A Cafe Hayek reader writes the following to me in an e-mail:
I have no delusions that sliced bread (or the machines and processes for making it commercially profitable) is a world-changing phenomenon. By itself, its contribution to human welfare is small compared to many other innovations and certainly compared to the accumulated innovations over time. But this fact reveals one of the beauties of the decentralized market process. To explain, I reprise here a June 28, 2004 post on the prosperity pool.
The Prosperity Pool
Don Boudreaux
I’m continually impressed by the countless, seemingly daily
improvements in the quality and range of goods and services available
on the market. I reflected on these improvements yesterday as I watched
my seven-year-old son, Thomas, play with plastic “water noodles”
in the swimming pool. Water noodles are brightly colored flotation
devices shaped like very large pieces of macaroni. They make playing in
a pool both more enjoyable and safer for young children.
In fact, think of human material prosperity as being like water
contained in a gargantuan swimming pool. The higher the “water” level,
the greater is our prosperity. Call it the “prosperity level” in the
prosperity pool.
How is this pool filled? Mostly, small drop by small drop. Countless
people line the edge of the pool, each dripping in a drop or two of
additional “water” – additional prosperity – from time to time. Very
few single drops have any noticeable effect on the prosperity level.
Had water noodles never been invented and produced, no one would have
noticed. Ditto for almost everything else that comes available on the
market – new shades of paint color for homes; improved quality of
stereo speakers; improved food-freezing techniques; slightly
longer-lasting light bulbs; a new fusion cuisine; a more-efficient
machine for weaving fabric; improved corkage for wine. The list is
practically endless.
A very few drops are large – say, the polio vaccine, and
Henry Ford’s innovation for producing automobiles. But almost all drops
are tiny. These tiny drops, though, together result in an enormously
high level of material prosperity.
Many people want the prosperity level raised noticeably, by one
gigantic infusion. Because each of us individually, even large
corporations, are small compared to the whole, no one of us can ever
really hope to raise the prosperity level noticeably. As a result, too
many of us believe that we don’t “change the world” by contributing
little drops; we arrogantly want to make a big splash – a move that
raises the prosperity level noticeably.
So what do those with a passion to “change the world” do? They
naturally call upon government, the one institution that can make a big
splash.
To make a big splash, government makes unusually large infusions
into the prosperity pool. Unfortunately, because government officials
are not directed by market signals, because of public-choice problems,
and because the nature of market prosperity is for it to grow
decentrally and incrementally, the big splashes that government makes
are too often the result of giant boulders bureaucratically tossed into
the pool. These boulders often do make big splashes. They often
noticeably change the level of the prosperity pool – too often
downward. Giant splashes, after all, are rather wild; much of the
splash ends up outside of the pool, where it dissolves.
And even if the measured level of the prosperity pool is higher
after the big splash, this higher level might well be due to the fact
that a large boulder is now in the pool; the volume of prosperity in
the pool might be lower.
Of course, maybe I’m all wet.
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{ 50 comments }
Don, I have to say that despite my misgivings about certain themes in your posts, The Prosperity Pool is a home run all around.
Good post.
We could also note that when the government drops the big boulder in the pool, not only is the water splashed wildly to evaporate outside the pool, now we have a big boulder displacing a sizable amount of the space in the pool into which no more water can go.
Furthermore we find that as only government can put the boulder in, only government can get it out. Historically government refuses to remove their FUs.
The saying 'Best thing since sliced bread' is meant to be ironic….
No it's not. And I would go out on an ad hominem limb and say that anyone who uses that phrase sarcastically or ironically is (a) not so smart as he imagines, and (b) probably has mommy/daddy issues.
What sliced bread does is super conveniently provide a portion of grain/carbs that kids (and even adults) will want to consume. That's why 99% of people who use the phrase are paying homage to sliced bread. The 1% aren't even being ironic or snarky. They're being dorks.
