Matt Ridley and Jean-Baptiste Say, or, Say Said It First
This one’s on the abstruse side, I’ll admit. But what are the holidays for if not taking a little time after eating the ham and turkey to rest up and think deep thoughts?
From a reader in Nova Scotia:
I enjoyed your recent Uncommon Knowledge series with Matt Ridley, particularly episode three.
In this episode, you said--by way of setting up a question--‘we should cherish population growth, the development of cities, and now with technology, this new inter-connectedness of the entire globe: that’s all good’. This reminded me of an article by Steven Horwitz on Say’s Law. Horowitz writes:
In the small town, the fact that less value is being produced by residents means that their ability to demand goods and services is correspondingly limited. As a result, the selection of products, the number and diversity of sellers, and the degree of specialization among producers is quite limited. By contrast, in the wealthier suburb, there is an amazing array of products, with a large number of diverse sellers all offering very specialized goods. Perhaps most important is that in the wealthier area, there is a greater degree of competition, as the market can support multiple sellers of particular goods given the level of wealth being generated by producers.
Say points out that this explains why a seller will likely get more business as one among a large number of competitors in a big city than the sole seller of an item in the more sparsely populated countryside. The key to understanding Say’s Law of Markets is that it is production that must come first. Demand, or consumption, follows from the production of wealth.
Me:
I don’t pretend even to begin to grasp all the subtleties and nuances that arise from Say’s Law—the formulation, by French economist Jean-Baptiste Say (1767-1832), that “products are paid for with products….Money performs but a momentary function…and when the transaction is finally closed, it will always be found, that one kind of commodity has been exchanged for another.” But his emphasis on production—on the making of actual stuff—is mighty useful, and this contrast between life in small towns and big towns demonstrates it neatly.
Stimulate demand? No, Larry Summers and Ben Bernanke. Instead we need to stimulate supply—to provide conditions in which Americans prove willing to make investments, take risks, form enterprises and produce stuff.
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Jul '10
Re: Matt Ridley and Jean-Baptiste Say, or, Say Said It First
Perhaps this post explains the success of "The Pet Rock." Maybe... I don't know...
Sep '10
Re: Matt Ridley and Jean-Baptiste Say, or, Say Said It First
Its fascinating that an enlightenment thinker like Say was able to see that money is a medium of exchange and the various extended causes and effects of that statement and yet not able to express or even imagine a world in which the Sears catalog, much less, amazon exists. The entrepreneur sees demand where no one else does and produces products to fill that demand. However, there are some problems with giving people freedom and letting free enterprise take root and grow. Politicians don't get to take credit for it. It cannot be fit into econometric models. Most of the time, the entrepreneur is fighting against entrenched interests who employ more people - including politicians - who are more interested in the prior two problems than in the many benefits.
Jul '10
Re: Matt Ridley and Jean-Baptiste Say, or, Say Said It First
Making stuff that people want to buy? Obama's been busily making and selling phenomenal amounts of debt. We lead the world in debt, and our lead has been radically accelerated the last two years. We make Greece and Ireland look like pikers. And those Berlin Bailouts could not begin to make a dint in our principle.
And, of course, as a sidelight we have government-owned zombie enterprises animated briefly by the unions that slew them.
Sep '10
Re: Matt Ridley and Jean-Baptiste Say, or, Say Said It First
And of course, the Keynesians have turned Say's Law on its head - "Demand creates its own supply." No wonder the economy has been so screwed up of late.
Jul '10
Re: Matt Ridley and Jean-Baptiste Say, or, Say Said It First
Dunno, Peter. You got 4 comments on Say's Law and 33 about oatmeal.
Not sure what that says about us. But it must say something...
Re: Matt Ridley and Jean-Baptiste Say, or, Say Said It First
Kenneth: Dunno, Peter. You got 4 comments on Say's Law and 33 about oatmeal.
Not sure what that says about us. But it must say something... · Dec 21 at 8:43pm
Don't think I didn't notice.