Dear Jeff Spross,
Thanks for the softball!
No really, I mean it.
I don't mean to say that I disagree with you when you say that it is a tragedy when anyone goes to bed hungry, especially a child, but I do mean to say that you miss the boat with your example.
You begin by setting us a strawman: a fictional two-party negotiation between a deodorant spray magnate and a deodorant spray prole. Then give me three variations on the theme: one where there are conditions specified and the two parties agree on a price "in the middle". The next where there's a "bad recession" and the worker has to settle for $30,000 and a final one where the worker haggles into $60,000. You then go on to say it's all about balances of power.
Bah!
I say again, Bah!
The first problem I have with this scenario is that it is as far from a realistic scenario as if a football coach told his quarterback to imagine that there are no defenders. Rediculous. First of all, unless you work in the Soviet Union, North Korea, or Cuba, there are other options--for both the employer and for the employee, and for the consumer. Why does this matter? OK, call it "balance of power" if you like, but it is about choice; just like a free economy. But is it balance of power when I choose Right Guard over Old Spice? No, it's about other things, including cost, quality, advertising, packaging, and let's not forget about scent!
The same is true in hiring. Do I hire the first person who walks in the door? Sure I might get lucky, but really, I'd be a fool to think that she is the best candidate and stop there. There are so many factors that go into making a hire, including cost, quality, advertising, packaging (although it's not supposed to be a factor), and scent (again, not supposed to be a factor).
And this is the problem with the idea that any one entity can make decisions better than a market. You just can't. The market is not like a computer, it's very, very different from a computer. Unlike a computer which only has the inputs that you define (i.e. "they only know what you tell them") markets take all information. Perfectly? Of course not; this is what causes all sorts of distortions, from the tank of gas for sale at the car rental agency to bias realtors have to move your house as quickly as they can.
But on the whole, markets do a phenomenal job.
I will concede that I really don't need 25 varieties of Old Spice Deodorant (yes, 25, I counted), but someone has discovered a demand for scents like "Matterhorn", "Livewire" and "Komodo", and by golly, they are fulfilling that demand.
As for the human beings who want to work in a deodorant factory, the question is not how valuable is the work they can do. The question is what choices do I, the employer, have? Can I get someone better or cheaper or both? If I can, why wouldn't I? What this candidate "needs" has as much to do with my decision as the date of the next lunar eclipse.
Yes, there is tension between all those brands and starving kids; yet it would still be there if there were only one brand, because the decision to divert money from starving kids comes, not when we create a second or third (or twenty-fifth) brand, it comes when we have just one. Unless you have more armpits than a Jatravartid, you only need one variety at a time. More to the point, having 25 scents of Old Spice probably decreases the number of hungry kids, because now you've got to hire the chemists to create the scent, marketers to sell it, and workers to make it.
Are markets dumb? No. Are they intelligent? Well, I have no idea what "intelligent" means, but markets probably not whatever it is. What they are, however, is an example of emergent order. To say that it has analytical power is just wrong. There is no more analysis in that than in the ways that the orbits of the planets interact with each other, than the ways that galaxies organize, birds fly, sand dunes form, or termites build their mounds.
I will give you credit for getting something right, however, policies do impact markets, and more often than not in ways that we cannot predict. For example, price controls seemed like a good idea, right? Next time you're in the 1973 or 1979 take a look at the lines for gas (the same thing happened as a result of the anti-gouging laws in NY after Hurricane Sandy).
OK you're not talking about having "bureaucrats direct the flow of every last resource in the economy. It is a matter of the inescapable social, political and policy choices that shape the balances that exist prior to market dynamics, and that profoundly shape how those dynamics ultimately hash out." Then what, exactly are you talking about? I caution you, tread lightly, very lightly. History is littered with pundits, politicians and policy wonks who were smart.
The problem is that being smart...is dumb.
Thanks for the softball!
No really, I mean it.
I don't mean to say that I disagree with you when you say that it is a tragedy when anyone goes to bed hungry, especially a child, but I do mean to say that you miss the boat with your example.
You begin by setting us a strawman: a fictional two-party negotiation between a deodorant spray magnate and a deodorant spray prole. Then give me three variations on the theme: one where there are conditions specified and the two parties agree on a price "in the middle". The next where there's a "bad recession" and the worker has to settle for $30,000 and a final one where the worker haggles into $60,000. You then go on to say it's all about balances of power.
Bah!
I say again, Bah!
The first problem I have with this scenario is that it is as far from a realistic scenario as if a football coach told his quarterback to imagine that there are no defenders. Rediculous. First of all, unless you work in the Soviet Union, North Korea, or Cuba, there are other options--for both the employer and for the employee, and for the consumer. Why does this matter? OK, call it "balance of power" if you like, but it is about choice; just like a free economy. But is it balance of power when I choose Right Guard over Old Spice? No, it's about other things, including cost, quality, advertising, packaging, and let's not forget about scent!
The same is true in hiring. Do I hire the first person who walks in the door? Sure I might get lucky, but really, I'd be a fool to think that she is the best candidate and stop there. There are so many factors that go into making a hire, including cost, quality, advertising, packaging (although it's not supposed to be a factor), and scent (again, not supposed to be a factor).
And this is the problem with the idea that any one entity can make decisions better than a market. You just can't. The market is not like a computer, it's very, very different from a computer. Unlike a computer which only has the inputs that you define (i.e. "they only know what you tell them") markets take all information. Perfectly? Of course not; this is what causes all sorts of distortions, from the tank of gas for sale at the car rental agency to bias realtors have to move your house as quickly as they can.
But on the whole, markets do a phenomenal job.
I will concede that I really don't need 25 varieties of Old Spice Deodorant (yes, 25, I counted), but someone has discovered a demand for scents like "Matterhorn", "Livewire" and "Komodo", and by golly, they are fulfilling that demand.
As for the human beings who want to work in a deodorant factory, the question is not how valuable is the work they can do. The question is what choices do I, the employer, have? Can I get someone better or cheaper or both? If I can, why wouldn't I? What this candidate "needs" has as much to do with my decision as the date of the next lunar eclipse.
Yes, there is tension between all those brands and starving kids; yet it would still be there if there were only one brand, because the decision to divert money from starving kids comes, not when we create a second or third (or twenty-fifth) brand, it comes when we have just one. Unless you have more armpits than a Jatravartid, you only need one variety at a time. More to the point, having 25 scents of Old Spice probably decreases the number of hungry kids, because now you've got to hire the chemists to create the scent, marketers to sell it, and workers to make it.
Are markets dumb? No. Are they intelligent? Well, I have no idea what "intelligent" means, but markets probably not whatever it is. What they are, however, is an example of emergent order. To say that it has analytical power is just wrong. There is no more analysis in that than in the ways that the orbits of the planets interact with each other, than the ways that galaxies organize, birds fly, sand dunes form, or termites build their mounds.
I will give you credit for getting something right, however, policies do impact markets, and more often than not in ways that we cannot predict. For example, price controls seemed like a good idea, right? Next time you're in the 1973 or 1979 take a look at the lines for gas (the same thing happened as a result of the anti-gouging laws in NY after Hurricane Sandy).
OK you're not talking about having "bureaucrats direct the flow of every last resource in the economy. It is a matter of the inescapable social, political and policy choices that shape the balances that exist prior to market dynamics, and that profoundly shape how those dynamics ultimately hash out." Then what, exactly are you talking about? I caution you, tread lightly, very lightly. History is littered with pundits, politicians and policy wonks who were smart.
The problem is that being smart...is dumb.
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