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Michael J. SandelWhat Money Can’t Buy: The Moral Limits of Markets
Nonfiction | Book | Adult | Published in 2012A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
Chapter 4Chapter Summaries & Analyses
Chapter 4 Summary: “Markets in Life and Death”
Michael Rice, a Wal-Mart employee, died suddenly of a heart attack. Wal-Mart had taken out a life insurance policy on their employee, allegedly without his or his wife’s knowledge, and collected $300,000 from his death.
Chapter 4, Section 1 Summary: “Janitor’s Insurance”
It has long been the practice of companies to take out life insurance on their CEOs and top executives to offset the significant loss of skill and knowledge if they die, and the lost income incurred as new staff are found and trained. Insurance on rank-and-file workers, known as “janitor’s insurance”—as was the case in Michael Rice’s case study—is a new phenomenon. The investments in worker insurance are tax-free. Most employees aren’t told of the schemes, or in some cases, they give consent based on a comparatively small payout that their family would receive in the case of their death. These employees don’t know of the discrepancy between what their family would receive compared to what the company would receive.
As well as the lack of informed consent, workers are objectified in this scheme; They are commodities worth more dead than alive. Life insurance morphs from a scheme designed to safeguard families into a corporate tax break.
Chapter 4, Section 2 Summary: “Viaticals: You Bet Your Life”
Many people suffering from AIDS in the 1990s participated in a scheme whereby an individual would buy out their life insurance policy and pay them a significant portion of it, allowing them to access their life insurance money immediately. There are moral complications to this kind of investment, as the insurance purchaser hopes that the beneficiary will die sooner rather than later, as the longer they live, the less the final payout will be.
Chapter 4, Section 3 Summary: “Death Pools”
Death pools, such as stiffs.com, are a form of gambling whereby participants bet on which celebrities will die that year. Odds are affected by factors such as illness and age. There are moral concerns with commodifying people’s deaths and treating them as a focus of speculation and amusement.
Chapter 4, Section 4 Summary: “A Brief Moral History of Life Insurance”
Life insurance emerged in Britain in the late 17th century, but didn’t develop in many countries until the mid-19th century, as many felt that a human life couldn’t—and shouldn’t—be commodified.
In Britain, death pools quickly became popular. The line between betting and insurance policies became blurred. People took out insurance on ships they didn’t own in the hopes that they would sink. In another case, in 1765 people betted on whether a group of German refugees would live or die. The Gambling Act of 1774 limited insurance policies to those who would be affected by the individual’s death.
Life insurance agents in America were traditionally treated with derision; they were seen as salesmen of death, profiting off of tragedy. Further moral problems emerged in that these policies could be bought and sold—a problem that reemerged with viaticals in the 1990s.
Chapter 4, Section 5 Summary: “The Terrorism Futures Market”
In 2003, an agency within the Department of Defense (U.S.A.), proposed a website that allowed people to anonymously place bets on the deaths of world leaders, terrorist attacks, and wars; the theory was that those willing to place large bets would likely have reliable sources of information, thereby allowing the Department of Defense to make inferences about terrorist plans, for example.
This concept was quickly condemned due to moral objections, as well as for the potential for corruption: Terrorists would have a possible monetary incentive to carry out a given action. However, many maintain that the market is the most reliable way to make predictions, and that the positives of the scheme would outweigh the concerns.
Chapter 4, Section 6 Summary: “The Lives of Strangers”
The viaticals market moved to the life insurance policies of seniors, who could sell their policies to others, allowing them to benefit from the accrued money during their lifetime and allowing the investors to cash in the remainder when these individuals died. This is disadvantageous to insurance companies; previously, many people just let their life insurance lapse, allowing the companies to avoid payouts. In other cases, people outlive their estimated life expectancy, causing investors to lose out.
Spin-life policies soon emerged, where wealthy elderly people took out life insurance simply to sell it to investors at a profit. A number of these cases have ended up in court. In some cases, insurance companies have objected to paying enormous payouts to investors who were unaffected by the individual’s death. In other cases, those involved in spin-life policies claim to have been misled, and feel uncomfortable at not knowing who holds their life insurance.
In 2009, laws came into effect to ban spin-life policies initiated by investors, although insurance companies still allow ill or elderly people to initiate sale of their own policy to strangers. This market remains somewhat blurred in terms of legality and morality.
Chapter 4, Section 7 Summary: “Death Bonds”
Life settlements were packaged into bonds by Wall Street in 2009: Insurance payouts when people died would be paid out to bond holders. Some believe that the comparative anonymity and abstractness of death bonds make this practice less morally repugnant than janitor’s insurance and viaticals, but Sandel suggests that society has cycled back to the 17th-century British practice of death speculation and betting.
