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Freeman Essay #69: “Simplistic Answers”

In the October 2001 Freeman I explained that those of us who counsel “Let the market handle it” offer advice that is far from simplistic; instead, our advice is grounded in the recognition of society’s enormous complexity.  Those whose answers are simplistic are those who say “Let the government handle it.”  (Of all the many columns and op-eds that I’ve written over the past 30-plus years, this one might well be my personal favorite.)  My counsel in full is below the fold.

We’ve all been warned to beware of people who think that they have all the answers—who believe themselves to hold the key to Truth—who have a simplistic formula alleged to be the solution to all of the world’s problems.

It’s wise to heed this warning, for, regrettably, people with simplistic answers are not uncommon and they frequently wear masks that make them appear to be deep, careful, and open-minded thinkers. Worse, when they are given power they become dangerous to others in direct proportion to their power.

But here I have a confession to make: in the past I’ve often felt pangs of guilt stemming from my own uncompromising advocacy of free markets. I agree completely that sweeping, simplistic “answers” to society’s ills are toxic, for they are never really answers. People issuing such “solutions” are, at best, naïve romantics blind to the immense complexity of reality—a complexity so deep and unfathomable as to defy any attempt at simplistic description or reform.

And yet I routinely issue the seemingly simplistic advice to rely on the market. Am I guilty of the same sin of hubris that I lay at the feet of central planners and other statists and utopians? Is my enthusiastic endorsement of the market just as arrogant, careless, and unthinking as are statists’ proposals to remake the world? Am I a simpleton with simplistic answers?

I believe not.

I deny the equivalence between uncompromising advocacy of the market and advocacy of statist schemes not because I stubbornly and hypocritically believe that my blueprint for remaking reality is the One True Answer. Rather, I deny the equivalence because, unlike those who would substitute state regulation for the market, I have no blueprint for reality. I reject the very idea of blueprints for society. I deny that some genius or committee of geniuses can use coercion to outperform the market at satisfying human wants.

It’s important not to judge the equivalence or difference between various policy proposals by the number of words used by advocates. Think, for example, of the many proposals for further socializing health care in the United States—with Hillary Clinton’s plan of several years ago being the most well known. These plans seemingly are careful and considered. They contain lots of words composed by lots of people who’ve spent lots of time in school and who read lots more books than average folks do.

Compare such plans to my own recommendation: let the market handle health care. Have government involved only in the same way that it’s involved in vegetable gardening, doorknob manufacturing, and the production of Ideas on Liberty — namely, protect persons and property from violence and theft. Period. That’s it. Nothing more.

My plan sounds simplistic. And because I offer it for every facet of the economy, I might be accused also of being a knee-jerk ideologue with simplistic answers—one who believes in a one-size-fits-all solution to very different problems.

The reality is quite the opposite. Saying “let the market handle it” actually is to endorse an unfathomably complex arrangement for dealing with the issue at hand. Recommending the market over government intervention is to recognize that neither he who recommends the market nor anyone else possesses sufficient information and knowledge to determine or even to foresee what particular methods are best for dealing with the problem.

To recommend the market is, in fact, to recommend letting millions of creative people, each with different perspectives and different bits of knowledge, each voluntarily contribute his own ideas and efforts toward dealing with the problem. It is to recommend not a single solution but, instead, a decentralized process that calls forth myriad competing experiments and, then, discovers those solutions that work best under the circumstances. This process is flexible and it encourages creativity. It also denies to anyone the power to unilaterally impose his own vision on others.

In short, to say, “let the market handle it,” is to say, “I have no simplistic plan; I reject all simplistic plans. Only a competitive, decentralized institution interlaced with dependable feedback loops—the market—can be relied on to discover a sufficiently complex and detailed way to handle the problem in question.”

The most elaborate concoction of the minds of the finest Ivy League scholars, written in minute and lengthy detail, is a tiny clump of dirt beside the Everest that is the stock of creativity and knowledge used by the market to deal with even routine problems.

I refer the reader again—as I do so often—to Leonard Read’s brilliant essay “I, Pencil.” Suppose someone were to ask me, “What can we do to ensure a steady supply of inexpensive, high-quality pencils?” My response would be unambiguous: “Leave it to the market.” As Read’s essay shows so clearly, this response is no simplistic mantra. It is, rather, a shorthand way of saying, “Producing pencils is a task of gargantuan complexity. No one can know more than a minuscule fraction of all that there is to know about how to achieve this outcome. To get a steady supply of pencils requires that each person throughout the globe whose creativity, knowledge, and effort might prove useful in the production of pencils be encouraged to contribute this creativity, knowledge, and effort in a coordinated way. We know from vast amounts of experience that the market calls forth and coordinates this creativity, knowledge, and effort far more reliably than do government regulators. Therefore, if you want a steady supply of high-quality pencils, you’d better avoid the simplistic ‘solution’ of turning the task over to the state.”

Perhaps the single most magnificent fact about life in a market economy is that each of us benefits from the creativity, knowledge, and efforts of millions upon millions of our fellows. And to receive these benefits, all that we must do in our capacity as citizens is to respect the property rights and peaceful choices of others—which entails being on guard against people with simplistic answers. It’s really quite simple.