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Then the Gods of the Markets Tumbled
Early on in one of my harder math courses at the university, the professor stood up in front of the room, writing on a chalkboard. He proved that all possible problems of the class we were studying had a solution. He was quick to point out though, that no one was guaranteeing that you could find it. I spent the rest of that semester increasingly frantic as I couldn’t find those solutions.
All too often, when presented with a problem, conservatives will wave our hands and say “the market will provide a solution.” The certainty of our inevitable triumph absolves us of any need to bother with anything in the meantime. And make no mistake; I believe in the inevitable triumph of market forces as much as anyone. But we should spend a little time thinking about what all that implies.
The market is slow. Communism has been a failure wherever it’s been tried, but somehow we’ve had three generations of murderous scumbags ruling in North Korea. That regime can’t last forever but it has lasted for several decades. From the moment the Soviet Union was born out of revolution it was doomed. That didn’t prevent the Holodomor, or save uncounted multitudes from the gulag. Quite a lot of awful things can happen while we wait for the market to correct itself.
The market is unpredictable. The New York Times (a former newspaper) is still making money. Isn’t it obsolete? Shouldn’t a print medium have gone out of business by now? Maybe; word of them having layoffs always brings a smile to my face. Maybe the market is still correcting and we’re just waiting until they lay everyone off. Maybe there’s still enough value in what they create to pay to keep the doors open. It’s useless to wait for the market to solve that problem if the market is balanced already.
The market is chaotic. There’s still good money to be made in a dying industry if you play your cards right. And you can still end up bankrupt in an up-and-coming one even if you did everything right. The only way that the market rewards or punishes people is through money. There’s a lot of noise in that signal. One shouldn’t attribute too much virtue to someone who succeeds, or too little to someone who doesn’t.
The market is amoral. Not immoral, just completely indifferent. Someone was telling me about the difficulties in returning their rented cable box. The company makes money if they can charge you for it, and they’re already losing you as a customer. It’s in their economic best interest to abuse that process. Makes life worse for you the consumer, but there’s very little market incentive to change.
Some problems are resistant to market forces. Smoking weed is pretty much a dead end in terms of making money. People still do it though. Definitionaly market forces can’t demand every single person do one thing; the people have to be responding to their own incentives and making their own choices. People are chaotic; they won’t all choose the same things even given exactly the same circumstances.
Statistical effects don’t balance out in individual cases. If I lose my job maybe I don’t get another. Not because I’m not qualified or because I didn’t plan sufficiently. Statistically speaking, some people get the shaft. In a similar sense, you’ll find occasional people on this site who benefited from Obamacare. The thing is a train wreck and ruining the economy and all that, but they rolled the natural. Maybe I would have gotten another job, maybe Obamacare’s implosion would leave them worse than before. Maybe we die before that happens; there’s no karmic balance sheet that has to add up.
What does all that add up to? Before you tell me the market will solve a problem, stop and consider it. Will it solve the problem quickly, or slowly? What immediate problems is it generating while we’re waiting, and how serious are they? Is the market pointing towards the solution you want it to? If it’s not, what incentives do you have to adjust so it is?
And for heaven’s sake, show a little empathy when someone gets kicked in the teeth.
In “I imagine you already know this” news, the title is taken from the poem The Gods of the Copybook Headings by Rudyard Kipling.
Published in Economics
No, I didn’t know that. It’s probably the weed.
Agreed. The “Engels pause” (yes, that Engels) is something I just learned about recently. The 19th century conversion to industrialization eventually benefited more people than it ruined. But it took about fifty years for the benefits to outweigh the pain. That’s not going to fly anymore.
For me that was one of the lessons of 2016; though most Americans broadly accept the market system, no one should be too quick to dismiss its losers as being, well, losers, and for decades, most conservatives, especially of the FiCon type, did. Last year that changed.
What about when they get kicked in the head?
It’s funny, though. The Gods of the Copybook Headings are karmic gods – neat little “moral of the story” gods. It’s in fact a very good reason to maintain a healthy suspicion toward them, too.
I can’t figure out quite how to word this, but: what were the overall conditions like beforehand? If things are already bad, then I don’t know if I’m going to feel too bad about a downturn into worse.
What’s interesting is neither University-of-Chicago-style economics nor religious devotion has ever required dismissing these people as morally unworthy.
The copybook gods, on the other hand, are the ones telling us, if we reaped bad consequences, it’s because we deserved ’em.
I am a great believer in free markets. There are several threads on Ricochet discussing Prager vs YouTube that highlight some of the complexity.
Free markets can be a bitch; buggy whip makers suffered, as did some of my coal mining ancestors. My husband works in manufacturing and he will soon be either be a dinosaur or a god.
What is so frustrating is the “thumb on the scale” that perverts the free market. If my husband becomes a dinosaur because of the free market; I can live with that. I’ll be broke, but not bitter. If he becomes a dinosaur because someone-well-connected-in-dc-who-knows-someone-who-knows-a-congressman and throws a grant or a subsidy to a competitor or doing business off-shore becomes more profitable and there’s a tax benefit, well, then, that’s no longer a free market.
