You’d never know it from DeLong’s selective summary, but Rizzo’s post is dense with interesting (if elementary) economics. A key point is that when you think you’re tipping a New York cab driver, you’re really tipping the medallion owner. (A medallion is a license to drive a cab; medallions are in fixed supply and currently trade for a price of about three quarters of a million dollars. Your driver is probably leasing his medallion from its owner.) If we all started tipping, say, an extra $2 per ride, then medallion owners would demand another $2 per ride in rental fares—effectively claiming all the additional tips for themselves. (Click here for a slightly longer explanation.)

Likewise, Professor Rizzo and others like him can make life harder for cab drivers in the short run, but not for long. Eventually, low tippers force medallion owners to accept lower rental fees, so that drivers are made whole again. (In brief: With tipping down, some cabbies are disheartened and unwilling to continue driving unless rental fees come down; medallion owners must comply or lose their rental income altogether.) So in the very short run, he’s hurting cab drivers but in the longer run he’s hurting medallion owners and striking a blow for what he considers a desirable change in social norms.

Personally, I don’t mind tipping but I found a lot to chew on in Professor Rizzo’s post. DeLong, true to form, ignored the content and jeered like a third grade bully. Most sadly, whenever he indulges this habit, DeLong sacrifices a chance to teach a little economics. Fortunately, the web is a big place and there are plenty of alternatives for readers who care about ideas.

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A similar issue comes up in Chapter 20 of The Big Questions, where Mary the landlord won’t rent to, say, Albanians. Ought we force her to?

In The Big Questions, I make two separate (but closely related) arguments on Mary’s behalf. I was about to write a blog post offering the same arguments on behalf of Sony when I realized that only one of them applies. So I am forced to conclude that I should be a little less sympathetic to Sony than I am to Mary.

My first argument is that Mary never had any moral obligation to rent to anyone in the first place—and if she has no general obligation to rent to anyone, then she can have no specific obligation to rent to Albanians. Likewise, Sony has no moral obligation to provide anyone with video games—and if there is no moral obligation to provide me with a video game then there is no obligation to provide one to Alexander Stern. Fine so far.

But my second argument is that Mary, appearances to the contrary, is actually doing some good for Albanian apartment seekers. By renting rooms to non-Albanians, she takes a little pressure off the housing market, driving down rents and making it easier for Albanians to find apartments elsewhere. Sure, she could be doing even more for them, but she’s already doing more for them than I am, since I don’t rent apartments to anyone at all. How can she be at fault for doing small amounts of good when I’m given a free pass to do no good at all?

Now this second argument is actually a little slippery. When I say Mary is doing the Albanians a small amount of good, you’re entitled to respond “Compared to what?”. Compared to taking her building off the market altogether, she’s surely doing them some good. But what about compared to selling her building to a non-bigot?

Answer: Compared to selling to the non-bigot, Mary is doing no particular good, but she’s doing no particular harm either (except, perhaps, to Albanians with idiosyncratic reasons for preferring that building to all others). No matter who owns the building, it’s going to take, say, ten renters off the housing market and have the same effect on rents elsewhere. So depending on the comparison you want to make, Mary might or might not be doing small amounts of good for Albanians, but at least she’s doing no harm.

Now let’s try applying that second argument to Sony: Alexander Stern is having trouble playing Sony’s video games. But without Sony those video games wouldn’t be there in the first place. According to the argument, those games force down the price of other games, including the ones that Stern can play.

But in this case, the argument is probably wrong. Here’s why: Mary, by running a single apartment building, can’t drive all the Albanian-friendly landlords out of the marketplace. All she can do is drive rents down, which is good for all renters including Albanians. But Sony, by dominating a segment of the video game market, might well drive out some of its blind-friendly competitors—and that’s bad, not good, for Alexander Stern.

The fundamental difference is that an apartment is what economists call a private good—it can be occupied by only a small number of people at a time. A video game, by contrast, has at least some of the characteristics of a public good—once you’ve developed it, there’s no limit to how many can play. This gives Sony the ability to cause damage that Mary can’t.

So although Mary is a contemptible bigot, whereas Sony seems to be making reasonable economic decisions, I think I am forced to conclude that the case against Sony is stronger than the case against Mary. Not strong enough for me to support it, though.

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