Friday, June 08, 2012

The Ethical Atheist Politician: The Power of Markets

In my pseudo-campaign for public office, I have described the political bargain as, "If you give me the power of elected office, I will use it to make good things happen."

What do I mean by "good things"?

Imagine a large group of people crash-landed on an island with no hope of rescue. What do they need?

They need medical care for the sick and injured, clean water, nutritious food, shelter, and security from external and internal threats.

That's the basics.

To get any of these things efficiently, they need accurate information. They need to know how best to treat injuries and disease, where to find or how to manufacture fresh water, which foods are nutritious and which are poisonous, what threats exist, and how best to protect against those threats.

Because each person is the best governor of his or her own life, they also need individual freedom. However, freedom does not entail a liberty to act in ways harmful to others - either through direct acts of violence or deception, or indirect acts such as those that poison the land, air, and water. Furthermore, wise men recognize that a few vitally important goods - a defense system from external threats, a system of police and courts, and a system of education, can best be provided through community action.

People need a market system.

Markets, properly structured, are essential for the well-being of a community.

Markets have several remarkable powers that centralized control can never replace. The most important of these is that they get people focused on getting the things that are most needed - or, at least, those things that the people think they need - and they reward those who are successful.

Our crash-landed community needs fresh water. What is the best way to get it?

Answer: offer a reward to whomever finds the most and cleanest water.

There are lots of different options for getting clean water. A scouting party may leave looking for a water source. Where should they go? People might have different opinions on the matter. Let each go their own direction and discover what is there. The reward will go to whomever is right.

Perhaps our community of crash survivors should dig a well. Where should they dig? One crash survivor may start criss-crossing the land with a divining rod. Another takes her knowledge of geology, looks at the ground features, and locates a place where her knowledge tells her that the water table is closest to the surface and in a relatively porous rock/gravel mixture that is quickly replenished.

I would bet on the geologist myself. I would go up to the geologist and say, "I will invest my time and labor and skills in your project - in exchange for a share of the water."

Markets get people acting in ways that, to the best of their knowledge, will fulfill a perceived need. Furthermore, they reward those who are right. Consequently, markets give people an incentive to acquire accurate information so that they can obtain the benefits of being right.

Markets also respond quickly to new information.

In a free market, the instant that people start to believe that a particular source of water is drying up, the price of water goes up. This tells people to start conserving water NOW! It also tells people to start looking for alternative sources of water NOW! Both of these consequences will work to help the community out of the dry spell to come - without the need to wait for some centralized policy decision. It could very easily save lives - while government interference in this process could cost lives.

Political process will either require convincing somebody that the threat is real and to take corrective action (in the case of a dictatorship), or trigger an extensive period of debate. In both cases, there will be a period of time where nothing is getting done (while markets would already be responding). The sole dictator might never get around to doing anything. The same is true of the democracy as those who simply do not want to believe that there is a coming shortage or those who profit from a lower price today muddy the waters of the public debate in order to preserve the current status quo - at a huge future cost (that they will not have to pay).

Do you want to guarantee shortages of essential resources and violent conflict over what remains? Then have the government keep the price of that resource artificially low. You will get your shortages and your violent conflict soon enough.

We need markets. We need to use prices to allocate the use of resources - not government bureaucrats.

I want to remind you that markets do not give those with money a right to poison, maim, or kill others just because it will improve the corporate bottom line. Markets do not give those with money a natural right to destroy your home or your property through global warming or any other type of company-created harms. It does not give the head of the corporation the right to treat the workers in the corporation as serfs - as something just a half-step short of mere property.

A free market contains none of these things.

Yet, you would hardly know it if you listened to some of the people who claim to be defending free-enterprise. What they call free-enterprise is a freedom to poison, sicken, maim, or kill others with impunity so long as it is profitable. What they call free-enterprise is a right to treat workers like property. What they call free-enterprise is actually a form of corporate feudalism where moral constraints only apply to those who are poor, and where those with money cannot be bothered by such mundane concerns.

When it comes right down to it, a lot of people who call themselves economic conservatives and capitalists, really are not. In fact, on many issues, they advocate the most basic form of communism, and claim that this is the best way to manage resources.

I will talk more about that next.

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