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Like Marginal Revolution’s Slogan

A Cafe Hayek reader writes the following to me in an e-mail:

You cannot be serious that sliced bread is a noteworthy achievement.  The saying 'Best thing since sliced bread' is meant to be ironic….  Sliced bread is one step away from totally insignificant.

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

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.