Suppose that I value a widget at $30. Suppose that the widget costs the widget-manufacturer $20 to produce, but, due to monopoly power on their part, they can charge $100 per widget.
The economic calculus for this problem is as follows. $30 (widget valuation) - $100 (widget price) = -$70 to me; $100 (widget price) - $20 (widget cost) = $80 to widget producers. $80 - $70 = +$10 total value. Ordinarily, this wouldn’t imply that utilitarians are required to spend all their money on widgets because for a function to convert dollars to utils u($), u’($)>0, u″($)<0 and widget-producers usually have higher $ then widget consumers.
But suppose the widget monopolist is a poor worker commune. The profits go directly to the workers who, on average, have lower $ then I do. It seems like buying widgets would be more moral then, say, donating $80 to the same group of poor people ($80 - $80 = $0) because the widget purchase slightly compensates me for the donation in a way that is greater then the cost of the recipient to produce the widget.
And yet, I feel even less moral compunction to buy widgets then I do to donate $80 to GiveDirectly. Is this just an arbitrary, unjustifiable, subconscious desire to shove economic transactions into a separate domain from charitable donations or is there actually some mistake in the utilitarian logic here? If there isn’t a mistake in the logic, is this something that the Open Philanthropy Project should be looking at?
[Question inspired by a similar question at the end of chapter 7 of Steven Landsburg’s The Armchair Economist]