An excerpt from the Markets without Limits manuscript, a recently written, very drafty first draft of the section on designer babies. (The tables don’t render that well in HTML. Sorry about that.) This discussion occurs after a discussion about how inequality in access to technology and luxuries in developed countries leads to almost everyone having access to those technologies and luxuries.

SHORT SUMMARY: Even if designer baby technology led to massive inequalities of ability, that would be a good thing, not a bad thing!

According to the Wall Street Journal,

 A personal-genomics company in California has been awarded a broad U.S. patent for a technique that could be used in a fertility clinic to create babies with selected traits, as the frontiers of genetic enhancement continue to advance. The patented process from 23andMe, whose main business is collecting DNA from customers and analyzing it to provide information about health and ancestry, could be employed to match the genetic profile of a would-be parent to that of donor sperm or eggs. In theory, this could lead to the advent of “designer babies,” a controversial idea where genes would be selected to boost the chances of a child having certain physical attributes, such as a particular eye or hair color.
Some will regard this kind of technology as moral problematic. We welcome it, if it works. One legitimate worry is that if people are allowed to design their own babies, this could result in dangerous sexual selection. In some countries, parents prefer male to female infants. If parents are allowed to choose their babies’ sex, this could lead to undesirable and dangerous imbalances in sex ratios when the children reach maturity. But this isn’t on face a reason to forbid the market in designer babies—it’s just a reason at most to regulate one aspect of that market. We acknowledge that there is a legitimate worry is that developers will botch the technology, and thus hurt rather than help the babies they design. But this issue concerns acceptable risk and safety. In principle, the issue is no different from that any new drug or technology faces. It’s part of business ethics that one should not market technologies, such as cancer vaccines or personal jetpacks, without taking an appropriate response to possible risks, including the risk of harm to innocent bystanders. There’s an interesting question about just what the appropriate principles governing risk and product safety are, but we will not explore this issue any further here.

When anti-commodification theorists complain about designer babies, they aren’t primarily worried about whether genetic technology might lead to birth defects or health risks, but are concerned about whether designer babies might lead to invidious inequalities of ability. As the Wall Street Journal article reports, “Some people say it is unethical to bioengineer children because better-off parents could use it to give their children a competitive edge, widening societal divisions.” The argument goes something like this:

 The Inequality Argument against Designer Babies:

  1. If markets in designer baby technology are allowed, these markets will be expensive.
  2. If so, then only the rich will be able to afford designer babies.
  3. The rich will use the technology to give their children greater health, intelligence, and other desirable traits, creating even further inequality.
  4. Causing further equality would be wrong.
  5. Therefore, allowing or participating in markets in designer babies is wrong.

This argument can be modified to argue that such markets should also be illegal.

Imagine a world like ours, but in which the overwhelming majority of people had extremely high intelligence, were extremely healthy, were much more attractive, had low risks of cancer or other diseases, lived long lives, had few behavioral problems, and were generally leading better lives. This is a world to aim for, not a world to avoid. The premise of the Inequality Argument against Designer Babies is that technology for designing happier, healthier, smarter people will eventually exist, but will be in the hands of the few. Our response to say that we should welcome it going into the hands of the few, so that it may one day be available to the many.

We want to remind the anti-commodification theorist of the normal trend in technological development. As we explained above, when a new technology develops, it is usually expensive, and available at first only to the rich. But, as the rich pay for the initial development of that technology and enjoy the initial benefits, the rich also pay to make the technology available to all. This has been true of, say, dishwashers, washing machines, air conditioning, electric stoves, microwaves, personal computers, landline telephones, cellular phones, smart phones, laptops, air flight, automobiles, furnaces, electric lighting, electricity in general, toilets, sanitation, daily baths, tasty and sufficient quantities of food, spices, salt, large houses, having lots of clothing, video games, and pretty much everything else. Perhaps designer baby technology would go against this trend, but it is doubtful. After all, consider that the cost of sequencing one human genome dropped from over $100,000,000 in 2001 to about $7,000 in 2013. The available evidence strongly indicates, if not guarantees, that designer baby technology will eventually be in the hands of almost everyone in developed countries. And, as developing countries develop, it will eventually be in their hands as well.

One might object that such technology will not be available literally to everyone. Perhaps the very poor will never be able to afford to ensure their children are genetically blessed. If so, then undesirable inequalities would persist. We have two responses to this objection.

First, it is unclear to us why this would call for closing the market, rather than subsidizing the poor. Consider: right now some people in the United States cannot afford to feed their children. No sensible person thinks this shows we should eliminate markets in food. Instead, at most, it means we should keep having markets in food, but use food stamps to subsidize the poor so that they can buy food. Similarly, if it turned out that designer baby technology forever remained too expensive for the bottom 5% of stable households (the kind of households where we would want children to be raised), then this doesn’t on its face call for eliminating the market in designer baby technology. Instead, it at most calls for giving such household tax-funded vouchers for designer babies, in the same way that we subsidize food or health care.