It should be a free market. As in “free” market. My husband and I both work in highly regulated fields, so I plead guilty to being cynical.
Happy to hear about any markets that are “free”.
ps Irony alert: It’s government involvement and regulation that can change a market from “free” to otherwise. Yet Prager’s lawsuit makes sense to me. I can’t be ideologically pure and support it, but I can acknowledge that in today’s world, when it comes to YouTube, there’s no competition and no “free” market.
No, they’re not. They’re necessity. That which stands over against human hopes & fears.
If you want to understand what economics is trying to do, it’s trying to game the copybook gods. If you want to understand the copybook gods, you need to understand that their holiness is natural. Where they are is where being human is. Everyone who abstracts from that thinks they’re scientifically clever. They’re not.
They certainly seem to think of themselves as necessity. Which must be vexing to them as gods on those occasions when chance renders them unnecessary.
This man played with fire. He should have got burned. But he didn’t.
On the other hand, this man did not play with fire. It wasn’t necessary that he be burned, and yet he was. Neither moralists nor libertines can take comfort in a world where necessity is no more – but also no less – than a statistical trend.
Listen to political veteran Rhody, folks! The self-understanding of competitive productivity does not remove anyone’s voting rights. Though some wish it, no one can take from the majority their voting rights.
As for the latest push in doing so, removing from man his political nature–that’s Universal Basic Income. Libertarians especially seem to like it. It redistributes wealth without creating a state, & wouldn’t that be wonderful! Finally, the productive few wouldn’t even have to bother acknowledging the existence of the unproductive many!
Midge, it seems to me you’re trying to get clever with stories before you even understand them. Maybe you can understand this–people like freak athletics that seem impossible, but nevertheless real. But nobody believes in that. For what you’re saying to be anything but glib talk, freak cleverness, you need to think through what it means to have a race of heroes, even if their heroism is to be desiccated to playing ‘a statistical trend.’
Again, the sacred rage to destroy the rules in the name of an exception cripples thought. This is why nobody likes modern people-
Well, Mencken was the one who said we deserve to get it good and hard.
Getting back to the actual subject of the OP: I don’t know what the answer is. I’m all for an everybody pulls their own weight society, but if there aren’t jobs, and increasingly over the next few years there won’t be, then telling someone to get a job is worse than useless, it’s incendiary.
But if you go to a UBI style society, then we’ll end up with the non-people-eating parts of Soylent Green. A vast useless population, with no motivation other than to demand more, until there’s no difference between being one of the few producers and one of the vast horde of consumers.
If the UBI is enough to live on, and it would have to be, why would anyone produce anything? Followed immediately by no UBI because no tax receipts.
Is that the answer? A return to zero?
The answer is changing government & science to fit American needs. It’s not just the free market that’s an empty vessel, mysteriously filled, in the conservative-libertarian imagination–technology, too. You cannot try to mess with the process: It’s sacred.
But you cannot tell the majority of the American people–if you complain, we’ll automate away your jobs & who the hell are you to complain anyway, automation is giving you all the good things you get as consumer! That’s a recipe for the end of America.
So betting on specific technological results of scientific progress in ways that do not fully replace human work is very important. One man thinks the tech future is amplifying human strength & precision–another manthinks the tech future is, no people. Americans will make their choice one way or the other. But who’s more American: The man who looks at a backhoe or a forklift & thinks, well, exo-skeletons are next!– or the man who thinks: Driverless backhoes & forklifts are next!
About thirty years ago I saw a problem posed starkly and clearly at its extremes, if impolitely: what do we do–what can our country offer–the dumb but decent? Until fairly recently, historically speaking, the answer was, more than any society in the history of the Earth. A high school education, a union card, and a job in an expanding industry weren’t hard to get, and could just about guarantee a good home, college for the kids, even a boat on a trailer.
Everyone knows those conditions are harder to come by, and villains are equally hard to come by. It’s no one’s fault that the rest of the world is no longer in ruins, 1948-style, ready to absorb the products of our industry. It’s a good thing that backbreaking manual labor, the curse of millennia, was finally replaced by pushing a button. But the day came when we didn’t need as many button pushers.
We’re conservatives. We like to say, finish high school, get married and stay married, stay in your first job a year and you’ll never be poor. We like to say it, but it’s no longer true and we say it anyway. Now it takes more. We’re conservatives. Like the flinty test pilots in “The Right Stuff”, we need to acknowledge the condition of our craft.
Our way is better, sure, and people are better off following it. We should not pretend it’s a panacea.
Yeah, well it’s also true that a high school diploma used to mean more, too.
Which reminds me: I think part of this is also exacerbated by our (by which I mean humanity’s) failure to take full advantage of the promise of space. If there were colonization efforts on the Moon and Mars, we’d have an outlet for some of those people. Sure, you need skilled people, but you also need people to follow their directions. I’m not sure there’s anywhere left on Earth now that fulfills the promise of America in the 19th and early 20th centuries.
You have a rare gift for articulating a vision, Mr. Balzer. It’s a pleasure to share a thread with you.
For “unskilled” people. Yes.
Great post. I typically come across as the lassiest of faire on this site, but I agree with just about everything written. Plus, I appreciate the short precis at the beginning of each paragraph for lazy people like me.
