to be offered for giving someone a kidney could increase the supply of kidneys. In fact, there isn’t much debate about that. So the repugnance toward kidney sales gives us the opportunity to understand repugnance and what it implies for markets in extremis, by looking at transactions that are forbidden even when lives would be saved by allowing them.

The debate, as well as the opposition to legalizing kidney sales, arises from concerns that this increase in supply, even if regulated as carefully as possible, would come with costs—to donor/sellers, to the poor and vulnerable, and to society at large—and that these costs might outweigh even the large benefits from saving many lives. Black markets, run by criminals, provide ample opportunity to see how those costs could be large. In at least some of these black markets, donor/sellers are deceived, coerced, not paid as promised, and almost never provided follow-up medical care. (The quality of the care provided to transplant recipients may also be suspect.) Moreover, black market kidneys are available only to the relatively rich and come from people who are quite poor.

There are also concerns that don’t have to do with measurable costs. For example, a concern that has been expressed by the Catholic Church is that paying for kidneys inherently diminishes human dignity in a way that we should be reluctant to endorse even in a well-run market.

Market design can at least try to address the concerns about the costs that a market could impose on society. Legal markets are safer and easier to regulate than illegal ones. (Buying a bottle of wine today is very different from buying bootleg whiskey during Prohibition.) So it’s worth thinking of market designs that might reduce or avoid the aspects of a market for kidneys that many find repugnant, in order to try to remove some of the barriers to transplantation that condemn many people around the world to early death and send others to illegal black markets, which thrive in many parts of the world.

 

Saving More Lives

 

Here are some preliminary proposals to think about, first about how a market in kidneys might be designed with cash compensation, and then, if that remains illegal, how kidney exchange could be extended to facilitate more transplants without cash compensation.

There has been a good deal of thinking about how some of the worst fears about compensating donors might be avoided with appropriate market design. For example, the concern that only the rich could afford kidneys might be addressed by amending the current outright ban on purchases to allow purchases only by a single authorized government buyer, with the obtained kidneys then being allocated according to the rules that today govern the allocation of deceased-donor organs.

The concern that sellers would be coerced by desperate circumstances could be addressed in part by having a one-year cooling-off period, in which prospective donors would be fully informed of the risks and benefits, as well as pass rigorous physical and mental health tests. And because a kidney transplant saves Medicare more than a quarter of a million dollars compared to continued dialysis, society could afford to pay generously enough that sellers who passed through those rigorous requirements wouldn’t appear to be exploited.

Needless to say, there would be devils in the details. It may help to take a long-term perspective by considering how we would evaluate, twenty or thirty years after making it legal to pay for kidneys, whether legalization had been a good idea. Obviously, we’d want to determine whether the kidney shortage had been alleviated and whether the patients and donor/sellers were healthy and satisfied. We’d also want to know who the donors were and what had become of them. And I think we’d want to assess how both groups were regarded by the rest of society. This last issue is important because, once again, making a market legal doesn’t necessarily remove the repugnance. (Prostitution is legal in Germany, but I’ll bet no one running for political office there boasts of having been a sex worker.)

So what I would look for, twenty years after, is people campaigning for the U.S. Senate with the argument that you should vote for them because they cared enough to sell a kidney and save a life when they were young. That may sound far-fetched, but that’s how Americans today regard the volunteer army. Soldiers are paid, but when they become candidates for political office, they boast about their military service and are honored for it. When we board an airplane at an American airport, uniformed members of the armed services are invited to board first. I’d be glad to line up behind kidney donors, too.

Another sign of success would be a long waiting list—not to get a transplant, but to sell a kidney—with self-help books authored by former donor/sellers bearing titles like The Kidney Donor’s Diet and Exercise Regime: You, Too, Can Qualify.

Could this happen? Maybe, despite our best efforts, people who sold their kidneys would turn out to be poor, and ill, and exploited. It was presumably because of concerns like these that the Thirteenth Amendment made the market for indentured servitude illegal rather than trying to regulate it. And while I’m an optimist about what can be done through careful design and monitoring of a market to fix it if it isn’t working well, I don’t have a similar optimism about being able to successfully change laws that forbid kidney sales just about everywhere.