Second, we object to the view that inequalities in ability are inherently undesirable. Implicit in this objection, and in the Inequality Argument against Designer Babies in general, is the assumption that we live in a zero-sum world, where if some people are more talented than we are, this comes at our expense. But whether other people’s greater talents helps us or comes at our expense is a contingent matter, which depends on our background institutions. For people living in warlike hunter-gatherer tribes, it really is a disaster if the tribe across the river is stronger and smarter than you. But for people living in market societies, it’s not only not a disaster, but good to encounter people who are stronger and smarter than you.

Markets are not (generally) a zero-sum game. Markets allow unusually talented people to become unusually rich, but only if they use their talents to offer goods and services to others at prices they can afford to pay. Few of us are as talented as, say, Steve Jobs, James Watt, Edwin Land, George Westinghouse, or Norman Bourlaug, but at the same time, few of us would be better off in a world where they never existed.

Imagine a genie cast a spell making so that everyone was less talented than you. The genie doesn’t make you any better in absolute terms—it just makes everyone else worse relative to you. There are two versions of this thought experiment:

  1. Assume for the sake of argument there is such a thing as “natural talent”, where natural talent refers to our potential under favorable circumstances in light of our genetic endowments. Imagine the genie makes it so that everyone has less natural talent than you. But the genie will allow that some of these less naturally talented people have better skills than you in some things. That way, if you decide to specialize in plumbing and utterly neglect learning carpentry, the genie will allow that some people can become carpenters. However, had you decided to carpentry, you would have been better than any other carpenters, thanks to your greater natural talent.
  2. Imagine an even more extreme case in which the genie makes everyone else literally worse than you at everything you can currently do.

In both cases, the genie is an evil genie, not a good genie. The overwhelming majority of people would be much worse off in the situations described in 1 and 2 than they are in the real world.

David Schmidtz summarizes this issue well:

 …society is not a zero-sum card game, but a cooperative venture in which the pie’s size is variable. Almost all people can have a better life than they could have had on their own, and the reason is simple: Other people’s talents make all of us better off. Talented bakers don’t just capture pie. They make it. The rest of us have more pie, not less, when talented people put their talent to work.
One reason why people struggle with basic economics is that we have a natural tendency to see the world in zero-sum terms. But we need to overcome this tendency. Market economies do involve competition, and sometimes, we would personally benefit from our competitors being less talented than we. But the market economy as a whole is not one big competition. It is not a race in which only one person can win. Instead, in a market economy, there is far more cooperation than there is competition. For a job at Georgetown, I might compete with 300 applicants, but I type my application on a computer in which literally tens of millions of people had a hand in making. Georgetown Cupcake might prefer that competitor Baked and Wired go out of business, but when you by a cupcake from either place, you eat something that literally tens of millions of people had a hand in making. In markets, we directly compete with the few, but we cooperate with the many.

A good way to think about this is to consider what might happen if the planet Earth began trading with the Vulcans from Star Trek. Suppose a few hundred years from now, Earth is vastly more productive and technologically advanced. Suppose we Earthlings discover how to build starships. Shortly after we test our first warp drive, the Vulcans make contact with us. Suppose, for the sake of argument, that the all Vulcans are more talented than all Earthlings. The dumbest Vulcan is smarter than the smartest Earthling, the weakest adult Vulcan is stronger than the strongest Earthling, and so on. Suppose the Vulcans are also better at doing everything—growing corn, making computers, designing fashion—than Earth is. Everything we can do, they can do better, and they can do things we can’t do, too.

To those with little background in economics, it might seem like Vulcans would have no reason to bother trade with us. Or, to others with little background in economics, it might seem that trading with Vulcans would just put us all out of work, because everything we can do, they can do better.

But economists understand that’s a mistake. In fact, except in unusual circumstances, both the Vulcans and Earthlings would gain immensely from interplanetary trade. Each planet should specialize in its comparative advantage—that is, the form of production for which it has the lowest opportunity cost.

To illustrate, suppose Earth needs 8 million Earthling workers to produce 1 starship per year, or it needs 2 million workers to produce 1 trillion tons of food per year. Suppose the smarter, stronger, and more rational Vulcans are far better at making things than we are. They need only 1 million Vulcan workers to produce 1 starship per year, or 1 million workers to produce 1 trillions of food per year.

To see how trade will affect the standard of living on both planets, we need to start by seeing how well the planets do under autarky. Imagine that the planets don’t trade, and just decide to produce everything they need themselves. Suppose each planet decides this year to have 8 million of its workers manufacturing starships and 8 million grow food. Table 1 shows the most they can produce and consume without trade. (To simplify this illustration, we are ignoring all the other things Earthlings and Vulcans produce.)

