- If you're just joining me,
we're about to start the active reading step of this passage
as we go through the SQ3R method.
So in the previous video
we surveyed the questions, we surveyed the passage
we asked ourselves what is the question
that this passage is trying to answer?
Happens to be right there in the blurb
and the title of the passage,
which is "Can Economics be Ethical?"
Now it's time for the three r's:
reading, reciting and reviewing.
So what this means as I proceed through this passage
as I read it aloud to you,
I'm also going to be reciting back
the ideas that are presented in the passage
in its own words.
This is a very powerful technique
because when you synthesize an idea from the passage
when you say it in your own words, when you recite it
you are demonstrating your understanding of it.
So as we go through this passage
I'm going to be circling claims, arguments, big ideas.
In the first step in the survey step
I already circled a couple of names,
here I'm going to be circling claims made by the author.
I'm going to be circling contrast words,
conjunctions like but or yet
or adverbs like instead or however
I wanna focus in on those see where
the hinges of this argument are and where things pivot.
All right, so let's get going.
Let's commence the reading, paragraph one.
Recent debates about the economy
have rediscovered the question, is that right?
Where right means more than just profits or efficiency.
Okay, so this is basically our topic sentence
of the passage.
It's reintroducing the idea of ethics
into business basically.
That's what they're talking about
with profits or efficiency here
is doing business right more
than just making money or doing your work efficiently?
Lets move on to paragraph two.
Some argue that because the free markets allow
for personal choice, they are already ethical.
Well, there's an argument right there.
I'm gonna underline it and flag it.
Let me say that back
because you can make choices in a free market.
This argument is saying
you are free to make ethical choices.
Others have accepted the ethical critique
and embraced corporate social responsibility.
Now I see that I've underlined embraced
and I've written question four here.
If this were test day, I would hop right over
to question four and answer this question
to see how embraced was being used in context.
But I'm not gonna do that today.
So, okay so we have one claim here.
Free markets are already ethical.
We have another claim here
which is that corporate social responsibility
is a counterpoint against the idea
that free markets are already ethical.
But here we go with the but
before we can label any market outcome as immoral
or sneer at economist who try put a price on being ethical
we need to be clear on what we're talking about.
So before we go any further,
let's get to some definitions
is what I think the author is trying to say.
Now I will note that what I'm doing here
making these annotations is not something
that as of this video you can currently do in our product.
So as you are doing practice
if you feel the need to note something down
keep a little pad of paper and a pencil or a pen
next to your device.
Line 10, paragraph three
there are different views on where ethics should apply
when someone makes an economic decision.
All right, so let's keep a lookout
for what those different views might be.
The paragraph is setting up this idea
that there's gonna be a bunch of different ideas
clashing with each other.
Consider Adam Smith,
widely regarded as the founder of modern economics.
He was a moral philosopher
who believed sympathy for others was the basis for ethics.
We would call it empathy nowadays.
All right, we're talking about economics,
we're talking about moral philosophy,
we're talking about sympathy and empathy
now these are a lot of complex ideas
but I will say that you don't have to have outside knowledge
of Adam Smith or economics or moral philosophy
in order to do well on the SAT.
Everything you need to do well
on this passage is contained within this passage.
And more importantly it's contained within you.
Yeah, all we need to do is go through this passage
and restate it in our own words
and that gives us control over it.
You don't scare me
passage in a discipline I know little about.
Now back to the passage.
So Adam Smith was a moral philosopher
who believed sympathy for others was the basis for ethics.
We would call it empathy nowadays.
I've underlined empathy because it's important.
But circle the but one of his key insights
in "The Wealth of Nations" that's his book
was that acting on this empathy could be counterproductive.
Interesting.
He observed people becoming better off
when they put their own empathy aside
and interacted in a self-interested way.
That does seem kind of counter-intuitive.
Let's keep reading.
Smith justifies selfish behavior by the outcome.
Whenever planners use cost benefit analysis
to justify a new railway line
or someone retrains to boost his or her earning power
or a shopper buys one to get one free
they're using the same approach,
empathizing with someone and seeking an outcome
that makes that person as well off as possible.
