… today few people appreciate just how similar the arguments made by Smith and Darwin are. Generally, Adam Smith is championed by the political right, Charles Darwin more often by the left. In, say, Texas, where Smith’s emergent, decentralised economics is all the rage, Darwin is frequently reviled for his contradiction of dirigiste creation. In the average British university, by contrast, you will find fervent believers in the emergent, decentralised properties of genomes and ecosystems who yet demand dirigiste policy to bring order to the economy and society. But if life needs no intelligent designer, then why should the market need a central planner? Where Darwin defenestrated God, Smith just as surely defenestrated Leviathan. Society, he said, is a spontaneously ordered phenomenon. And Smith faces the same baffled incredulity — How can society work for the good of all without direction? — that Darwin faces.
Matt Ridley, The Evolution of Everything, 2015.
August 18, 2018
QotD: Adam Smith and Charles Darwin
August 4, 2018
QotD: Supply and demand
… that terribly simplistic stuff about supply and demand in those econ 101 classes is actually true. Prices are not some arbitrary numbers thrown at something by the capitalist neoliberals in order to do down the proletariat. They’re vital and essential information about who wants what and who is willing to produce what. Where the supply and demand curves meet is where the market will clear and the market price will be the market clearing price. The meaning of this is that when you decide to arbitrarily throw a price at something you’re going to up set that balance. And if you tell producers that the price will be lower than the market one then they will produce less. And as demand curves slope downwards so will consumers desire more at that lower price. Thus price fixing below the market price produces a shortage, a dearth.
This is not some optional feature, it’s an essential fact about our universe. It is the explanation for those food shortages that Venezuela has been having. More than that it’s the only explanation we need or desire. Fix prices below the market price and you will have shortages. Stop fixing prices and you will stop having shortages.
So, well done to Venezuela for giving in to reality there. And this is something that we need to take on board too. Rent controls which fix the price of housing below the market price will lead to a shortage of housing. And the opposite applies too – fix the price of labour above that market price with a minimum wage and you’ll have an excess supply of labour. Or, as we usually call that, an excess of unemployment.
The price of something simply is the price of something and don’t ever forget it.
Tim Worstall, “Congratulations To Bolivarian Socialism – Finally A Sensible Economic Policy In Venezuela”, Forbes, 2016-10-15.
August 2, 2018
QotD: Economic complexity
“Progressives” mistake as “science” their habit of lumping countless idiosyncratic individuals and things, each always in an ever-changing set of deeply nuanced circumstances, into catch-all categories (such as “consumers,” “labor,” “government,” “the environment,” “the health-care sector,” “the money supply,” “the unemployment rate,” “the capital stock,” and “imports”) and then theorizing about how these big blobs of people and things interact with each other, and how these interactions can be “improved” by an apolitical, loving, intelligent, ever-diligent scientific guiding hand. That professors and their graduate students can assemble data on each of these big blobs of people and things, can write intricate equations describing mathematically how the professors and their graduate students imagine these blobs interacting with each other, and use the gathered data and sophisticated software to “test” the equation-ladened “models” seems oh-so-objective and truly scientific.
Yet most such exercises are b.s. Far too many of these exercises, when done by economists, are done in utter disregard of the meaningful, if impossible to observe from afar, differences that separate from each other each of the individuals and things that comprise each constructed blob. Far too many of these exercise are done by people whose impressive, deep, and vast knowledge of econometric techniques does not begin to compensate for their innocence of price theory, of history, and of formal and informal institutions.
Correctly taught and understood, economics reveals that reality is vastly more complex than the economically untutored mind realizes. Yet this message of complexity is unwelcome by those who want to rule and command. The reason is that to understand the reality of reality’s complexities is to understand that ruling and commanding – the actions of the “man of system” – can only worsen most individuals’ lives. Ruling and commanding of the sort that “men – and women – of system” itch to do can only disrupt for the worse, and not improve for the better, the spontaneous forces of society.
Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2016-09-20.
July 3, 2018
QotD: The fatal conceit
… each of these questions, like the larger point made here, applies not only to proposals for complete, economy-wide central planning of the sort that was fashionable during the mid-20th century. These questions apply to any proposal for government direction of economic affairs, however ‘partial’ it might be (or seem to be).