Actually, I think that sliced bread is a pretty significant achievement. I speak from no great expertise in the history of bread and/or breadmaking (I'm sure there's a graduate student somewhere specializing in loaf-producing), but it seems like a mechanism for realizing the economies of scale of producing an entire loaf of bread rather than baking individual portions at a time.
Long live sliced bread!
Actually, I think that sliced bread is a pretty significant achievement. I speak from no great expertise in the history of bread and/or breadmaking (I'm sure there's a graduate student somewhere specializing in loaf-producing), but it seems like a mechanism for realizing the economies of scale of producing an entire loaf of bread rather than baking individual portions at a time.
Long live sliced bread!
Actually, I think that sliced bread is a pretty significant achievement. I speak from no great expertise in the history of bread and/or breadmaking (I'm sure there's a graduate student somewhere specializing in loaf-producing), but it seems like a mechanism for realizing the economies of scale of producing an entire loaf of bread rather than baking individual portions at a time.
Long live sliced bread!
No-one from that generation I ever heard was saying "the greatest thing since sliced bread" in irony.
Sliced bread was a time-saving, sandwich making sensation.
vidyohs is right — I have never heard anyone say something was "the best thing since sliced bread" to make the point that the thing in question wasn't very worthwhile.
A good analogy, but the basic laws of physics guarantee near perfect "crowding out", at least in the simple case of water in a pool (I'm sure there are exceptions at pressure or temperature extremes I'm not aware of!).
Transposing that perfect "crowding out" example to the economy seems dicey to me, particularly because most cases when governments are called upon to add in a large way to the "prosperity pool", people have considered the prospect of perfect crowding out (at least governments associated with responsible market economies).
Sure special interests get the government to toss in pebbles or stones here and there… but when the government chooses to make big splashes, I'm not sure the laws of physics transfer over to the economy so smoothly.
weird thought –
Not only does sliced bread create exceptional prosperity because of the utility of it's own design – it also creates value even in the process of making other bread obsolete. When my wife and I have pasta, we use an uncut loaf of bread to have on the side. Never thought much about why… I suppose because it's "rustic" or something like that.
New products like sliced bread… or new fashions… or new cars… can actually bring new value to supposedly obsolete products by making them "vintage" – because it's very clear that people value "vintage" for it's own sake… for the psychological effect it has. I went to the College of William and Mary, near colonial williamsburg. They couldn't charge the price they charge for a horse-drawn carriage ride if the car hadn't been invented! It's precisely because that service is utterly obsolete that people pay for it now!
A little off topic – I just thought that was interesting… and now I feel like pasta for dinner tonight.
But only the rich get sliced bread.
The basic point needs to be repeated, expressed in many different analogies, similies, and metaphors. It is fundamentally important. I was struck by the incremental, nearly invisible nature of progress when I helped a friend in the construction business. He offered me a part-time job helping him install interior walls made of gyp-board (fragile, chalky, paper-covered stuff). I had done some of this ten years earlier, and discovered that the fasteners which buildres used to attach this material to light weight metal structural members had changed. Installation was much easier. Only someone in the industry would notice.
I have one quibble with the pool analogy: water thrown out of the pool does not "dissolve" it evaporates.
Malcom -
Yes, analogies are good, but some analogies can obscure reality.
Cutting bread is a skill all by itself, not to mention inconvenient.
It takes practice to get even slices without crushing the loaf, and you always get crumbs everywhere.
While certainly not as significant as the steam engine or transistor, it is most certainly a noteworthy accomplishment.
An interest aside is that the federal government banned sliced bread for three months during WWII to help with the war effort. What did people say for those three months? "That's the greatest thing since…hmmm?"
Talking about analogies, here is a clever one that is watched by 100s of 1000s on youtube. It is about the new era of responsibility that just arrived in White House.
Here is another clever one that describes the stimulus – the difference between rhetoric and reality
It could also drain into the earth.