Although the person they are empathizing with
may well be themselves in the future.
Okay, so let me try to wrap my head around this.
It seems like Smith is saying that greed is good.
I'm gonna put that in the margin, greed is good.
Because if you act in your own self-interest
it ends up benefiting other people anyway.
So if a city planner is trying
to be as self-interested as possible
to justify building a new railway line
eventually that will benefit the people
that get to use that train.
Or if someone retrains in order to
maintain or get a higher salary
that's better for the marketplace at large
because that means that
their contribution to the workplace
is more efficient or better somehow.
So, okay so that's what Smith is saying, greed is good.
It has societal benefits
when individual people act in their own self-interest.
The next paragraph, instead of judging consequences,
okay, so Smith judged consequences.
So we're looking at a counterpoint
this is a hinge of the article.
Aristotle said ethics was about having the right character
displaying virtues like courage and honesty.
Okay, so Aristotle was saying, it's not that greed is good
it's the thought that counts.
Let's keep reading in line 28.
It is a view put into practice
whenever business leaders are chosen
for their good character.
But it is a hard philosophy to teach
just how much loyalty should you show to a manufacturer
that keeps losing money?
Show too little
and you're a "greed is good" corporate raider.
There's our Adam Smith idea there.
Too much and you're wasting money on unproductive capital.
So here the author is questioning
whether or not loyalty for example as a virtue
is one that is smart to maintain in business.
If you have too little loyalty
you're basically evil, right?
A greed is good corporate raider
and too much loyalty and you might end up
making bad business decisions.
Let's continue at line 33.
Aristotle thought there was a golden mean
between the two extremes
an ideal middle between the two extremes
and finding it was a matter of fine judgment.
But, let's circle that but,
if ethics is about character
it's not clear what those characteristics should be.
So here I think the author
is trying to complicate Aristotle's idea.
If it's the thought that counts
if it's character values that contribute to ethics
which are those characteristics?
Which are those virtues?
Let's continue on at line 38.
There is yet another approach.
Okay, so now we have, I would say a third claim to ethics.
So we've got so far we've got Adam Smith with greed is good,
we've got Aristotle with it's the thought that counts.
Now here comes idea number three.
Instead of rooting ethics and character
or the consequences of our actions
we can focus on our actions themselves.
Okay, so let's recite, let's say that in our own words.
So instead of consequences which is Adam Smith's
the ends justify the means greed is good ideology.
And instead of Aristotle's virtue focused
it's the thought that counts ideology.
This third one is about the means
by which something is accomplished, right?
The way in which we're doing something
let's focus on the actions themselves.
So from this perspective, some things are right some wrong.
We should buy fair trade goods,
we shouldn't tell lies in advertisements.
Ethics becomes a list of commandments
a catalog of do's and don'ts.
When a finance official refuses to devalue a currency
because they have promised not to
they are defining ethics this way.
According to this approach, devaluation can still be bad
even if it would make everybody better off.
So I've read this paragraph
I'm going to recite what I think the point of it was
which is to say the means are important.
So focus on actions, move on to paragraph six.
And in fact actually hold on
so if we remember from our survey step question five
was about the content of paragraph five.
What's the main point of paragraph five?
We wanted to on test day
we could pop over answer that question right now
but instead let's move on to the next paragraph.
Many moral dilemmas arise when these three versions
pull in different directions
but clashes are not inevitable.
Clashes I remember I underlined in the previous video
we could again go over to the questions
and answer that one straight off.
I'm not going to here I'm just demonstrating that we could.
So, okay so through active reading
We have pulled out three different strands of argument.
The passage very kindly has agreed with us
that there are three different arguments here
but clashes are not inevitable between those three ideas.
So there's a point at which Aristotle, Adam Smith
and focus on actions can all agree.
Take fair trade coffee
and we know from our earlier survey
that fair trade coffee is what the graph is about.
The graph is illustrating this idea.
So what is fair trade coffee?
