Values Arbitrage

Taking advantage of differences in priorities, ethics, culture, and systems of meaning for one’s own gain

Arbitrage is a financial term that refers to “the purchase and sale of an asset in order to profit from a difference in the asset’s price between markets. It is a trade that profits by exploiting the price differences of identical or similar financial instruments in different markets or in different forms.”[1]

I’ve become fascinated by, and just as often horrified by, examples of what I now consider values arbitrage: A person, institution, or even society or cultural group with one set of values taking advantage of the differences in priorities, ethics, culture, systems of meaning between themselves and the other person or group for their own gain (money, influence, power, whatever) or just to get things done expediently.

Sometimes it’s neutral. Or practical. Or can’t be helped (things are complicated). Or, of benefit to both parties. More often it’s deliberately or negligently exploitative, deceitful, or manipulative. At its most corrosive, it’s ongoing, systemic abuse.

Can you help me think of examples?

One that frequently comes to mind for me is when politicians with personal geopolitical goals use the language of patriotism, love of country, and personal honor and sacrifice to recruit other people’s children to join the military to accomplish ends that may not be directly related to their country’s actual defense. This specific end may be access to natural resources (oil?) or an advantageous supply chain route (direct line to/from ports?).

But we see this in a more general sense too. On a societal level, we rah-rah sell heroism, bravery, and self-sacrifice to one socioeconomic group more so than other demographic subsets, and, gee, that group bears the lion’s share of combat deaths, PTSD, and other wartime fallout than others. But, hey, we let them own heroism and patriotism in exchange.

I’m trying to tease out what is/isn’t values arbitrage as elements of the concept overlap in so many ways with a whole cabal of unsavory behaviors — cheating, lying, manipulating, control.

Ben Sasse, a Republican senator from Nebraska, wrote an article that was published in The Atlantic on January 16, 2021 (“QAnon Is Destroying the GOP From Within”). He writes, “Until last week [referring to the events at the Capitol on January 6], many party leaders and consultants thought they could preach the Constitution while winking at QAnon. They can’t. The GOP must reject conspiracy theories or be consumed by them.”

What he refers to, I think, qualifies as values arbitrage: One group (the Republican party) deliberately taking advantage of differences in values, priorities, and understandings of another group (QAnon and related conspiracy theorists) for personal gain (votes, political power). For some Republicans, there may be no material differences with QAnon, but that’s another matter and that’s exactly what Sasse’s opinion piece calls attention to. These are not the values and beliefs of the Republican Party as he knows it and there’s a problem in the “winking.” He’s calling out their arbitrage of values.

As I small business owner, I see the broad manipulation of two sets of values, two overarching stories, in the business world to the extreme advantage of one group. Some businesses actually operate by the rules of bootstrapping and la vida laissez faire, such as it plays out. It’s really their only option and they deal — no biggie — they buy in and accept the principles of making it on their own and surviving and thriving in a free market free for all.

On the other hand, mammoth, multinational others may conduct much of their affairs sufficiently protected from market gales with loopholes, legal machinations, government handouts, too-big-too-fail exceptions. And, it’s my understanding, such distinctions even go back to the birth of capitalism and the Merchants of Venice world.[2] After certain Italian families became wealthy from free-market practices, they used their power and influence to maintain their position — with regulations and protectionist policies that curbed the free market for newcomers to the game and weighted things in their favor. Is this an example of exploiting values differences somehow, or is it merely a sheer expression of power, taking what one can by force? Is laissez-faire for thee but not for me PR, simply controlling the message — using crafty language and clever framing for advantage?

What about women and our historical (and/or innate and/or natural/nurtured-hybrid) proclivities to tend to, to prioritize, to often over-perform when it comes to societally under-appreciated caregiving, relationships, and emotional work? We’ve heard about how many women have left the workforce during the pandemic to care for children and seniors, and it reminds of age-old tradeoffs. Is it values arbitrage when society at large takes advantage of those who prioritize relationships and care work, reaping economic and emotional benefits that are not paid for meaningfully in some way?

What about teachers? Is it values arbitrage, exploitation of values differences, when we take advantage of their commitments to education, their dedication to children, to underpay and undervalue them?

What about parents and children? There are whole fields of study devoted to the dark side of family dynamics and family communication.[3] Do parents, even good ones, routinely or occasionally take advantage of their children’s very different values, culture, sense of meaning for their own gain (control, compliance, other)?[4]

Anyway, I want to introduce the term and concept of values arbitrage because I foresee wanting to use it more here and would like to hear about other instances you can think of — the nefarious examples, which to be honest have been the only kind to cement themselves in my mind so far, but also neutral or mutually beneficial ones. I’m also going to try to give the latter more thought for a future article. (Actually, as I binged through Bridgerton recently, some beginning thoughts on neutral or mutually beneficial examples began forming, but they’re still not defined enough yet.)

Whether you’re viewing life through a collaborative lens, a competitive lens, or some blended view, we’re all living in a sea of conflicting ideas and values. Good ones, challenging ones, competing ones. When there’s a spread between values, what we do with and in that gap? Where do we compromise ideas and ideals? Especially as they relate to priorities, ethics, and what we value and find meaningful? How does this all play out in the public sphere and in the intimacy of our personal decisions and relationships?

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[1] Arbitrage, Investopedia, https://www.investopedia.com/terms/a/arbitrage.asp

[2] Can anyone help me with a confirmation of this? Specifics? A reference? I’ve read about this in two nonfiction books in the last five years, but am unable to place either source.

[3] Loreen N. Olson, Elizabeth A. Baiocchi-Wagner, Jessica M. Wilson-Kratzer, and Sarah E. Symonds, The Dark Side of Family Communication (Hoboken, NJ: Wiley, 2012).

[4] Though she doesn’t articulate it this way, Shefali Tsabary, PhD, author of The Awakened Family: How to Raise Empowered, Resilient, and Conscious Children (New York: Penguin Books, 2017), offers a beautiful and compelling antidote in her book for countering impulses to manipulate and control children (“for their own good”), whether we do that through values arbitrage or other means.