Don, I remember that post and it's a classic, but you missed a golden opportunity (pun intended) to point out that all too often Government is more like the kid who adds something warm and yellow to the pool!
There's potential for an interesting concretization of the invisible hand here. None of the individuals at the edge of the pool intend to add to the pool, they just want to add to their own piece of the pool. And the only way they can do that is to add to the pieces of others, all of which happen to be part of the pool. The pool only grows when individuals want to add to their own pools and accept that the only way to do so is to add to the pools of others – any other mentality can only result in moving the water around or even throwing rocks.
Sliced bread sounds insignificant, unless you don't have sliced bread.
That was a wonderful description, and, like all really good economics, as accessible to laymen as professionals, and to schoolchildren as adults.
So often the admirer-er of nature is told not to discount man and his existence as all part of nature. It's claimed to be unnatural to dissociate man from nature. The argument is well made and hard to refute.
Likewise when I hear libertarians trying to separate the market from the governance in which it operates I would argue to do so is un-natural.
The libertarian who views pure markets with no regard for rules,planning and governance is not dissimilar to the naturalist who considers man as an artificial thing apart from nature.
The prosperity pool is filled with goods from both the markets and government planning. Likewise sometimes market failures and externalities as well as government ineptitude drain the pool.
The saying 'Best thing since sliced bread' is meant to be ironic….
No it's not. And I would go out on an ad hominem limb and say that anyone who uses that phrase sarcastically or ironically is (a) not so smart as he imagines, and (b) probably has mommy/daddy issues.
What sliced bread does is super conveniently provide a portion of grain/carbs that kids (and even adults) will want to consume. That's why 99% of people who use the phrase are paying homage to sliced bread. The 1% aren't even being ironic or snarky. They're being dorks.
************************
Over here in Britain, the phrase "best thing since sliced bread" is definitely ironic. It is taken to refer to factory-produced bread that came to the fore in the 1960s. "Sliced bread" is synonymous with the blander-tasting, long shelf-life loaves made by a new process that allowed poorer quality flour to be used and which displaced the loaves made by local bakers, many of whom sold their products on a home-delivery round.
http://en.wikipedia.org/wiki/Chorleywood_Bread_Process
Regards
Will
Only an idiot would say that a political construct is natural…
MnM -
He's not an idiot and government is no more a construct than the market is.
IF there is such a thing as a certified idiot, he will definitely qualify. He has proven it time and time again. I am not talking about a handful of time, instead, stupidities emanated from him day after day, non stop, for 3-4 years. It is more than enough time to graduate from the school of brickheads. He has done it with flying colors.
The frustrating fact about Muirgeo is that he seems unable to grasp certain simple claims. Most prominently, he is forever saying that libertarians don't believe in rules. We counter by saying, "yes we do, we just believe that rules evolved spontaneously — such as rules of grammar — are generally more effective and better than are rules consciously designed and imposed from above."
Now Muirgeo and anyone else is perfectly free to disagree with our assessment of the relative merits of the different sorts of rules. Perhaps we libertarians are wrong. But Muirgeo is not free to continue to pretend (or to continue to forget) that libertarians without question believe in rules.
Government is as much a part of nature as wolves devouring sheep, and parasites, let's not forget parasites.
The question is: can we live without parasites?
We may not be able to get rid of them, but certainly we should try to reduce their numbers, and we certainly should not let them govern us.
government planning
Psst! Hey buddy, I've got a five year plan for you.
It is possible to plan certain things via government, like invasions of other countries and the construction of internment camps and roads.
What government cannot plan is our prosperity or our posterity.
"We counter by saying, "yes we do, we just believe that rules evolved spontaneously — such as rules of grammar — are generally more effective and better than are rules consciously designed and imposed from above."
Don B
Where in all of the modern world or all of human history does such a market(based on spontaneous rules alone) exist?
I know somewhat of what you believe and I know what the "nature purists" believes, but does it exist in the real world?
Markets require governance. That includes spontaneous rules, laws and planning.