If cash markets for kidneys remain repugnant, market design still offers ways to expand the pool of possible donors without having to take on that repugnance directly.

For a start, we could learn about the role incentives might play in the decisions of organ donors by experimenting with removing disincentives for donation. Current American law does allow some money to change hands, in the form of paying donors for their housing, travel expenses, and lost wages. However, except in a few limited cases, most American donors bear these expenses on their own. (That’s not true everywhere. In Israel, living kidney donors are now offered forty days’ pay at their current wage, even if they don’t miss that many days of work, and they are promised priority on the deceased-donor waiting list, in case they should ever need a transplant themselves.)

I would be glad to see some careful experiments, perhaps on a state-by-state basis, that would add evidence to the discussion of how donation would respond to payments. Even small payments might make some more donations possible. As with many diseases, kidney disease falls disproportionately on the poor, and so the potential donors for many patients are their spouses and close relatives and friends, who are poor themselves. But while even small payments may allow some donations to go forward, they would likely make only a small difference.

To take a big bite out of the big problem of kidney shortages, we’ll have to do more.

 

Expanding Kidney Exchange

 

Kidney exchange is a good place to start, since it has been successful in increasing the number of donations and transplants without arousing repugnance. Kidney exchange is an in-kind exchange, kidneys for kidneys, a gift for a gift. And as I discussed in chapter 3, a big part of the success of kidney exchange has involved making good use of non-directed living donors to start chains of transplants. Some of those chains have been very long, and the average non-directed donor chain these days yields about five transplants.

But deceased donors are also non-directed, and they aren’t being used to start chains. Not all deceased-donor kidneys would be attractive to patient-donor pairs hoping for a living-donor kidney, but some would be, as many deceased donors were young and healthy right up until a fatal accident.

Right now, each of the approximately 11,000 deceased-donor kidneys that become available each year in the United States produces one transplant. If we could instead include a substantial number of them in chains that would begin with the deceased-donor kidney going to an incompatible patient-donor pair and end with the living donor in such a pair donating a kidney to a person who was waiting for a deceased-donor kidney, we could get a lot more transplants.

Again, the devil would be in the details, because while everyone who is waiting for a kidney exchange is also on the deceased-donor waiting list, those individuals aren’t at the very top of the list—that is, they haven’t been waiting the longest. But if we could get the average deceased-donor kidney to facilitate just two transplants instead of only one, that would be a huge increase in transplantation, which would in turn shorten the wait for everyone.

Another possible solution would be to think about kidney exchange in a global way. There is virtually no kidney transplantation, and little or no access to dialysis, in places such as Nigeria, Bangladesh, and Vietnam, where kidney failure is a death sentence. Presumably, many kidney patients there have willing donors, but in a country such as Nigeria, for example, where fewer than 150 transplants occurred from 2000 to 2010, that willingness doesn’t do patients any good. But suppose we were to offer them access to American hospitals, at no cost?

That may sound expensive, but it wouldn’t have to be—indeed, it could be self-financing. Remember that removing an American patient from dialysis saves Medicare a quarter of a million dollars. That’s more than enough to finance two kidney transplants, as well as postsurgical care and medicines. That money could pay for an exchange between an American patient-donor pair and, say, a Nigerian pair. We could push the envelope further (and perhaps risk arousing some repugnance, but be able to offer transplants to more foreign patients) if the foreign patients and donors would sometimes recruit a non-directed donor to accompany them. In this case, the living-donor surgery on the foreign pair could be financed by the savings on dialysis from a non-directed donation to a chain or to someone on the deceased-donor waiting list in the United States.

I can imagine conditions in which that kind of medical foreign aid would not only save foreign patients who would otherwise quickly perish but also cut the waiting time for kidney transplants in the United States to a fraction of its current, lethal length. It might also radically reduce the demand for illegal black markets. Talk about gains from trade.

 

Black and White?

 

I mention these proposals about kidney exchange partly to stimulate the important discussion of how we could alleviate the shortage of transplantable organs and increase access to kidney transplants. But I also want to use it as an example to emphasize the larger issue that even when thinking about the most difficult markets—those that may arouse our repugnance—we should never forget that markets are human artifacts. Market design allows us to think about how to try to get the benefits of markets to the people who need them.