Coffee that is sold with a certification
that indicates the farmers and workers who produced it
were paid a fair wage for example.
Buying it might have good consequences, be virtuous
and also be the right way to act in a flawed market.
Good consequences, that's Adam Smith.
Be virtuous, that's Aristotle.
Be the right way to act,
that's the ideology from a paragraph ago
the focus on actions.
Common ground like this suggests that
even without agreement on where ethics applies,
ethical economics is still possible.
So even though there are three different ideas
intention with each other about what ethical economics is
there are still places in the real world
where all three of those ideas can exist in harmony.
Let's keep going at line 57.
Whenever we feel queasy about perfect competitive markets
the problem is often rooted in a phony conception of people.
The model of man, they mean human
on which classical economics is based
in entirely rational and selfish being
is a parody as John Stuart Mill,
the philosopher who pioneered the model accepted.
Okay, so economics is based on
a perfectly rational human being
this fictional human being
that makes all of their decisions on the basis of
self-interest and rationality doesn't exist is a parody.
Let's continue at 62.
Most people even economists
now accept that this economic man is a fiction.
We behave like a herd, we fear losses
more than we hope for gains.
Rarely can our brains process all the relevant facts.
So I think that a perfect competitive market
and the reason that we feel weird about it
that we feel queasy about it
is because it calls into question Adam Smith's idea
about being self-interested.
Is that self-interest ever truly rational?
Because we know that human beings are not purely rational.
Let's keep going.
All right, final paragraph these human quirks
right referring back to the previous paragraph
we are not rational,
so these human quirks mean we can never make
purely rational decisions, there we go.
A new wave of behavioral economists aided by neuroscientists
is trying to understand our psychology
both alone and in groups,
so they can anticipate our decisions in the marketplace
more accurately.
But let me circle but,
but psychology can also help us understand
why we react in disgust at economic injustice
or except a moral law as universal.
Which means that the relatively new science
of human behavior might also define ethics for us.
Ethical economics would then emerge
from one of the least likely places, economists themselves.
So ultimately we have these three ideas,
we've got Smith, we've got Aristotle
and we've got let's just call it actions.
So rational self-interest, virtue and moral actions.
And all of these are now complicated by
behavioral psychology, which I'm just gonna call BP.
The author is saying in this final paragraph
that behavioral economists and neuroscientists
are going to use their science
to help understand everything else
why human beings behave the way that they do.
And so this last line is kind of a
I guess it's kind of a joke at the expense of economists
ethical economics would then emerge
from one of the least likely places, economists themselves.
I guess it's,
they're trying to be ironic about the idea that
since ideas like greed is good, also came from economists
it seems weird that ethics would arise from them as well.
Now comprehending this irony
I don't think is necessary to answer any of these questions.
I think that's just sort of a little bit of
mild economist fun that the
author of the passage was having.
All right, so we've read, we've recited.
We already had a look at the graph during our survey step.
So I won't take a ton of time with it now.
We saw that the graph
compared the profits of fair trade coffee
to the profits of non fair trade coffee.
And that's it let's move on.
So now it's time for us to review.
What was this passage about?
And in order to do that,
let's zoom out to take a look at the whole thing.
And now with this view
and I know the text is quite small now,
but in this view we can see the shape of the arguments.
So in this paragraph here
we're introducing the idea of Adam Smith
you can see my tiny little note
that says "greed is good."
Here, we're introducing Aristotle who says
"it's the thought that counts."
And here we've got the focus on actions
and these three ideas are all intention with each other.
In this paragraph, we see the idea of free trade coffee
which reconciles one, two and three.
And in these final two paragraphs
we introduce ideas that complicate claims one, two and three
on how human beings aren't rational actors
in the first place.
So now I feel like I have a pretty solid handle
on this passage
and I'm gonna move on into the individual questions.
Okay, so this video was like 16 minutes long
and you won't have that much time on test day
to do the active reading step.
However, the speed of your thought is gonna be much faster
than the speed of my voice spelling out my thoughts
and with focus practice, you'll get faster and faster still.