How full would the Prosperity Pool be with out social security, unemployment, public education, catalytic convertors or a moon shot? The fullest pools seem to have more then just spotaneous rules but also the best planning and laws however imperfect.
How full would the Prosperity Pool be with out social security, unemployment, public education, catalytic convertors or a moon shot?
Fuller.
Many of these programs actually have a negative impact on productivity: by giving easier alternatives to working (why do we have to import agricultural labor?), by encouraging free-loading, and by diverting businesses from productive endeavor to lobbying, among others.
IOW, redistribution enables and encourages more people to swim in the pool without actually contributing to it.
Not to mention the costs of bureaucracy (a goodly part of the reason CA is in a fiscal hole).
You just don't see very deep.
Have you apologized, Mr. Strawman for your lies?
It is an illusion that your tiny brain couldn't tell apart from the reality. look closer, you will see big boulders lying at the bottom of the pool due to all the big splashes that the government has made.
In all of human history, Where and When did collectopia ever exist, where market or society functioned without "speculation", corruption, recessions, bankruptcies, theft, murder and scams?
Sorry Will. I just ran this by an English born guy who doesn't particularly like markets the way I do, and he calls BS on you too.
The mislead emailer doesn't understand that the world and it's wonderful steps of progress don't happen leaps and jerks; those sudden lunges forward are just the things we notice from a distance.
I'd highly recommend any of the books written by Henry Petroski for a more in depth look at the nuances of technological advancement.
I'd like to ask muirgeo what he thinks if the argument was shifted from the nebulous concept of "government" to mean specifically the federal government. Maybe you think these government actions add to prosperity, maybe everyone in California or Vermont does too, but is it necessary to impose them on 300 million Americans? I have never heard an argument from a leftist as to why they think their "good" ideas need to be applied universally.
"He's not an idiot and government is no more a construct than the market is.
Posted by: Daniel Kuehn | Jul 8, 2009 5:08:02 PM"
Your response here Disingenious Kuehn, simply makes it clear that you too are an idiot.
You have had time to assess muirduck the author of an endless stream of muirpidities (that is a stupidity authored by muirduck), yet you haven't the intelligence, wisdom, education, and experience to instantly recognize him for what he is. It is a sad commentary on your lack of intellectual strength and honesty.
But, then your response doesn't surprise me because you were easy to peg as well.
This is muirpidity #1.
1. “The rising income discrepancy is what prevents people from obtaining affordable housing.”
Posted by: muirgeo Nov 2007
Which after being hounded for months on end to explain what he said and how it had any validity or application, he responded with muirpidity #18:
18. It's called Gentrification. It's a well described social economic / market phenomenon.
" Rising housing costs in gentrifying districts may ensure that poor residents who do move leave the neighborhood, rather than settle elsewhere in it. Since their places usually are taken by more affluent, better educated people, the neighborhood's character and demographics change."
gen•tri•fi•ca•tion
Pronunciation:
\ˌjen-trə-fə-ˈkā-shən\
Function:
noun
Date:
1964
: the process of renewal and rebuilding accompanying the influx of middle-class or affluent people into deteriorating areas that often displaces poorer residents
or
19.
I'm pro-democracy. Not a socialist or a communist by any definition. Posted by: muirgeo | Aug 18, 2008 8:46:04 PM
muirduck is self certified idiot.
Now to the rest of your own unique idiocy"
"and government is no more a construct than the market is."
Government is a legal fiction, all governments are legal fictions, and have been from the beginning of time. They are agreements among men, artificial constructs, that purport to direct the interpersonal relationships of men in beneficial ways.
A market is the simple one time exchange of goods or services between two individuals.
No construct: A market can happen with no set time, no set place, no set products, no set price, no set rules, nothing other than the random coming together of two individuals who discover thay have goods or services to exchange….all the other things they work out on the spot. Having worked them out to their own satisfaction, they make the exchange and part. All the decisions they made in conducting their market exchange do not hold any validity or authority to any other two people who come together to exchange.