Chapter 4 Analysis
In this chapter, Sandel continues to expound on his work’s primary theme, The Immorality of Over-Commodification. Sandel suggests that the commodification of death—through life insurance policies, death bonds, viaticals, and janitor’s insurance—has a corruptive effect on humanity through commodifying, and therefore objectifying, individual lives and deaths. These policies position investors to hope for the deaths of the insured individuals in order to profit financially. Sandel suggests that this cynical practice debases us on a societal level. He continues to advocate for The Importance of Debate on Market Values, suggesting that policies that favor the deaths of humans for material gain is a practice that should be publicly reexamined and curtailed.
In the case of janitor’s insurance, corruption is particularly evident as large, multi-million-dollar corporations benefit from the deaths of their employees. Even before workers die, these policies are advantageous to companies, as these investments are tax-free. Intentionally creating further discomfort around the immorality of the practice, Sandel draws attention to the absence of workers’ consent: “[F]ew workers were aware that their companies had put a price on their heads” (161). In other cases, consent is based on intentionally misleading premises: “[M]ost workers accepted the offer [of life insurance policies], unaware of the vast discrepancy between the $5,000 benefit their families would receive and the hundreds of thousands the company would collect upon their deaths” (164). Sandel emphasizes the cynical and misleading nature of this practice, arguing that free-market principles enable the concern for money-making to overtake concerns around ethics and individuals’ wellbeing.
Furthermore, the issue of janitor’s insurance raises the theme of Free-Market Values and Social Inequality. Policies originally intended to safeguard individuals’ dependents can now instead benefit already wealthy companies, leaving the dependents with very little, or often, with nothing: “[A] twenty-nine-year-old man […] died of AIDS in 1992, yielding a $339,000 death benefit for the company that owned the music store where he had worked briefly. His family received nothing” (161). As is illustrated in this example, janitor’s insurance allows corporations to benefit over bereaved families in need, which supports Sandel’s contention that market values favor the wealthy. As surmised by The Wall Street Journal, “life insurance morphed from a safety net for the bereaved into a strategy of corporate finance” (162).
Similarly, Sandel illustrates the lack of ethics in viaticals by quoting William Scott Page, the president of a viatical company. Scott Page’s language reduces the unexpected longevity of terminally-ill individuals to a disappointing investment: “There have been some phenomenal returns, and there have been some horror stories where people live longer” (167, emphasis added). Scott Page goes on to explain, “that’s sort of the excitement of the viatical settlement. There is no exact science in predicting someone’s death” (167). Scott Page’s disappointment at someone’s longevity (“horror stories”) as well as his labelling of the unpredictability of death from AIDS—a global tragedy that killed, and continues to kill, millions—as “excitement” illustrates the lack of an ethical dimension to this kind of pure market thinking.
Even the comparatively anonymous and ambiguous death bonds are still characterized as morally corrupting by Sandel, as the investors are still hoping for death, rather than life, which is a morally depraved and problematic position from which to earn capital. Sandel emphasizes this when he points out that developments that could improve quality and longevity of life for the masses would be disadvantageous to investors: “[D]eath bond prices would fall if national health policy, environmental standards, or improved eating and exercise habits led to better health and longer lives” (199). It is immoral, Sandel suggests, to wager on death, rather than on extending life; this depraved investment system has been allowed by unfettered market values.
Sandel draws on the historical instances of immoral insurance schemes benefiting London-dwellers from ships sinking and refugees dying, which led to the institution of the 1765 Gamblers Act. He suggests that society has regressed back to the kind of profiteering the law-makers in 18th-century Britain hoped to avoid, in the form of spin-life policies and death bonds. He suggests that, “today, markets in life and death have outrun the social purposes and moral norms that once constrained them” (182). Sandel continues to suggest that free-market values, once introduced, are difficult to curtail, and therefore require close examination: “speculative temptation prove[s] difficult to contain” (199). He argues that “for society as a whole, such attitudes, and the institutions that encourage them, are coarsening and corrupting” (177).
In terms of death insurance and bonds, as well as the proposed terrorist betting scheme, Sandel points out that these schemes “ignore the ways that markets crowd out norms” (188). As he has pointed out in previous chapters, commodifying something—in this case, human death—changes the way that individuals relate to the concept. The information that may have been gained through the Defense betting scheme, given that “markets are extremely efficient, effective and timely aggregators of dispersed and even hidden information” (185), is nevertheless outweighed by the fact that the value of human life and death is inevitably demeaned in the scheme.
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