Monday, July 6, 2009

The Simple Life, Part 2

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A couple of days ago I discussed how our complex society allows us to live simple lives. It takes the efforts of many people even to provide the number 2 pencil for which we pay only a few cents. Yet nobody deliberately organizes all those people to do the work. Each simply does his job in order to be paid. Most don’t even know that they are helping to make pencils.

We might compare this economic organization to a human body. Countless cells perform specialized functions, most with no central direction. Lung cells move oxygen into the blood and remove carbon dioxide waste, receiving in return the nourishment they need for their own lives. Yet those lung cells are certainly unaware that the oxygen they provide sustains the heart, the brain, the muscles and other tissues. Likewise cells in the stomach and small intestine digest food and move it into the blood, providing nourishment to every part of the body. Yet the stomach cells know nothing of how their nourishment is used, they only do their job in exchange for the oxygen and other things they need. That goes on throughout the body; different cells form organs that do their jobs without knowing how the products of their work are used. In exchange those cells receive the nourishment and waste-removal services they need to live.

Whether you believe in evolution or divine design, your body is a wonderful system. Now suppose you are approached by a gifted surgeon who offers to make a few improvements. He thinks it is not fair for the brain and heart to get first call on available oxygen and food. Surely the feet deserve as much consideration as does the brain, after all your feet help the whole body get around. Why is the body so arranged that when you get cold circulation slows to the feet and they get cold while the brain and heart stay warm and nourished? To each according to his need and the feet have needs just as does the brain.

Would you accept such modifications of your body? Probably not, who could foresee the unintended consequences of his “improvements”? It would be worse if the person offering to operate were a lawyer instead of a surgeon. Yet we have politicians worldwide insisting that they know best how to improve economic matters.

The interesting thing is that a great number of those politicians are lawyers and very few ever seriously studied economics. Somehow they seem to think that knowledge of legal matters qualifies them to tell the rest of us how to run our businesses. In fact the U.S. government has just appointed a new chairman for General Motors – and that man has no experience in the auto industry. We can hope for the best, after all that company has a major effect on our economy. However I’m afraid I can’t be very optimistic in this case.

Why should government dictate business practices? Many think that such control will lead to fairness and prosperity, but why should that be so? Such a belief requires that government officials be:

a. Able to consider all the appropriate factors and make wise decisions, and

b. Moral enough to put the needs of others above their own.

I do not believe we can trust any mere human to meet those requirements. The economy is so complex that no person can understand all its details. How does he compensate for weather that affects crops? How does he allow the risk taking necessary to developing new products without also allowing waste? How does he distribute compensation to best motivate people to do what will benefit the population? Such a person will face many more questions, all unnecessary if individuals are left free to manage their own affairs.

Nor can we trust people in power to be totally altruistic. They are quite as human as the rest of us and just as subject to temptation – nay more so because their positions of power protect them. I find it amazing how many people complain about greedy business executives and yet are willing to trust their welfare to government employees. They seem not to realize that those government employees are quite as human as are the businesspeople.

Is the free market perfect? Of course not, there are greedy executives and other problems. However the market at least allows a choice. If you don’t like the cars Ford makes you can buy a Chevy or Toyota, or even not own a car at all. Government allows no such choice. Don’t like public schools? Too bad. You can send your children to a private school but you still have to pay for the public school you do not use. It’s as if you had to pay Ford when you buy that Toyota.

Government is necessary for some functions. We need national defense as well as a local police force. We need a road system and it is not practical for private enterprise to provide it. However when government starts meddling in affairs that the people themselves can manage, we are headed for trouble. That is why a country like Soviet Russia, with tremendous natural resources, became so poor under communism. Well-intentioned people “performed surgery” on their system and the result was poverty and misery for the vast majority of the people.

Before we ask government to meddle in our economic system we should think about what might be the result. It is likely to be as bad as having that surgeon change the way our bodies work.

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