Here DK, is another treat: enjoy.
"14. There will always be regulation. The key is to make it minimalist but effective. The biggest danger to effective regulation is allowing the regulated too near the process of making regulations and too near the process of enforcing them.
Posted by: muirgeo | Mar 31, 2008 1:41:01 PM"
You got to remember DK, that this was written by an idiot that constantly says he loves democracy and equality, is no socialist or statist.
LOL, that is why muirduck is no more than comic relief to most of us.
Think how much of our precious health care dollars have been saved because people can buy sliced bread, instead of sacrificing their fingers.
Don -
RE: "We counter by saying, "yes we do, we just believe that rules evolved spontaneously — such as rules of grammar — are generally more effective and better than are rules consciously designed and imposed from above.""
I think you're oversimplifying muirgeo's argument to make your point. His whole point is that the rules that govern markets – the regulatory structure of the state, etc. – ARE evolved spontaneously over time. Now, you may disagree with that proposition, but if you just ignore this central point of his you're not giving him a fair hearing. He's saying libertarians often ignore the emergent rules that ARE out there and mistakenly identify them as something unnatural.
Feel free to disagree, but don't accuse him of drawing a conclusion that can only be drawn if you apply your own assumptions to his arguments.
In muirgeo's second posts he seems to push against your specific vocabulary choice of "spontaneous" – but I think the overarching point is that so called "libertarians" are inaccurately ascribing "un-naturalness" to government. I hate to break it to you but regardless of whether that overarching point is proved true or not – it's a fair point made in good faith.
vidyohs -
RE: "Your response here Disingenious Kuehn, simply makes it clear that you too are an idiot."
Thanks for clearing that up. I can always count on you for constructive comments on here.
Disingenious Kuehn,
LOL, once again you prove me right.
Your little comment to Don is an example. None of what you say is an interpretation of what muirduck said. Hell, not even muirduck knows what he said. Do you need to see more examples of his crippled brain, I have more on the list?
What you posted to Don above is your thoughts and ideas, not muirduck's.
As to the constructive comments, my son, they are constructive and designed to speed things along without letting the mindless troll derail them, or letting you, as jr. troll assist him in that derailing.
Thank you very much.
Muirgeo has frequently asserted that we believe in "no" rules.
His whole point is that the rules that govern markets – the regulatory structure of the state, etc. – ARE evolved spontaneously over time.
We don't think the regulatory structure are evolved spontaneously among market participants, but are arbitrarily created via influence and political pressure. A sort of Frankenstein's monster version of the spontaneous order.
Spontaneously evolved market order comes from negotiations of market participants for mutual benefit. The purpose of political regulation is to increase the benefit to one party at the expense of another. That is, to supercede the negotiation process with arbitrary external authority.
Libertarians hold that the only legitimate rules that may constitute government are rules that apply equally to all individuals and for the purpose of prohibiting fraud and aggression.
IOW, the funtion of government is to use the threat of force, fear, to make those who are not civilized, behave as though they were.
Unfortunately, the form of government that has evolved as the state, political hierarchy, is exempted from such rules and often operates in a perverse fashion, using the tactics of the uncivilized to enforce rules and policies that have a deleterious effect on social harmony.
Apparently that's what a lot of people seem to want in their government, indicating that social harmony is not their aim, but rather, special benefit and privilege.
Sam -
RE: "Muirgeo has frequently asserted that we believe in "no" rules."
Read his post. He didn't say that people on this blog all believe that. He said that libertarians who do believe that are problematic for the reasons he listed. Reasonable standards of debate would allow you to accept the unspoken corrollary that "to the extent that someone ignores this, even if they don't ignore it completely, it is problematic". I'm not saying he hasn't had outbursts in the past – but this post clearly addresses the practice of assuming that you can categorically separate out government from everything else. He said, verbatim, "Likewise when I hear libertarians trying to separate the market from the governance in which it operates I would argue to do so is un-natural."
