Saturday, July 7, 2012

The Little Blue Book

Subtitled "The Essential Guide to Thinking and Talking Democratic", this volume gives the party faithful a guide to winning debates with Conservatives.  Yes, it's all Bantha poo;  how could it not be?  But while it does have some interesting stuff, don't try this one on me:

"The liberal market economy maximizes overall freedom by serving public needs: providing needed products at reasonable prices for reasonable profits, paying workers fairly and treating them well, and serving the communities to which they belong."

Left unsaid here is the definition of "reasonable" and (more importantly) who decides what constitutes "reasonable".  I have my own definition, and if you leave it up to me, you may be quite uncomfortable with the result.  Lucky for you, I don't get to make that decision.  Lucky for me, you don't get to make it either.  Here's why:

When making economic decisions, these decisions cannot be made in a vacuum.  Every decision affects every other facet of the economy to a greater or lesser extent.  The problem is best illustrated by a water balloon:  squeeze it here;  it bulges someplace else.  Where?  Nobody knows.  It might bulge where the effect is beneficial but it might  (and Murphy says it probably will)  bulge where the effect would be catastrophic.  That is:  making a good change here might cause a much worse change elsewhere.  You can't get past this.  There is no one and no group with adequate knowledge or wisdom or skill to guide the economy in a constantly positive direction.  Even if they succeed temporarily, eventually this chicken will come home to roost.

It gets worse.  "[B]y ... providing needed products at reasonable prices" has a built-in self-destruct mechanism:  the one who sets the reasonable price is, in the liberal economy, not the one who produces.  If the producer judges that the reasonable price is unreasonably low  (and, really, what other scenario is there?)  production doesn't happen.  There's an old joke my mother used to tell me:

"How much are these bananas?"
"$1.69 per pound."
"That's outrageous!  The market down the street sells bananas for 79 cents per pound!"
"Okay, go buy them from the market down the street."
"They're out of bananas."
"Oh, when I'm out of bananas, the price is 59 cents per pound."

When the price is unreasonably low  (in the producer's estimation)  you're out of bananas. If the selling price is unreasonably high in the buyer's estimation, you're left with lots of brown bananas.  Commerce happens when buyers and sellers agree... unless  (as in The Affordable Care Act)  government steps in to force commerce to happen.  Again, this can only go on for so long.  Eventually production stops, companies leave the insurance biz, cost-effective alternatives are found and the system is thwarted.  Only in a thorough-going police state can this scheme be run on a relatively-long-term basis, and we have some good examples of how that works in the not-so-relatively-long-term:  In 1989, after driving The Great Socialist Experiment in near-laboratory conditions for 71 years, the USSR collapsed economically.  A country with everything going for it simply could not overcome the effect of the economy doing what it damned well pleased in violation of the Commissars' orders.

The only solution that works consistently and corrects itself rapidly is an unfettered free market, and by 'unfettered', I mean unfettered:  give the government authority to license entry into the market to keep the unscrupulous out and it fails;  let corporations shield their assets via the scam of 'limited liability' and it fails;  let the government issue letters of patent and it fails;  let companies rig the market by having trade secrets whose secrecy they may enforce in court and it fails.  And when it fails, who gets hurt?  Corporate officers?  Probably not.  Government officials?  Never.  Joe Sixpack?  Joe takes it in the shorts every time.  It's Joe who ends up on a soup line while the well-connected escape to Barbados.

Yet, who is it that constantly whines about government not doing enough to manage the economy?  Why...  isn't that our old friend Joe holding a placard over there and chanting something about 'the 99%'?  Yes, I think it is...

Until we solve the problem of people ordering poison for others and drinking it themselves, we will never have an economy that doesn't prove "it's not what you know, it's who you know".

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