In my column for the November 26th, 2008, edition of the Pittsburgh Tribune-Review, I celebrated the market’s astonishing bounty – and lamented the fact that the market generally works so smoothly at delivering this bounty that few people ever notice the awesomeness of the market’s daily achievements. You can read my column beneath the fold (link added).
The market’s bounty
Ludwig von Mises, the great Austrian economist who died in 1973, described what he called “the logic of interventionism.” This logic is simple if sad. Government interventions into the economy, being much more likely than not to worsen matters, beget more government interventions.
In part, this ratcheting up of interventionism is due to the panicked turn to government whenever new problems arise. Another part of this ratcheting, though, is caused by the fact that the newly arisen problems are seldom traced to their root causes — that is, to the interventions themselves.
A modern market economy is of a degree of complexity far outstripping the comprehension of any mortal. We miss this complexity because such economies work astonishingly well. Or, rather, we would be astonished at how well they work if we took the time to reflect upon their daily achievements.
Every morning the bagel store is filled with fresh, hot bagels; the supermarket shelves burst with milk and meats and coffee and toothpaste; the lights come on when we flip the switch, the water rushes out when we turn on the faucet, and the phone rings when a friend calls us.
These occurrences, and thousands of others just like them, are routine. Boringly so. They are as much a part of our ordinary existence as is water to a fish. And just as the fish never pauses to give thanks for the all-encompassing water that sustains his life — indeed, just as the fish likely never really notices the water — we almost never pause to reflect on the commercial world that is almost as vital to our sustenance as is the air we breathe.
In fact, the only times we do notice the commercial world is on those rare occasions when it is obstructed or working poorly. When there’s no gasoline at the service station, we feel as if some near-sacred right of ours is being assaulted.
We’re angry at the station owner or the oil companies; things are not as they should be! We should have gasoline whenever and wherever and in whatever quantities we desire. That’s how our world works! When it doesn’t work that way, something is amiss.
Economists have a familiar theory to explain the role of government. According to that theory, government’s core function is to correct “market failures” — such as the alleged inability of the market to supply “public goods” like pollution abatement, national defense and law and order.
Debates rage within the academy on how extensive are such market failures in reality and how reliable government is likely to be in correcting them. But few scholars question the premise that the need to correct market failures is the core reason that people overwhelmingly feel a need for government.
This premise is faulty. Precisely because the market works so reliably and without hoopla — precisely because, say, Bill Gates can create hundreds of billions of dollars of value for consumers worldwide while he gets paid only a fraction of that amount — that is, precisely because the market so seldom fails — people take markets for granted.
In modern America, the market’s bounty is assumed always to be there, as if it emerges naturally from the soil, available for us to “redistribute” as we wish.
Too many Americans — especially in the punditry — are both ignorant about how life would be if markets were severely hamstrung and oblivious to markets’ reliance on freedom and security of property rights.
This ignorance and obliviousness combine to fuel calls for government-supplied universal medical care, massive bailouts of “ailing” industries, heavy regulations to “cool” the planet, higher taxes to “equalize” incomes and social engineering to keep us from driving, smoking, eating foods and doing any of those things that the Enlightened have concluded are bad for us.
So in this season when we Americans give special thanks for our blessings, let’s better understand what those blessing are. The blessings for which we should be thankful are not fertile land, for those produced no great wealth until modern commercial markets developed on this continent. The blessings are not a democratic government in and of itself, for majorities can be as tyrannical and as unwise as any dictator.
The blessing for which we should be most grateful is that we still live in a society in which markets remain the chief means of directing economic activity. Let us give thanks that, despite the many hurdles put in the way of people who make their way in markets, those markets continue to operate powerfully, reliably and smoothly. And let us ask whatever powers that be that we not risk any further meddling with this quiet source of our bounty.