ARC's 1st Law: As a "progressive" online discussion grows longer, the probability of a nefarious reference to Karl Rove approaches one

Sunday, March 19, 2006

Learn to Love the Market

Cafe Hayek (an excellent blog) has this excellent post on letting the markets drive solutions to our problems:

Simple Rule for a Complex World
Don Boudreaux

"'Let the market handle it! Let the market handle it!' Don't you tire of muttering this simplistic formula?" So ended an e-mail that I received from a reader.

It's true that all of us sometimes are tempted to avoid thinking hard about complex issues and, instead, to fall back lazily upon simplistic mantras. We should guard against this weakness, in ourselves and in others.

At the same time, though, we shouldn't confuse consistency with simplicity. The two are different. Just because I instruct my eight-year-old son to be always truthful does not mean that I'm a simpleton offering simplistic advice; it means, instead, that truthfulness is a virtue that should be pursued consistently -- even if in a handful of instances my son might be made better off by telling a lie.
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Saying "Let the market handle it" is to reject a one-size-fits-all, centralized rule of experts. It 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, in fact, is to recommend letting millions of creative people, each with different perspectives and different bits of knowledge and insights, 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 many competing experiments and, then, discovers the solutions that work best under the circumstances.
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This process is flexible and it encourages creativity. It also denies to anyone the power to unilaterally impose his own vision on others.

In brief, to advise "Let the market handle it" is a shorthand way of saying, "I have no simplistic plan for dealing with this problem; indeed, I reject all simplistic plans. Only a competitive, decentralized institution interlaced with dependable feedback loops -- the market -- can be relied upon to discover and implement a sufficiently detailed way to handle the problem in question."

None of this is to say that getting the government out of the way is sufficient to create peace and prosperity. Markets require a rule of law to ensure that, among other blessings, property rights are secure and exchangeable. At their best, governments can help to protect our rights. Markets also require a culture in which commerce flourishes.
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So yes, show me a problem and I'll likely respond "Let the market handle it." I'll respond this way because I know that not only is my own meager knowledge and effort never up to the task of solving big problems but that not even the Einsteins or Krugmans or Bushes amongst us can know the best solution to any social problem.

Solutions to complex social problems require as many creative minds as possible -- and this is precisely what the market delivers.

Markets are complex, chaotic, and difficult to predict. This is one of the primary reasons that the "progressives" refuse to believe in them and instead prefer the centralization of decisions with the apparatchiks in D.C. I am frankly amazed that, given their hatred for Bush, the Left still seeks to have his administration take over control of their healthcare or any other activity.

If you think they're full of wild-eyed conspiracy theories now, just imagine that we had socialized medicine and a Howard Dean or Russ Feingold ends up in a government-run hospital and meets their demise. Of course, even with socialized medicine, we all know that there would be one system for joe-sixpack (aka get in line and we'll get back to you in 12 months) and one for the elites.

Your Co-Conspirator,
ARC: St Wendeler