We can all agree, for example, that economic equality is fine thing – but do we count only monetary income as relevant for assessing equality, or do we count monetary income plus monetary wealth? What about the value of voluntarily chosen leisure: does it count? if not, why not? if so, how is it weighed against monetary income or wealth? And even if we all agree upon just what sources of utility do and don’t count as relevant for assessing economic equality, and agree also on the weights of the various sources of utility for making this assessment, how is the goal of economic equality itself to be traded off against competing goals – such as economic growth, or environmental sustainability (however that might be defined!)?
The previous paragraph gives only one small example of a huge problem that confronts those who believe that entrusting the state with the power to engineer economic outcomes is really just a matter of science, of empirically discovering the allegedly objective costs and benefits of various economic arrangements and then choosing that particular arrangement that best satisfies society’s object preferences.
The very notion that there is an objective ‘best’ arrangement of economic affairs that can be discovered independently of actual market processes and then imposed by the state to improve everyone’s, or most everyone’s, well-being is, truly, a fatal conceit.
Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2016-09-03.
June 18, 2018
How Georgian wine survived the Soviet Union and its central planners
Last week, Atlas Obscura posted a fascinating story by Nickolaus Hines on how Georgian winemakers somehow managed to keep their craft alive during the Soviet period of mass production and mandated conformity:
Georgian Kvevri or Qvevri wine fermentation vessels. They are typically buried in the ground and grapes are fermented, then the resulting wine is scooped or suctioned out and the qvevri will be cleaned and sterilized for the next year’s vintage.
Photo by Levan Totosashvili, via Wikimedia Commons.
Qvevri are cultural metaphors, writes Keto Ninidze, Kiknavelidze’s great-granddaughter and a Georgian winemaker, in an email. Much like how someone might give birth to a child, she says, qvevri give birth to wine. And after many years of giving life, the qvevri were used as a burial place. “So in Georgian cultural perception, [qvevri are] regarded as the cycle of life and death,” she says.
Georgia has the oldest wine culture in the world, and little changed from the earliest qvevri to Ninidze’s qvevri. Everything — down to the shape of the clay pots, the method of burying the qvevri, and letting crushed grapes ferment naturally inside — is passed down from generation to generation. When the Soviet Union took control of the country in 1921, this ancient winemaking tradition was pushed underground, where it almost disappeared. During these years, Georgian winemakers lost their land or had to give over all of their grapes every harvest. If they wanted to make their own wine, they’d have to forage grapes from wild vines on hillsides, in forests, and sometimes on the sides of village streets.
Before the Soviet Union imposed their rule on Georgia, though, more than 500 different grape varieties flourished in the country’s moderate climate, tempered by its proximity to the Black Sea. Thanks to the environment, wine grapes grow without much intervention. Back then, most grapes were picked by hand and crushed by foot. The juice, skins and stems and all, were then put into qvevri.
[…]
For around six months, natural yeasts ferment the juice inside the pots. The solid parts of the grapes filter the liquid, which funnels naturally towards the bottom. Once fermentation is over, the wine is suctioned or scooped out and bottled. Or, more likely, it’s stored in smaller pots. Then the cleaning process begins. The tools of the trade have upgraded, Ninidze says, and winemakers now wash qvevri with high pressure water, ash, and citric acid, then disinfect the vessels with sulphur smoke. What hasn’t changed is the immovability. Qvevri is “something you can’t take from one place to another,” Ninidze says, adding that once a winemaker chooses a spot for their qvevri, they’re rooted there until they pass it on or buy new qvevri.
This process didn’t budge for years. Then, the Soviet Union invaded and annexed Georgia in 1921. The slow, natural qvevri cycle — an extension of the Georgian lifestyle — didn’t fit Joseph Stalin’s five-year economic plans. These plans set economic goals and called for industrializing industries, including wine. Rural winemaking would need to be mechanized, and the wild-looking vines would need to be tamed. In the region of Kakheti, officials uprooted more than 500 native varieties. Steel tanks replaced the storied underground clay pots, too.
The government then redistributed and repurposed the annexed land previously used for wine, and built sterile buildings on top of them. “You see these Soviet buildings everywhere that are sturdy cement and nothing beautiful about them, but very practical,” Railsback says. “And then the Georgian [buildings] are more beautiful, and the architecture is really unique with hand-carved woodworking on the front of houses. There’s the Georgian look, and there’s the Soviet [look] that tried to demolish the culture and vibe — you feel that literally everywhere.”
During that time, families were given a single acre of land compared to the full vineyards they once tended to alongside their homes. Vines were ripped out and replaced with tidy rows of hardy, high-yielding varieties such as Saperavi and Rkatskeli. While they were plentiful and certainly sweet, they were bland and lacked the character of traditional Georgian vines. “There was one or two state factories that [processed] the whole yield of the country,” Ninidze says. “The production policy was of course industrial (especially after Stalin’s period), based on the five-year plans and neither the factories nor the farmers cared [about] the quality of the grape.”
