Commencement Speech of The Twenty-fifth Commencement Ceremony of The Johns Hopkins University – Nanjing Center, June 10 2011

Consumption, the Market and Moral Relativism

By Gerald Chan

Thank you for inviting me to be part of this happy occasion. Graduation is a celebration of a milestone in your life of learning. I commend you for having made the commitment to come this far in your studies. For the students from America, to be able to debate in Chinese and to write a thesis in Chinese is no small accomplishment. I salute you all.
In the past week, as I contemplated what I should say today, I came across a New York Times column on commencement speeches by David Brooks. I quite agree with his uneasiness with trite adages so over-used in commencement speeches like “follow your passion, chart your own course, march to the beat of your own drummer, follow your dreams, find yourself.”

I don’t want to come here to offer you such hollow and shop-worn platitudes, so I am going to do the opposite. I will talk about something rather more meaty even if I run the risk that the tone of this speech will be a bit somber. I’d like to say something which I believe will serve you well as you embark on your lives beyond academia.
I shall organize my remarks around three observations. Much of my remarks will bear the flavor of economics as I was told that the Hopkins-Nanjing Center curriculum is suffused with economics even though it is not a graduate program in economics.

Furthermore, my remarks may be considered a critique of my generation, giving a scorecard to the current players such that future players, you, may learn from those that have gone before. If you will, I’d like to offer these observations as part of a roadmap to a good life. I use this term “good life” in the Aristotelian sense to denote a life that is just, that is fulfilling to yourself and that makes a positive contribution to mankind. If we are to have a good society, its citizens must themselves live a good life.

First, I want to talk about consumption. Our current society has imputed an inflated valuation on the gratification that can be derived from consumption. It is understandable that societies which emerged out of a period of scarcity into a period of abundance are prone to such exaggerated valuations. This was true of the Americans who came out of the Great Depression and World War 2 into the abundance of mid-twentieth century. It is also true of China today where the abundance is a far cry from the scarcity of the earlier years of the People’s Republic. For such societies, it is hard not to have an ethos that life is about consumption, even conspicuous consumption. People live to consume rather than consume to live.

The Baby Boomer generation in America basically overdosed on consumption. They consumed beyond their means, leaving to posterity, including you, a large debt burden. You, the American graduates, were born debtors; you, the Chinese graduates, were born holders of American IOUs whose value is constantly being diminished by the greenback printing press, otherwise known as quantitative easing, and with it, inflation. Moreover the Baby Boomers pillaged the earth’s resources to support their good times. They had one crazy party; now you guys have to pick up the tab and clean up the mess. The American Baby Boomers are the most selfish generation that ever lived and are truly guilty of generational child abuse.

How did they get there? It was a Faustian bargain between the consumers and the financial market. If the consumers would close their eyes and keep on consuming, the financial market would keep on supplying them with the means for more consumption in the form of credit cards, home equity lines, zero interest loans.

My observation is that your generation is no less inclined on consumption than the Baby Boomers. You grew up in material abundance, in an environment where social standing is in large part determined by one’s pattern of consumption. If anything, I think you are more sophisticated consumers. When I was in college, having a steak was a big deal. Nobody asked how the steak was prepared because there was only one way to prepare it – by grilling, and there were only two ways to eat it – with ketchup or with A1 sauce. You are much more sophisticated today. For you, it would be too crude to be concerned just with what cut of meat the steak comes from. For you, it is about how the steak is prepared, the sauces, the spices, the reduction, the complexity of flavors, the presentation, the pairing with wine. It is about the ambiance of where you eat the steak – the table setting, the décor of the room, the lighting, the waiter’s ability to be attentive without being intrusive, the gracefulness of his speech and even his accent. In short, your generation has elevated consumption from mere materialism to a total experience.

You demand the perfect combination of sensory stimuli, finely tuned so as to please all the senses. Now that the Baby Boomers are aging and their human capacity for consumption declining, or for some, that the recent financial crisis has rendered them less able to binge as before, there is a newfound temperance, a curtailment of consumption, be it voluntary or involuntary. Uncomfortable as this adjustment may be, it is in this newfound temperance that many are discovering life is about more than consumption.
In reality, the gratification from consumption does not increase monotonically. There are limits; there will always be an asymptote. If one iPad makes you happy, two iPads will not make you twice as happy. It does not scale linearly. Diminishing marginal utility is not an intellectual concoction of the economist; it is in fact hardwired into human nature.
There is more to life than amassing more goods and becoming a more voracious or a more refined consumer.