Table 1. Production on Earth and Vulcan without Specialization or Trade

Planet Labor Allocation (Starships, Food) in millions Starships Food, trillions of tons
Earth (8, 8) 1 4
Vulcan (8, 8) 8 8
Total Production 9 12

Now suppose, in anticipation of trading, both planets decide to specialize in their comparative advantage. Earth’s lowest opportunity cost is in making food. It costs earth 4 trillion tons of food to make 1 starship, but costs Earth 1/4th of a starship to produce 1 trillion tons of food. It costs Vulcan 1 trillion tons of food to make 1 starship, and 1 starship to make 1 trillion tons of food. So Earth is the low-cost producer of food, while Vulcan is the low-cost producer of starships.

Imagine that Earth thus decides to stop making starships, and all 8 million former starship workers start producing food instead. The Vulcans decide to shift 2 million of their food workers toward producing starships. As table 2 illustrations, the total production of each good now increases. The two planets have collectively produced 1 more starship and 2 more tons of food.


Table 2. Production on Earth and Vulcan with Specialization in Anticipation of Trade


Planet Labor Allocation (Starships, Food) in millions Starships


Food, trillions of tons
Earth (0, 16) 0 8
Vulcan (10, 6) 10 6
Total Production 10 (+1) 14 (+2)

 But this doesn’t yet mean that the Vulcans or Earthlings are better off—they still need to trade. So, now imagine the Vulcans decide to trade 1 starship for 3 trillion tons of food. Table 3 shows that trade will make both planets better off than they had been under autarky, when there was no specialization or trade. Earth ends up getting the same number of starships, but 1 more trillions food, while Vulcan ends up getting 1 more starship and 1 more trillion tons of food. (The number in parentheses shows the gains from trade compared to autarky.)

Table 3. Consumption on Earth and Vulcan after Trade (Vulcan trades 1 starship for 3 trillion tons of food)


Planet Starships Food, trillions of tons
Earth 1 5 (+1)
Vulcan 9 (+1) 9 (+1)
Total Consumption 10 14


Think about what this means from Earth’s perspective. The Vulcans are twice as efficient at producing food and eight times as efficient at producing starships. Yet, if the Earth decides to specialize in producing food and stop making starships altogether, it continues to get one starship per year, but gets even more food. It’s almost as if by growing more food and deciding not to build any starships at all, Earth gets a free starship. Or, another way of putting it, is that interplanetary trade makes it is that Earth can grow rather than build the starships it needs.

            Now let’s examine how interplanetary trade will affect Earthling and Vulcan wages. Assume that a starship sells on the interplanetary market for $3 trillion dollars, while a trillion tons of food sells on the interplanetary market for $1 trillion. (This is consistent with the Vulcans trading one starship for 3 trillion tons of food.) We can then calculate what the average yearly salary of the workers will be. If both planets have competitive markets, then the average wage in each planet is given by the following formula:

Average Wage = Value of Total Consumption/Number of Units of Labor

In light of that, table 4 calculates average yearly wages for each planet before and after trade. 

Table 4. Average Yearly Wages for Workers

 Before Specialization and Trade: 
 Average Yearly Wages on Earth   

(1 starship x $3 trillion) + (4 trillion tons food x $1 trillion)

16 million workers per year

=    $437,500
 Average Yearly Wages on Vulcan   

(8 starships x $3 trillion) + (8 trillion tons food x $1 trillion)

16 million workers per year

 = $2,000,000
 After Specialization and Trade: 
 Average Yearly Wages on Earth   

(1 starship x $3 trillion) + (5 trillion tons food x $1 trillion)

16 million workers per year

=   $500,000

(12.5% increase)

 Average Yearly Wages on Vulcan  

(9 starships x $3 trillion) + (9 trillion tons food x $1 trillion)

16 million workers per year

 = $2,812,500

(8.4% increase)

In summary, trading with the smarter, stronger, genetically superior Vulcans is a windfall for the relatively dumber, weaker, inferior Earthlings. Vulcans benefit from trading with dumb, weak, and irrational Earthlings, but Earthlings benefit even more from trading with smart, strong, and rational Vulcans.

Now let’s apply this to the argument about designer babies. We can simply repeat the exercise above, except imagine that the trade occurs not between genetically superior Vulcans and inferior Earthlings, but genetically superior designer humans and the on average inferior humans produced by a genetic lottery. We would get the same results. In normal, well-functioning markets, designer babies’ talents are not a curse, but a boon to others. If we can’t find the Vulcans, we can design them instead.

The article first appeared on Bleeding Heart Libertarian.

Posted by The Indian Economist