June 8, 2018
The spiritual and aesthetic brutality of Brutalist architecture
In City Journal, Catesby Leigh looks at (and shudders at) some of the best-known examples of Brutalist architecture in the UK:
World War II left Britain in urgent need of rebuilding. The Blitz destroyed 200,000 homes and left another quarter-million uninhabitable. In the severely overcrowded urban slums, often blighted by industrial pollution, families lived without indoor plumbing, and they shared outdoor privies with neighbors. Others found shelter in temporary prefabricated homes produced by the aviation industry. In 1946, the government legislated the creation of new towns that, along with extensions of existing ones, would eventually be home to more than 2 million Britons. Aside from the new towns, a multitude of urban renewal and greenfield-development schemes emerged during the economically vigorous 1950s and 1960s. Housing “estates” erected by city and other local councils, mainly for lower-income residents, sprang up at a vertiginous rate, along with new office buildings, civic centers, shopping centers, parking garages, schools, hospitals, factories, and university buildings. Some 1.5 million prewar homes were demolished in the three decades following the war. Old urban centers were transformed: “Post-war Birmingham rebuilt itself in austere raw concrete, like Kuwait and Hanover and Manila,” Christopher Beanland enthuses in Concrete Concept: Brutalist Buildings Around the World. But by the late 1960s, it was obvious that most Englishmen weren’t keen on the idea of Birmingham looking like Kuwait and Hanover and Manila.
[…]
Park Hill, half-abandoned council housing estate, Sheffield, England
Photo via Wikimedia CommonsMany of the buildings that Harwood’s book covers make you wonder whether it is really about architecture at all. Consider Park Hill (1961), a huge council-housing estate containing nearly 1,000 duplexes and single-level flats that partially replaced a demolished slum overlooking downtown Sheffield — a crime-ridden precinct that, for all its problems, had housed a resilient community. Laid out as four long, interconnected slabs inflected so as to form an utterly antiurban, vermiculated footprint, Park Hill owed an enormous debt to the Unité d’habitation. At every third story, it featured elevated open-air “streets” or “decks” — the Corbusian fetish of the day — that ran indoors and out, connecting the slabs. As at the Unité, the imagery was nakedly industrial, with the apartments stashed in a “bottle-rack” grid of concrete that soon assumed a depressingly drab tincture and also proved prone to spalling. A ruthless rationalism likewise asserted itself in the level height maintained throughout the complex, which ranged from four to 13 stories, despite the irregular, sloping site. Park Hill was less a work of architecture than a huge, strange contraption inflicted on the urban skyline. Visual amenity, such as it was, came in the form of soft-hued brick within the concrete grid.
A typical deck in the Park Hill Flats, Sheffield.
Photo via Wikimedia Commons.As with many postwar housing projects, Park Hill offered practical amenities that residents had never before enjoyed: indoor plumbing, hot water, mechanical heating, even a sophisticated garbage-disposal system. Harwood mentions that, Britain’s many council-housing catastrophes notwithstanding, Park Hill “stood firm.” This is not true. By 1979, less than 20 years after its completion, Park Hill was an urban basket case — riddled with graffiti, terrorized by hooligans, afflicted with irruptions of black mold and the terrible stench resulting from waste-disposal blockages. Deserted decks and stairways provided criminals with multiple escape routes.
[…]
Local journalist Peter Tuffrey’s Sheffield Flats, Park Hill and Hyde Park: Hope, Eyesore, Heritage — whose title might seem to play ironically off Harwood’s but for the fact that the book appeared two years earlier — allows us to study a map and old photographs of the slum that Park Hill and Hyde Park supplanted. What we see are blocks, courts, and alleys teeming with row houses and low-rise tenements — streetscapes displaying a human scale, much solid construction, and considerable dereliction, all to be swept away by the desolation of the Corbusian superblocks.
Harwood doesn’t trouble herself with the Hulme Crescents (1972), another assemblage of concrete slabs on the vermiculated, “streets-in-the-sky” plan that rose from the blank slate of a demolished Manchester working-class district where 90,000 people once lived — “the human engine-room of the Industrial Revolution,” as Lynsey Hanley calls it in her largely autobiographical and often engrossing Estates: An Intimate History. The Crescents, designed to house more than 13,000, were conceived in emulation of Bath, the gorgeous Georgian city. Things didn’t work out that way.