For a repugnant market, “yes or no” isn’t a black-and-white issue. Because markets are collective enterprises, we can design them but not necessarily control them. This is part of why there is so much sentiment in favor of making some markets illegal rather than trying to design them to circumvent their repugnant aspects. Markets unleash powerful forces, and so, the reasoning goes, if we can’t completely control them, maybe we should ban them altogether when the risks seem high. The fact that laws banning various markets are so widespread means that we can’t ignore repugnance as a constraint on markets.

Nevertheless, banning markets is just one way of trying to control them, and preventing markets is easier legislated than done. Making a market illegal stops legal markets. The markets we try to ban, repugnant markets, are precisely those that some people willingly take part in despite others’ opposition. People wanting to transact with one another is a powerful force. The same force that has made markets an ancient and pervasive human activity also leads to black markets springing up where legal ones are prevented.

As the American experience with Prohibition shows, sometimes banning a market leads to widespread lawbreaking. Prohibition cut Americans’ consumption of alcohol, but at great cost, and not nearly as much as it cut legal consumption. Something similar is going on today with efforts to ban not only narcotic drugs but also marijuana. We speak of a “war” on drugs, and indeed military weapons and assaults are often involved, sometimes against drug operations that control small countries and profoundly disrupt larger ones.

In the United States, drugs remain widely available, while our prisons are full of people swept up in the antidrug war. In California, where I live, marijuana is estimated to be among the top cash crops—in a state that serves an enormous agricultural market and grows more than 10 percent of the country’s legal cash crops.

Some experiments with legalizing various aspects of drug consumption are slowly developing. Two states, Colorado and Washington, have legalized marijuana consumption and production even for recreational use, following a number of other states that had legalized it only for medical use. Other states no longer treat personal possession of marijuana as a criminal offense. European countries such as the Netherlands have had longer experience with the decriminalization of marijuana. And starting with Portugal in 1991, a number of countries have decriminalized the personal possession of all drugs.

To think about how we should judge whether relaxing the ban on a formerly banned market improves the situation or makes it worse, let’s focus that question, hypothetically, on markets for narcotics such as crack cocaine. Let’s further suppose that we agree that crack is an addictive drug that compromises the health of its users and has no medical use—that is, it’s a drug that none of us wish to see used by anyone.

We already know that the war on drugs hasn’t made crack unavailable, so we shouldn’t compare the possibility of legalizing it only with the unattainable goal of eliminating it. We also don’t have to consider legalizing it in an unregulated way—for instance, allowing it to be sold in schools. So the choices we need to consider aren’t black-and-white.

Instead, we have to weigh the trade-offs. Legalizing the market for crack, even in a carefully regulated way, would very likely increase the number of addicts. That’s a very bad thing. It might also decrease the amount of crime, and not merely the crime that would be eliminated by legalizing the possession and maybe the sale of crack, but also the crime that arises from having to consort with criminals to obtain it, and the crime that comes from having a commodity that generates an enormous flow of cash controlled by criminal methods to gain and keep market share. If the increase in addiction was huge and the decrease in crime was tiny, most of us would agree that we had made a bad situation worse. But if the increase in addiction was tiny and the decrease in crime was huge, I for one would think that we had made a good choice. Of course, even if we agree on how to evaluate the results of an experiment on legalizing crack cocaine, we may not agree at all on whether such an experiment would be desirable, or even ethical, depending on our possibly different beliefs about what the likely outcome of such an experiment would be.

To look at it another way, let’s consider one other domain in which repugnant transactions are common: sex. People want to have sex with each other in circumstances that society disapproves of. But when we educate our children, pass laws, and try to control the transmission of disease, we would be foolish not to recognize that sex is a powerful force. That doesn’t mean we shouldn’t disapprove of some behaviors and try to moderate them, but sometimes we will more nearly achieve our goals if we try to channel behavior or offer alternatives, rather than institute a ban. (For this reason, we sometimes try to promote “safe sex” rather than abstinence.) In short, when we deal with sex, we need to recognize that we’re dealing with powerful attractions.

Markets are like that, too.