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In my latest column for AIER, I identify three different levels of “what is unseen. [2]” A slice:
More deeply than unseen opportunity costs is the modern economy’s unseen complexity. This complexity remains unseen even by some economists.
The market economy’s daily manifestations are always in sight of everyone. People see full supermarket shelves (at least when governments haven’t mandated economic lockdowns!). They see countless goods and services for sale online. People see lights go on when they flip switches, toilets flush when they press handles, and automobiles move when they press accelerators.
And economists see statistics. The unemployment rate. The annual change in the price level. The percentage of workers employed in manufacturing. The number of firms in the domestic furniture-producing industry. The ‘distribution’ of income.
But no amount of marveling at the workings of modern wonders such as artificial lighting and indoor plumbing, and no amount of pondering statistics, reveals the vast, complex order of economic processes that generate these visible surface phenomena. Each pair of socks you wear, each cup of coffee you drink, and each hamburger or sushi roll you eat is the product of countless innovations – some dating back millennia (such as the wheel), others much more recently (such as your coffee-maker’s heating element). Nearly every one of the goods and services that we today routinely consume is produced with inputs that come from all across the globe and are themselves produced only through the efforts of hundreds of millions of specialized producers [3].
Making all this innovation and consumption possible are markets, guided chiefly by prices, profits, and losses. People operating in markets, of course, use infrastructure, some of which is physical (such as highways) and other of which is ‘institutional’ (such as dispute-resolution systems). Some infrastructure is privately produced; other of it is government-produced. Also necessary is law – the set of expectations that govern human interactions. A tiny fraction of this law is codified and available to be read in books and online.