“Almost immediately, the estate’s infrastructure began to suffer from the same problems that beset Park Hill and Broadwater Farm [a troubled north London estate]: leaky roof membranes, infestations of vermin and insects, uncontrollable damp, deserted walkways, and an endemic feeling of isolation,” Hanley notes. “The flats were so expensive to warm that many tenants never turned the central heating on, and communal areas were so difficult to maintain that the [city] council could not cope. When a small child died after falling off the top-floor ‘access deck’ of one of the Crescents in 1974, families decamped to the outskirts, belatedly following the rest of old Hulme.” The Crescents’ descent into chaos did make it possible for an anarchic punk scene to flourish in an upper-level hangout known as The Kitchen. The party ended with the estate’s demolition during the 1990s.
[…]
Still, the folly of concentrating lower-income populations in tall buildings eludes her, just as it eluded the Tory government that, in 1956, introduced hugely generous subsidies for the construction of high-rises, relative to row houses and semidetached houses. Not only are tall buildings much more expensive to build and maintain than houses; they were not even essential to achieving the residential densities that postwar planners sought. Tall buildings are highly artificial and complex structures housing temperamental machines, like elevators, that require a heightened degree of maintenance, often by highly paid technicians rather than handymen with toolboxes and stepladders, as Hanley observes. Tall buildings also require an elevated degree of social discipline, as well as security features like intercom systems, closed-circuit TV, and doormen or concierges. The tower blocks and high-rise slabs at the Barbican Estate, the carefully developed, elaborately landscaped, intensely picturesque Brutalist “bankers’ commune” in the City of London, have been very successful. The appropriate synecdoche for the Barbican’s low-end counterparts, however, might well be a broken-down elevator littered with trash, defaced by graffiti, and reeking of urine.
June 3, 2018
QotD: Price controls just make things more expensive in real terms
One of the perennial, and pernicious, political ideas is that if things are “too expensive” then we can fix that by just passing a law to make them less expensive. We see this just about everywhere and its sadly not limited to the more idiot sector of the left. Although of course it thrives there. Venezuela is a complete and total mess because Hugo Chavez and Nicolas Maduro thought they would make life cheaper by limiting prices by law. Payday lending doesn’t exist in certain states because people like Elizabeth Warren insist that interest rates should not go “too high”. Those usury laws mean that interest rates are infinite – as the lending simply isn’t available at all. And yes, people over on the right have made the same sort of mistake – Nixon tried to fix gas prices after all.
Price fixing just always leads to things getting more expensive. As David Friedman explains:
The result – that price control results in a cost to the consumer, pecuniary plus nonpecuniary, higher than the uncontrolled price – does not depend on the details of the [supply and demand] diagram. Consumers cannot consume more gas than producers produce, so the nonpecuniary cost must be large enough to drive quantity demanded down to quantity supplied. Quantity supplied is lower than without price control, so cost to the consumer must be higher.
Tim Worstall, “Memo For Would Be Price Fixers – Price Controls Always Make Things More Expensive”, Forbes.com, 2016-08-16.
May 5, 2018
What’s Wrong With Wakanda?
Foundation for Economic Education
Published on 3 May 2018Wakanda could never exist in the real world.
Wakanda is frustrating because it perpetuates the myth that an abundance of a really valuable natural resource is all you need to create a prosperous and extremely advanced society. This is simply not true. Matt Ridley, author of The Rational Optimist, wrote about how isolationism actually leads to a regress in technology.
April 22, 2018
How to begin solving the common problems of big cities
Vladimir “Zeev” Vinokurov is writing about Australian cities in particular, but the same general analysis applies to many Canadian, American, and British urban areas as well:
… our economy and population are growing, and the resulting congestion is costing us thousands of dollars per year individually, and billions to the economy. It isolates us from family, friends and work. But cities can still grow without getting us stuck in traffic, missing increasingly overcrowded and delayed trains, or left unable to afford property. All this is happening because workplaces are too far from residents living in the suburbs, which effectively funnels residents into the inner city for work. It must change.
First, we must unwind planning laws that prevent offices, homes and apartments from being constructed alongside each other and throughout the city. These laws also raise housing prices by hundreds of thousands of dollars. Second, instead of banning cars, charge commuters for using congested roads and trains. Third, stop supporting taxpayer funded ‘road to nowhere’ infrastructure projects. These reforms will cut congestion, grow the economy, cut living costs and reconnect us to family, friends and local communities.