My second point is that in American society, there is a belief in the power of the free market to create a good society. So strong is this faith that the market is accorded a position of sanctity. It is as if the market has become the god of this age – benevolent, omnipotent, omniscient, autonomous. Adam Smith has been anointed the prophet of this deity. His words, “It is not from the benevolence of the butcher, the brewer, the baker, that we expect our dinner, but from their regard to their own interest,” have become the creed of this faith. In this theological conception, man is viewed as a rational economic being ever seeking to maximize his gain. Self-interest is not only justified, it is to be celebrated, encouraged and fostered. Sin is not the indulgence of self-interest, but the restraining thereof.

If the market is so good, why not apply market principles to more facets of society? This was indeed what happened. We saw the application of the market to domains of society which in olden days were off limits to the market. These domains were formerly viewed as sacred ground characterized by a loftier purpose, where the players were there because of a nobler calling. I cite but two examples – education and the practice of medicine. Sadly, the special relationship between a teacher and a student has taken on too much of the flavor of a relationship between economic agents, and so it is with the relationship between a physician and a patient. This penetration of the market into all spheres of human activity is what some have called economic imperialism. Economic imperialism will have triumphed when economics becomes the lens by which we see everything, the metric by which we measure everything, the litmus paper by which we test everything. It becomes the dominant motivation of human actions, the framework by which we structure human relationships. If so, economics will eventually become the only meaning of human existence.

Let me share with you a quote. This writer so eloquently foretold the condition when economic imperialism has triumphed.
“Finally, there came a time when everything that men had considered inalienable became an object of exchange, of traffic, and could be alienated. This is the time when the very things which till then had been communicated, but never exchanged; given, but never sold; acquired, but never bought – virtue, love, conviction, knowledge, conscience, etc. – when everything, in short, passed into commerce. It is the time of general corruption, of universal venality.”

These words came from none other than Karl Marx.

My advice to you is that the world is more than just one big marketplace where everything in the human life is commoditized and traded. Never let the forces of economic imperialism reduce you to a mere economic being, nor allow the gospel of the market to fester in you unbridled greed and in turn, act as justification for that avarice. Don’t forget that Adam Smith who wrote The Wealth of Nations also wrote The Theory of Moral Sentiments. For him, the economic man, actuated by self-interest, and the moral man, actuated by sympathy, could coexist, and indeed must coexist.
Man is not one dimensional even though the world we live in is constantly pressing to one-dimensionalize us. Do not allow the forces of economic imperialism to squeeze everything out of you until there is nothing left but that which is economic. There is more to life. Do not forget your fellow men – your family, your loved ones, your friends, your colleagues, the less fortunate in this world, the heavy-laden, the hard-trodden, the needy. To them, our actions and choices cannot be guided by economic rationality alone, for in the words of Amartya Sen, “the purely economic man is indeed close to being a social moron.”

The third point I want to talk about is moral relativism, or the rejection of the notion that there exist absolute rights and wrongs.
I witnessed the sub-prime mess in recent years and like many, questioned how such a big mess could come into being. Of course, no one person alone could have perpetrated it, rather it took a collection of players to orchestrate it. I see at the heart of this crisis a ghastly erosion of ethics. Bankers used to be held to higher ethical standards by their clients. It used to be taken for granted that bankers would not bet against their clients and worse yet, rig that bet to the client’s disadvantage. There was no need for legislation to avert conflicts of interests; their avoidance was axiomatic. Neither was there the need for so many lawyers to transact any business. Our society has reached a new low when the job of armies of lawyers is to help their clients to do what is legally unassailable even if it is morally indefensible. I am sure the players in the sub-prime mess do not view themselves as crooks who deserve to go to jail. What we have witnessed is simply the operation of a moral relativism which has the net effect of ratcheting all ethics to the lowest common denominator.

It follows from the ascendancy of the market that a value system which is constructed out of economic rationality alone will trump all other value systems. All other value systems will have to beat a retreat, and what more “honorable” way is there to retreat than to rephrase the absolute as relative? In so doing, the retreat will be gradual and even imperceptible. No outright refutation is required; all it takes is a gradual relaxation of standards and with that, a gradual dulling of the moral senses. Put it in another way, it is a slippery slope.

I would like to say to you that if you desire a good life, there must be moral absolutes in your value system. Whether you believe in an objective absolute, at least in your personal universe, there needs to be that which is inviolable, non-negotiable and not for sale. It is only in an unwavering commitment to the absolute that you will go through life with a firm footing. It is only in the commitment to the absolute that you will find meaning.
I’d like to wish you all a good life – a life that is just, a life that is fulfilling to yourself and a life that makes a positive contribution to mankind. The path will be different for each one of you. While life’s circumstances will change, hold on to that which is constant. It will all work out.

I wish I can offer you a complete and personalized road map, but I cannot. As Hegel said, the owl of Minerva spreads its wings at the fall of dusk. You will have to find out for yourself, but the thrill is in the journey. Don’t be anxious. It will be all right.

I wish you all the very best. Thank you.