Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
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
What in the structure of the government made the US send troops into any of those countries?
You are asking the wrong question.
What should I be asking?
I am not sure what would happen to people I know if China got that power. I don’t think of the Chinese government as “perfectly harmless, fer sure not bent on taking over the world”, but I’ve also observed that even evil regimes don’t necessarily find it in their interest to conquer less-evil regimes just because the less-evil regimes are weaker. Do you consider it a possibility that China will become so much more powerful than the US that the US cannot defend itself against it, or will quietly become China’s puppet-state? Even if I knew China planned to “do its worst” to us, how much power would I have to fend it off?
When I think of what affects my and my loved one’s standard of living, and what I should do about it, I think primarily of my own inadequacies. I think of whether I have what it takes to gracefully manage what is in the larger scheme of things a relatively mild genetic defect that nonetheless causes premature pain and aging (and which certainly caused me great heartache before I knew what it was). I think, how will I be a kind, moral mother and wife, in the face of my limitations? Will I hold a steady job again, or should I expect no better from myself than freelance work that earns the family a little extra pocket change?
Even what domestic politicians might do to me and my loved ones cannot be my greatest standard-of-living concern, because my living something resembling a moral life in the weird body I was born into has to take priority, not only for my own sake, but for the sake of the loved ones who put up with me. I know other Americans believe politics has the power to make or break them, and perhaps that’s true for them, but what will make or break me is something else.
So no, China is not one of my big standard-of-living concerns.
If that’s the case, then why not divorce yourself from politics? If political affairs matter as little as you make them seem, then why not save yourself the aggravation?
You are attempting to force determinism in your question, to draw a line between the formal form of government and the actions it takes. It is an invalid question.
Are you saying that the US decision to invade Iraq is separate from the structure of government?
I’m one of those weirdos for whom conservatism has never been much about politics-politics. I’m interested in economics and epistemology, yes, and I learned them from a conservative point of view. I’m interested in the conservative approach to morals and religion. I find it really interesting the way the “cold”, “analytical” approaches of something like economics interact with morals and religion.
What initially attracted me to Ricochet was that it was a place where you’d have members engaging in lively and surprisingly well-informed debates in the comments about, say, the economics of nuisance law, or having a serious discussion about theology while simultaneously making booger jokes.
@hankrhody‘s post here isn’t about politics-politics, either. It, too, raises questions like, how do we live with the fact that we don’t always know whether people have been “punished” for transgressing the Copybook Gods, or whether they’ve simply been unlucky? How do we exercise empathy for people retrospectively without misleading them prospectively? We know the risk of perverse incentives. We also know “the right” incentives will have their victims, too, and that people sometimes just need a break.
It’s possible my private dilemmas contributed to me being interested in these sorts of questions generally.
If China’s rise eventually makes it the nation with the highest standard of living on Earth, yes, it will be an achievement to astonish the world for centuries to come. But it hasn’t happened yet, and there’s some reason to note that the path there may take much longer than it looks today.
Suppose it does. Is that necessarily a statement about their political system? Or might it be, for example, related to sheer population size–America is no slouch, BTW–combined with a millennias-old cultural cohesion that makes their society unusually productive, given half a chance? Like a Japan with seven times the people? Could it also be caused, as it is in the lucky USA, by vast stores of minerals, energy, metals and other industrial necessities in China?
Did America’s rise make Great Britain poorer? I don’t see any evidence to support that.
Of course it is. Are you arguing there is a direct and inescapable line from the 1787 convention to the Vietnam?
The form of Government, and its conventions, both have some impact on the level of influence lobbyists and special interest groups can exercise over state actions.
I can think of one way that the rise of the US made Britain worse. After the Suez Crisis, the US ended Great Britain’s status as a world power with an independent foreign policy. The US and Great Britain were allies. China and the US are not.
I think the better comparison should be between the China and the US today and Great Britain and Imperial Germany. There is no question that the rise of Germany made Great Britain poorer.
No. You seem to be agreeing with me. I said that the failures of the US in Vietnam, Iraq, and Afghanistan had nothing to do with the US political system, just like the failures of Spain in regards to how they spent their New World riches had nothing to do with their political system.
This is classic zero-sum, fixed pie thinking. There is absolutely no reason why an economically prosperous China should contribute to a reduction in the standard of living in the US. Again, this same argument, practically verbatim, was made about Japan. It wasn’t true then and unless the politicians manage to screw it up (and I don’t mean to trivialize that possibility) it won’t be true with China.
My favorite is Jeremy Siegel’s Stocks for the Long Run. I read the third edition, not the most recent (fifth) edition.