Re: "We don't think the regulatory structure are evolved spontaneously among market participants, but are arbitrarily created via influence and political pressure. A sort of Frankenstein's monster version of the spontaneous order."
Right. You think that. Many very reasonable, non-idiotic people don't think that. You can't conclude muirgeo's an idiot for not holding all your assumptions. If there's a disagreement you argue over the assumptions (which usually does happen here – on a good day). Not every assumption put forward here is gospel truth, and there are some people who like to discuss these topics without adopting all the assumptions that everyone else does.
I didn't call him an idiot, though I have been tempted at times.
I have noticed that he has never repudiated the charge that he thinks libertarians believe in "no rules". In fact, he thinks that's what we mean by free markets; absolutely no rules.
Many very reasonable, non-idiotic people don't think that.
Mild argument from authority.
Anyhow, let's ask him: George, do you think libertarians believe there should be no rules?
Well, I opened a can of worms,didn't I? A few thoughts.
Bad inference. I wasn't referring to government, but rather the rules that they create (please don't confuse the intent of those rules with their actual results). These rules might be natural…if you insist on confusing the meanings of natural and synthetic.
I don't the word spontaneous means what you think it means…
I think you might be committing the same mistake was muirgeo. Libertarians aren't anarchists.
Muirgeo often accuses frequenters of this blog, and libertarians more generally, of believing in "no rules". True, he hasn't done it to any specific commenter on this thread, but he has done it to me, personally, in the past.
When I attempted to correct him, (i.g. about libertarians vs. anarchists) he accused me of being the "equivalent of an anarchist", whatever that might be. His premise is that I don't believe what I say I believe, but rather that I believe what he says I believe. He makes having a conversation with him difficult (if not impossible).
As Dr. Boudreaux points out, we have corrected him often. It's okay to be mistaken. If you were to mess up your sums, say 2+2=5, and were corrected once or twice, that's fine. People make mistakes. But if, after two years of being repeatedly told that 2+2=4, you continue to answer 5, it can be reasonably concluded that you are either an idiot, or incapable of honesty.
I'll second this.
BTW, "the market" is not a construct. Our calling it "the market" is a construct.
MnM -
RE: "I don't the word spontaneous means what you think it means…"
I was just using Don's words… they wouldn't have been my prefered words, but I knew what he was getting at: emergent order.
RE: "I think you might be committing the same mistake was muirgeo. Libertarians aren't anarchists. "
Of course not – I'm not saying this.
That muirgeo is guilty of being overly zealous I'm not denying. I think it's true of several people that post regularly here. But that doesn't make his point any less obvious – to the extent that any libertarian thinks of government as being something inherently unnatural, inherently destructive, or inherently alien, they are making a huge analytical mistake. Don makes this mistake quite plainly. Insofar as he is saying that, I agree with him, and I don't think holding that position is worthy of being singled out as an idiot. Maybe being singled out as holding a different opinion, but not as an idiot.
Of course muirgeo also brings some gusto to his pronouncements. I'm not defending that necessarily. But even if he did make this false claim that's being ascribed to him (I don't see it in the text – he said "when I hear libertarians", not "all libertarians say") how in the world is that more outrageous or worthy of censure than you dead-panning that he's an idiot.
Gimme a break. Here you are harping on and on about why everyone should read every word that Krugman has ever written in journals, before commenting on any of his blog post. Yet, you want us to respond to muirgeo not based on his filthy track record for 4 years, but based on a single comment. No Mr. Kuehn, Muirgeo is a fool, people on this blog are smart enough to come to that conclusion – 4 years is long enough and people on this blog are smarter than you give them credit for.
The very purpose of most government rules is to ostensibly protect people from the rules of the free market–if by "rules" you mean "regulations".
The rules of laissez faire, like the laws of physics, can be merciless. Particularly when there is nobody there to bail you out with funds stolen from your neighbors.