Friday, May 12, 2006

A Spotsian dialogue

In response to Spot’s recent post Invisible hand job II, a callow libertarian correspondent of Spot’s, a pleasant fellow really – which of course eliminates Captain Fishsticks – wrote to take issue with Spot. And as well with Kevin Phillips, the author quoted by Spot in the post. Spot doesn’t disclose the identity of private correspondents – unless they are abusive, and none has been so far – but he would like to have a dialogue based on Spot’s reader’s epistle.

There is some truth in what that guy writes.

That guy? Do you know who “that guy” is, grasshopper? He wrote the book, so to speak, that engineered the Republican and Nixon drive through the south in the late ‘60s. Phillips has been writing on politics and economics for nearly forty years.

There is so much government interference in the market--for and against market players—[I] would not be surprised if a certain degree of economic chaos happens in the short to medium term.

In a pure social Darwinist hunter gatherer world, of course, it would be everyone for himself. Until, that is, Og figured out that he and Ig and a few others could get together and actually kill a mastodon. And thus began the history of economic cooperation.

Grasshopper, your point seems to be that “economic chaos” occurs in the shorter term because of long term market interference. Does Spot have that right?

Of course, grasshopper, that’s just silly. And that’s not Phillips’ point, either.

Neither business nor the invisible hand is very good at thinking strategically. Spot invites both the grasshopper, and the rest of you, boys and girls, to read an earlier post of Spot’s directed to this very issue, Invisible Hand Job [I]. A taste:
The second thing the market mechanism isn’t very good at is gauging the public interest, particularly when we are talking about thinking strategically. A guy who came along after our Pollyanna [Adam] Smith was Thomas Malthus. Malthus was much less sanguine. He saw a world of over-population, resource shortage, and misery. Charles Darwin was influenced by Malthus. Malthus advocated big-time regulation of population, since he believed that population growth could always outstrip resources.

We don’t seem to want to regulate population, except when it comes to those pesky Mexicans, but we do need somebody to think a little longer term than the stock market encourages. Considering the public interest does not maximize profits. The market isn’t immoral, just amoral. Drug companies don’t want to make vaccines for an influenza that may never occur; the market won’t do a lot of basic research, and it is not far-sighted enough to deal with Peak Oil or global warming in a way that will save our collective bacon.

A fundamental error that the grasshopper makes is that all “market interference,” all thumb wrestling with the invisible hand, is evil. Sometimes, it is necessary for the survival of mankind. Global warming is an excellent example. Thinking that the invisible hand will do anything other than take a tight grip around mankind’s throat (perhaps two invisible hands will be necessary!) is fantasy.

Let Spot give you a simple example, grasshopper. If Spot tells one of his pups to quit buying and drinking so much Mountain Dew because it’s bad for him and his teeth, that’s market interference. And Spotty says that when we get together through the political process and tell energy producers to produces fewer emissions and less mercury, it’s no different. Well, maybe in degree, but not essential kind.

All the invisible hand concept points out is that the law of supply and demand brings order to the individual, decentralized activities of particular consumers and businesses. It’s a basic fact of reality--if the law of supply and demand is allowed to operate, which so much government regulation and redistributionism often prevents in the short and medium run.

“Order” as in marching four abreast in orderly rows off the cliff.

Spotty’s spell checker tells him that “redistributionism” is not a real word. Perhaps he should have bought the optional Libertarian Edition module for his word processor! Spot thinks he knows what the grasshopper means, though. It’s something essentially different from the concept of “eat what you kill,” one of the pillars of social Darwinist hunter gatherism. This quaint notion, like so much of our theology, comes to us from our ancestors, in this case Og and Ig’s grandpa. Spot has also addressed the delusion of man being self-made and independent in Sticks regards himself, the Sticks referring to Captain Fishsticks.

In the final analysis, the invisible hand is theology, not so much economic theory. Let’s all get together and sing Immortal, Invisible Hand Only Wise.

Tag: Adam Smith's

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