I loved this book.
Mr Rhody poses some difficult questions. I favor free markets, but I recognize that there are problems. One is that a conversion to free markets will be painful to those who have been benefiting from the distortions in the unfree market. That includes innocent people, employees of the business benefiting from the market distortion.
Free markets change with the times. There are many persons out there who lack the talent and flexibility to adjust to changes in markets. And free markets constantly change, as they should.
Distorted markets hurt people too. They hurt people who are trying to do things the right way, but do not have the crony contacts to benefit from the government policies distorting the markets. Whenever the government puts his finger on scale, it may help some people, but it hurts others.
What is fairer: a market that operates according to predictable natural laws and principles? Or a market distorted by some arbitrary government favoring its current cronies du jour (which might from time to time be limited-skilled workers)?
I have a book titled “Beyond the Hype” by Robert Eccles that may get at your point, at least in the introduction.
It has been a very long time (15 years) since I read it, but I remember specifically that I bought the book for a pull quote about how management fads seem to recur in regular cycles. I pulled it off my bookshelf, so I will try to skim the introduction again and report back.
It seems that the final failure of the US in Vietnam is wholly attributable to US politics (the failure-to-fund by the Democrat Congress under Nixon as President) – and, in this case, that disaster of politics is directly the result of our political system.
While the initial errors in Iraq were solely the responsibility of the Bush Administration, it seems to me that the later failure to recover from those errors was, again, the result of politics that would have played out differently if we had a different political system.
Afghanistan … Jerry Pournelle probably had the right idea about what we should do about Afghanistan, but that particular decision was not one readily available to the US, given … well, our habits in approaching the world. Which, in this case, have less to do with our political system than with other characteristics.
It’s obvious which is more fair.
But I am motivated to think really hard about what, if anything, we can do, at various levels, to try to mitigate the damage to limited-skill workers. Because our modern world appears to have less and less need for “ordinary schmucks” who are not so “book-smart.” And people who feel unneeded feel alienated. And … you know the rest.
Contra that: I was just reading a “guest post” (like an op-ed) in IEEE Spectrum about human-controlled force-multiplying robots. Faster, please!
I empathize with the limited skill workers, but in the foreseeable future, the will be serious needs for low skilled workers for service jobs (servers, cleaners, and so on). The tough problem is about those workers whose skills are limited to one industry with nowhere to go but down when the industry digitizes.
Not an argument about which is fairer; a free market is in every way preferable to a crony market (or any other system I’ve heard of). Saying it’s fairer does not mean that it’s just.
Yes, that’s the dominant theme we keep returning to. We are mature enough to understand tradeoffs, accept the reality of imperfection, and logical about dynamic (which is to say, forced) allocation of human resources due to desirable change and market efficiency. But on a gut level we resist the idea that Larry Kudlow’s crowing about bank vaults overflowing always and necessarily means we’re all better off. Most of us don’t want to abolish agencies like the Food and Drug Administration, flawed as it is, just because “liberty will take care of everything”. It won’t.
I sometimes play with the idea of moving the FDA from “your product is forbidden unless we approve” to “we will publish lists of products which we approve, for any products we don’t approve, you consumers will be able to use the courts to punish bad-acting suppliers.” It would be messy. But what we have now is also messy.
Technically, it could. You have a company like Underwriters Labs that provides safety recommendations on appliances and such, why not have something that does the job for food and/or drugs?
In the last days of the Silk Road (the Tor site for trading in drugs, not caravans from Samarkand) people had set up a drug lab in Italy to verify the quality of the goods.
Oh wait, it looks like they already do.
I prefer the latter.
Even for those of us who would be OK with the FDA going poof aren’t necessarily OK with an ethos that refuses to acknowledge that some “punishments” handed out by a system that permitted individuals maximum self-determination and opportunity are nonetheless not “just” in any meaningful sense. Making it maximally possible for humans to better themselves doesn’t mean that we should write of those who have failed in some way as simply having “deserved” their failure. It’s hubris to think “maximally possible” and “perfectly possible” are identical.
Politically, I understand why it wouldn’t happen, though. An appliance is just something you use. It’s not something that invades the temple of the body, potentially despoiling it in some way. “We should protect the bodies of our innocent children from invasion” especially has tremendous visceral appeal.
Even if private industry would do it better, for some, there’s value in just having the government say that it runs organizations like the FDA in order to fulfill its duty to protect its citizens. Letting private industry handle it strikes many as saying the government has no duty to protect its own, and it’s very clear that Americans hate it when they believe the government isn’t fulfilling its duty to protect its own.
Unless you insist on making toast while taking a bath.