Click here to read this article. In the actual paper today the title was "Market economies the ones that work."
I was glad to see that Beto O'Rourke recently said "I'm a
capitalist. I don't see how we're able to meet any of the fundamental
challenges that we have as a country without, in part, harnessing the
power of the market.”
It seems like our
country is turning away from markets too much these days. Democrats are
proposing massive government interventions like the Green New Deal
along with much higher taxes on wealth and income. Trump is for tariffs
and border walls along with an executive order to buy and hire American.
When
economists say markets, we mean allowing individuals to decide who they
will trade (buy and sell) with, free of bureaucratic mandates. This is a
very democratic process where millions of buyers and sellers create the
outcomes.
Some of these outcomes have
been very beneficial. Look at the millions of people that have been
lifted out of poverty in India and China in the last 40 years as they
instituted market reforms. Countries like Venezuela, that have turned
away from markets, have suffered with very poor economic outcomes.
Markets
bring benefits even in unlikely cases. In their book The Inner Lives of
Markets, economist Ray Fisman and Tim Sullivan give some good examples.
In
prisoner of war camps during World War II, when the prisoners were
allowed to trade (mainly the items they got from Red Cross care
packages), survival rates were much higher than in camps where the
highest-ranking officers forbade trade and even “doled out food and
other supplies.” The top down approach was inferior to the democratic
process of letting people trade freely, even in a highly unfavorable
circumstance.
Another case was when
economists suggested to food bank operators that they adopt a
market-based approach using a point system. Second Harvest, a
clearinghouse for food banks across the country, was basically run using
central planning, offering donated food to different affiliates.
Food
banks were given points that could be used to bid on the available
food. This greatly enhanced efficiency, with food banks getting more of
the type of food they needed in their area of the country, which cut
down on wasted food.
Even North Korea
is starting to harness the benefits of markets, as novelist Travis
Jeppesen recently explained in The New York Times. Markets have been the
main driver of economic development there the last 20 years.
They
emerged in response to the famine of the 1990s and they filled in the
gaps due to the failure of the central planners. Now government workers
can do other jobs as long as they pay something to their supervisors and
businesses are allowed to set their own prices.
Markets
can also enhance morality. This is shown in a study done on small
societies by Harvard anthropologist Joe Henrich and colleagues.
They
found that people became more generous the more integrated they were
into the world of commerce. One co-author, economist Herb Gintis, said
“Societies that use markets extensively develop a culture of
co-operation, fairness and respect for the individual.”
One
important thing that all proponents of more government intervention
should remember is that the more they ask government to do, the less
well it will perform its tasks. This was pointed out by philosopher John
Stuart Mill in the nineteenth century.
Mill
said “Every additional function undertaken by the government, is a
fresh occupation imposed upon a body already overcharged with duties. A
natural consequence is that most things are ill done.” So, if you want
government to do things well, don’t ask it to do too much.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.