The Angry Economist

In an AP article, we are informed that Hillary Clinton is going to take $60 BILLION dollars from "big oil", and then spend it on "clean-energy research and development." Where does she think "big oil" gets its money from? What is "big oil" going to do when its costs increase by $60 BILLION dollars? Does she think there are going to be no negative effects on the American public?

Obviously, she is appealing to the greed of the American public. "These are the kinds of things that I will do if you vote for me for President."

A the end of 2006 (literally) I posted on "Faith in Free Markets". Through the (free market) miracle that is Google, I found a blog posting by Jeremy Hunsinger objecting to the possibility of saying anything about free markets, since all markets have interventions, saying:

I'd love to know where they found a free market to have faith in. I've never seen one that wasn't structured, biased or otherwise guaranteed by governmental or corporate structures.

Unfortunately, this idea exhibits a profound lack of understanding of economics. Jeremy isn't the only person to make this claim. A quick Google search for "no such thing as a free market" finds this and this and this which agree 100% with Jeremy, and are equally wrong. Economists rarely study anything by itself. Economics isn't the study of one thing; it is the study of one thing versus another. Economists try to figure out what you'll give up of one thing in order to get another, and why.

There's no point to objecting to advocacy for free markets by pointing out there is no pure free market, free of any coercive influence. We can compare more-free markets to less free markets, and decide which ones we like. If we like more-free markets, then we advocate for free markets, all the while realizing that the people who like less free markets will prevent us from having a completely free market.

It's not about free markets. It's about free-er markets.

I will tell you why I have blind faith in free trade. It's because any alternative to free trade requires coercion. Coercion requires threats and acts of violence. I am a pacifist. I believe that all violence which is not directly engaged in reducing even worse violence (that is, I believe that a police are necessary) is evil, and counter to God's will. I think that violence is the worst injustice. Thus, I think that violence cannot be used to counter injustice. Thus, I am philosophically opposed to most laws which interfere with trade, e.g. a minimum wage law.

You can see that my faith isn't so blind as some would say. There's a train of logic which only requires one assumption: that violence is the worst injustice. I would say instead that some people close their eyes when it comes to regulations.

Matt Yglesias writes a somewhat confused blog posting about "The Trouble With Contracting." He opines that governments are less efficient than the private sector. He lays the blame on just one aspect of the private sector: that badly run companies go out of business. Then he notes that when governments buy their services through badly run companies, they don't necessarily go out of business.

He is totally missing the reason why badly run companies go out of business. They fail because other companies out-compete them. Competition is what you get when multiple vendors try to cooperate with the customer more than anyone else.

If, as Matt suggests, companies are not chosen to maximize cooperation, then buying services through contractors is not likely to be any more efficient. He's quite right even though he doesn't understand why he's right.

But the real problem is not whether governments hire employees, or hire contractors. The real problem is when governments hire anybody. Governments don't have the flexibility to provide many different levels of service to different groups.

Compare, for example, restaurants to schools. Restaurants are subject to very little government control. They have to find an acceptable location if the community restricts business locations via zoning. They have to maintain certain standards of cleanliness and food preparation. Other than that, they can sell anything anytime anywhere in any quantity and combination to any customers. Schools have one curriculum for all students in a single grade. All students are expected to learn all material at the same rate at the same age at the same time of day. A tiny bit of flexibility is provided for special education students -- but even then the goal would be for them to learn the standard curriculum (aka mainstreaming).

School choice will have very little affect on any of this (or so I predict). "He who pays the piper calls the tune." Initially parents will be able to choose from a substantial range of schooling. Over time, taxpayers will rebel against, say, pagan schooling, or math-only schooling, or athletic schooling, and more and more restrictions will be placed on them.

That, in a nutshell, is the case against government provision of services. The private sector might be more efficient, but efficiency isn't really the goal. The goal is for everyone to get what they want, not for everyone to get what everyone wants. A free market provides the first; governments provide the second.

From time to time you will see people accuse free marketeers of "marketolatry". You'll see one here. The implication of that term is to say that we are worse than ideologues: that we worship free markets as our God. Thanks, no, I already have a God; don't need one so imperfect as markets, free or otherwise.

The problem with this accusation is it implies that we wouldn't change our minds in the face of contrary facts. The speaker usually believes that they have irrefutable contrary facts. Since we aren't convinced by their facts, we must be ideologues, or worse, marketolatrators.

Consider that they might be wrong. Certainly they don't.