Posts Tagged ‘Free markets’

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Heh (3)

April 16, 2016

I found this pretty amusing not only on its face but also because it reminded me of a similar discussion I had in the summer of 2000. At the time, I was managing a small development group in Minneapolis. One of the group members was a fairly hippie cat who wrote Java for the company’s web site. We came to get along fairly well and we spent a few evenings eating pizza (in the office) and discussing his Java and whether it was good object-oriented design.

I recall one day he was telling me about how he disliked American Consumerism (whatever that means) and how cool it would be instead if people could only trade with each other. I asked him if he meant that everyone would be bartering with one another.

No, he told me, it would have to be more flexible than that. So I asked if his "trading" scheme wouldn’t lead to some type of markets. He admitted it would and added that the thought discouraged him. I was a little bemused by that.

A Hippie Discovers Economics, And You’ll Never Guess What Happens Next!
What if we all grew crops and traded with each other? And what if we discovered the science of economics?

A post from Facebook has been making the rounds, where I came across it by way of my Federalist colleague Scott Lincicome.

grow-food-not-lawns

Here’s the mind-blowing argument: “If we each grow a large crop of different food, we could all trade with each other and eat for practically free.”

Where to start?

Well, for one thing, growing your own food isn’t exactly “free,” not even “practically free.” As anyone who has his own vegetable garden knows, it requires seeds, fertilizer, irrigation, weeding, protection from insects and birds and animals, and a lot of work. The cost may not all be measured in monetary terms, but it isn’t free. In fact, it’s notoriously easy for a vegetable garden to end up costing more money than it saves, which is why most of us do it just as a hobby. […]

But let’s not pick this apart. Let’s take the idea seriously. Hey, what if we all became small farmers and traded with each other? As they say on the Internet: you’ll never guess what happened next.

Maybe instead of everybody growing the same things, we could all produce what we’re best at and trade with others for what we need. We could come up with a catchy name for this, like “division of labor.” And we would need somewhere to exchange these goods with each other, which we could call a “market.”

Don’t Stop There!

Maybe we could get even more specialized. Some people could devote themselves just to growing young plants in greenhouses in the spring for others to plant when the weather gets warmer. Or they could provide seeds for other people to use, or breed hybrids with better yields or other desirable characteristics.

And maybe some crops would grow better in different areas, or at different seasons. I’ll bet you can’t grow blackberries in the middle of winter, but there are other areas of the country, or of the world, where these things still grow even when they won’t grow in your front yard. Maybe you could trade with people who live in those places.

Still, crops come ripe at different times, so maybe we need a system where I can trade my spring harvest of peas for somebody else’s fall harvest of pumpkins. Maybe we could write this all down on little pieces of paper which we pass between us to make trades. Has anybody ever thought of that? […]

It’s a tough problem to design a replacement for a system which generates an enormous bounty but which still doesn’t give the results you like. It’s an attitude I hear from Senator Sanders when he says things like, "You don’t necessarily need a choice of 23 underarm spray deodorants or of 18 different pairs of sneakers when children are hungry in this country."

I take Sen. Sanders claim about hungry children as just more political hyperbole. Here’s a fact-checking article about how measures of "food security" have replaced measures of going hungry because, basically, there aren’t many children who actually go hungry. These days, there are just varying amounts of food in the pantry.

I won’t say that children never go hungry or are never poorly nourished but I suspect that when they do (or are), it’s not for lack of food but instead for lack of responsible parents or care-givers.

I’m not sure what the relationship is between "too many" choices in the consumer market and the number of irresponsible parents. I don’t think Sen. Sanders knows that relationship either.

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Thanks to the Hand

November 25, 2015

Jeff G sends a link to this column by Jeff Jacoby that appeared in The Boston Globe in 2003. RTWT. My emphasis (and Jeff G’s) below.

As I like to put it (or tl;dr) "Don’t bite the Invisible Hand that feeds you."

Giving thanks for the ‘invisible hand’

GRATITUDE TO THE ALMIGHTY is the theme of Thanksgiving, and has been ever since the Pilgrims of Plymouth brought in their first good harvest. “Instead of famine, now God gave them plenty,” their leader, Governor William Bradford, later wrote, “and the face of things was changed to the rejoicing of the hearts of many, for which they blessed God.”

The annual presidential Thanksgiving proclamations always invoke God, and they frequently itemize the blessings for which we owe Him thanks. […]

Today, in millions of homes across the nation, God will be thanked for many gifts — for the feast on the table and the company of loved ones, for health and good fortune in the year gone by, for peace at home in a time of war, for the incalculable privilege of having been born — or having become — American.

But it probably won’t occur to too many of us to give thanks for the fact that the local supermarket had plenty of turkey for sale this week. Even the devout aren’t likely to thank God for airline schedules that made it possible for some of those loved ones to fly home for Thanksgiving. Or for the arrival of Master and Commander at the local movie theater in time for the holiday weekend. Or for that great cranberry-apple pie recipe in the food section of the newspaper. […]

And yet, isn’t there something wondrous — something almost inexplicable — in the way your Thanksgiving weekend is made possible by the skill and labor of vast numbers of total strangers? […]

No turkey czar sat in a command post somewhere, consulting a master plan and issuing orders. […]

Adam Smith called it “the invisible hand” — the mysterious power that leads innumerable people, each working for his own gain, to promote ends that benefit many. Out of the seeming chaos of millions of uncoordinated private transactions emerges the spontaneous order of the market. […] No dictator, no bureaucracy, no supercomputer plans it in advance. Indeed, the more an economy is planned, the more it is plagued by shortages, dislocation, and failure. […]

Mr. Jacoby’s opinion is backed by the reactions of Russian visitors to the US during the Cold War. The snippet below comes from Back in the USSR (in the Winter 2004 edition of Boston College Magazine). My emphasis again.

For Russians, most of whom have a heritage in agriculture, such a visit exposed the shortcomings of Soviet agriculture and by extension the Soviet system. “Why do we live as we do?” was a question many of them ended up asking, according to a veteran State Department interpreter who has escorted many Russians around the country:

Their minds were blown by being here. They could not believe there could be such abundance and comfort. Many of them would even disparage things here. “Excess, who needs it,” they would say. However, you could see that they did not believe what they were saying. When they returned home, in their own minds and in the privacy of their own trusted little circle of family and friends, they would tell the truth to themselves or to others.

ACCOUNTS OF Soviets’ astonishment on visiting their first American supermarket are legion, from the first Russian students who came to the United States in the late 1950s and early 1960s, to the future Russian president Boris Yeltsin in 1989.


Thank goodness for free markets.

WonTheLottery

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