“The market will fix it” has become a lazy crutch in too many arguments. It’s not even just the libertarian/muh principelz crowd that relies on it too much – it’s also a go-to for anyone right-of-center who just doesn’t want to deal with the difficulty of finding a complex solution to a thorny problem they don’t like.
We can actually temper the market worship with a few other basic conservative principles: there are no solutions, just trade-offs; life isn’t fair; and – to add to Titus’s point above – humans nature is human nature, and as long as humans have the vote, they will be constantly trying to put their thumb on the scale of free enterprise.
The best defense of free enterprise is also the simplest: it’s better than the alternatives.
The concept of relative superiority is easy to understand. My main job is convincing European governments to shell out billions of dollars for new drugs, mostly cancer drugs. Almost none of these drugs actually cure patients of their cancer; they end up dying of it anyway. The drugs simply keep them alive longer than the currently-available drugs, with fewer side effects, and only a marginally higher cost. That’s a simple example of something being clearly better while not actually solving a problem.
But when we discuss abstract notions of government or economy, “better than the alternatives” almost always morphs into “nearly flawless”. It’s a natural consequence of how we conduct debates in our society, but it’s still a fallacy that free market defenders need to be aware of and try to avoid.
My strongest defense of the free market is this: no matter what system we choose, there’s going to be lots of inequality, lots of injustice, and on the whole most people will be unhappy. Why not go for the system that at least provides a modicum of meritocracy, freedom, and continuous improvement in standard of living?
The inconvenient truth is that a model already exists which roughly balances the conflicting desires we’re discussing here, and works about as well as could be expected given the circumstances:
It’s the European social democracy model.
Granted, social democracy itself is not well defined. But in essence, it means a large state influence which nonetheless does not take any extreme measures like controlling means of production, providing universal welfare (i.e. UBI), or forcing people to make important decisions. Instead, it seeks to provide a very robust safety net, guide many decisions without forcing them, and yet leave at least some breathing room for market signals.
It’s a messy, ugly, complex, and often stifling system. But I challenge anyone here (or any Trump supporter) to invent a system to protect us from the worst of the free market which works better.
P.S. Sorry for the multiple long comments. Still getting used to living +6 hours ahead of everyone.
I think you have their number on this one.
I have first-hand evidence of the spread of the creed of UBI among young DC conservatives. Liberals & Progressives, of course, mostly see it as a win-win.
The desperate desire on both sides, deluded as it is, to avoid politics & the inevitable ugliness & difficulty of making decisions, issues in this alternative. What if we could designate the problematic population & pay them off!
It would be strangely un-American to remove work from the social contract; but maybe American individualism can turn into work for some & not for most. Why not!
The young are uniquely tempted. They were not educated with habits to deal with the intractability of the problem!
Capitalism and free markets are not a pancea, they are simply a mechanism for allocating resources to maximize utility in the most efficient way that we know of. There are human beings involved who imperfectly understand their utility, but their imperfect understanding of their utility is still better than that of a government bureaucrat.
It occurs to me that this discussion (and not just in this thread) is much more a rant against overexuberant champions of the free market than against free enterprise itself.
This is a phenomenon that has frustrated me as a scientist: the fallacy that if a person is doing a poor job at making an argument, then that argument must be wrong. Just because some scientists overplay the benefits of vaccines doesn’t mean you shouldn’t get your child vaccinated.
Yet griping about someone else is always an easy way to avoid having to take a stand oneself. “Well, I don’t know exactly what I’d do, but I sure wouldn’t do what he’s proposing!” In real life, the lack of a counterproposal means the other guy’s proposal wins. That’s why Obamacare is still intact.
So as someone who generally supports liberalizing markets, I’ll throw the ball back in your court: what does your ideal system of internal commerce/social safety net look like? Leave immigration and foreign trade off the table: how should the government intervene in the US to protect us from the negative effects of markets?
Some of us spent an entire career towards those ends….. Where is my
flying carspace plane?You’re absolutely right that trying to convince somebody who just lost their job to automation that they shouldn’t complain because low prices! is ridiculous.
But the rest of your argument is, respectfully, hogwash. The reason science proceeds in one direction and not another is due to the underlying, pre-existing nature and needs of any given scenario. The desire to save money on labor costs is an organic incentive, and the fact that e.g. farm workers can often be economically replaced by machinery is a coincidence of the intrinsic nature of the plant, physics, and the current state of metalworking and/or engineering.
Trying to force science to proceed against its natural course in order to fulfill what we think are more important goals is a recipe for wasted money and effort with little actual change to the outcome. See electric cars and solar power for evidence.
The notion that we could, as a society, decide which way science needs to proceed and then actually be successful is the stuff of science fiction fantasies, not reality.
Mendel, if you think the course of science is its own sacred thing, then you must say, in intellectual honesty, that we have no real control over the future of work. In all honesty, you would have to advocate a politics of either lying to the people as much as possible or of persuading people that their future as workers is a matter of a sacred mystery.
Perhaps this view of science & politics is true, me to the contrary notwithstanding. But it means, democracy is over.