1. Person A receives a kidney transplant as a donation from person B. 2. A short time later, person B is having financial troubles and her home may go into foreclosure. Person A is considering giving her some money to help out.
Is this ethical? According to Cohen, it's totally fine, as long as there is—and was never—any sort of quid pro quo arrangement between the kidney and the money. If it's a sale, or even an implicit trade, it's unethical. If it's just a sequence of unrelated donations, it's fine. That's Cohen's line.
Apparently, both of these gifts are noble acts, worthy of the highest praise and admiration. Unless, that is, there is some reason to think they are linked together. In that case, the reallocation of resources (kidney, cash) would be a despicable market transaction.
I suspect that few economists would concur. Indeed, the essence of market transactions is a kind of reciprocal altruism, enforced by contract. It might be nice if the world could work using pure altruism alone, but that seems highly unrealistic. The sad truth is that under the Ethicist's code of conduct, we have more deaths and more foreclosures than necessary, all in the name of fairness.
Would legalizing the organ trade really result in saved lives? Probably. There's little doubt it would increase the number of available organs, and that would probably result in more transplants. But the thing is, it wouldn't be anything like a happy college student in the States donating sperm. You'd have rich Americans and Saudis buying the kidneys of desperate people in the Philipines. Or Indian tsunami victims selling their kidneys to rich Brahmins under the worst circumstances. An open kidney trade may make for more total successful transplants, but instead of the current situation, in which kidneys come from a variety of people in different circumstances and go to a variety of people of different means, you would have a flow of kidneys from poor people to rich people.
Some people (me, for instance) are really nervous about commodifying things like a decent education, or clean water, or important (or even just nice-to-have) internal organs because they should be allocated according to need, not income. An open market for organs might save a few additional lives. The price: It would further compromise the ideal that health and life should be rights rather than commodities. Is that trade worth it? I'm not sure.
But even if Mankiw is right that a legal organ trade would save lives, he's certainly wrong that those instrumental kidney transactions would be "worthy of the highest praise and admiration." Selling a kidney to buy food for your family is tragic; donating one exclusively for good emotional or moral reasons is admirable precisely because it's not about money.
By the way, Iran still has a legal kidney trade (PDF). So Mankiw has a friend in Ahmadinejad, on this issue at least.
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