Planning laws cause congestion and social isolation by preventing people from building apartments and commercial offices throughout our city. As a result, rents and property prices become dearer because not enough housing is built to accommodate demand from population growth. Indeed, Reserve Bank economists estimate that planning laws increase average property prices by hundreds of thousands of dollars. This drives residents into the outer suburbs to look for cheaper housing, even as they commute into the inner city for work. If more people lived close-by to their workplaces, commutes would be shorter.
We need multiple CBDs, not just one. Unwinding planning laws that prevent commercial growth outside the CBD will cut housing costs and rents, cut congestion and promote tightly knit, thriving urban communities.
Congestion also occurs because we pay for using roads and public transport with thousands of dollars of time every year, rather than money. Congested public roads or trains cost us no more money to use in peak times, and busier routes cost no more to use than empty ones. As a result, the Grattan Institute think tank estimates that the average Melbournian’s commute to the city is twice as long in peak time. By contrast, Sydney’s trains are less congested, but are used more widely compared to Melbourne’s because its tickets are dearer in rush hour. Congestion charges that reflect market demand for infrastructure will also encourage businesses to open in commercial districts outside the CBD. Reconnecting local commuters with local workplaces will save us time and money overall.
Congestion charges are also a fairer and cheaper way of funding infrastructure projects compared to taxes like fuel tax or stamp duty. Scrapping these two taxes could save property purchasers tens of thousands of dollars or more, and reduce petrol bills by at least a third. If we pay for congested roads and trains with money rather than time and taxes, we may end up paying less.
March 5, 2018
December 7, 2017
Lawrence Solomon makes his pitch for “most hated by the bike mafia”
This was published last week, but I didn’t see it until it was linked from Instapundit:
Today the bicycle is a mixed bag, usually with more negatives than positives. In many cities, bike lanes now consume more road space than they free up, they add to pollution as well as reducing it, they hurt neighbourhoods and business districts alike, and they have become a drain on the public purse. The bicycle today — or rather the infrastructure that now supports it — exemplifies “inappropriate technology,” a good idea gone wrong through unsustainable, willy-nilly top-down planning.
London, where former mayor Boris Johnston began a “cycling revolution,” shows where the road to ruin can lead. Although criticism of biking remains largely taboo among the city’s elite, a bike backlash is underway, with many blaming the city’s worsening congestion on the proliferation of bike lanes. While bikes have the luxury of zipping through traffic using dedicated lanes that are vastly underused most of the day — these include what Transport for London (TfL) calls “cycle superhighways” — cars have been squeezed into narrowed spaces that slow traffic to a crawl.
As a City of London report acknowledged last year, “The most significant impact on the City’s road network in the last 12 months has been the construction and subsequent operation of TfL’s cycle super highway … areas of traffic congestion can frequently be found on those roads.” As Lord Nigel Lawson put it in a parliamentary debate on bicycles, cycle lanes have done more damage to London than “almost anything since the Blitz.”
As a consequence of the idling traffic, pollution levels have risen, contributing to what is now deemed a toxic stew. Ironically, cyclists are especially harmed, and not just because the bike lanes they speed upon are adjacent to tailpipes. According to a study by the London School of Medicine, cyclists have 2.3 times more inhaled soot than walkers because “cyclists breathe more deeply and at a quicker rate than pedestrians while in closer proximity to exhaust fumes … Our data strongly suggest that personal exposure to black carbon should be considered when planning cycling routes.” Cyclists have begun wearing facemasks as a consequence. A recent headline in The Independent helpfully featured “5 best anti-pollution masks for cycling.” Neighbourhoods endure extra pollution, too, with frustrated autos cutting through residential districts to avoid bike-bred congestion.
Health and safety costs aside — per kilometre travelled, cyclist fatalities are eight times that of motorists — the direct economic burden associated with cycling megaprojects is staggering. Paris, which boasts of its plan to become the “cycling capital of the world,” is in the midst of a 150-million-euro cycling scheme. Melbourne has a $100-million plan. Amsterdam — a flat, compact city well suited to cycling — is spending 120 million euros on 9,000 new bicycle parking spots alone. Where cold weather reigns for much of the year, as is the case in many of Canada’s cities, the cost-benefit case for cycling infrastructure is eviscerated further.
An answer might be dedicated bicycle-only routes, but the usual problem arises: the cost of the land necessary to build and maintain the routes will almost always be far higher than municipalities can afford to pay, and the benefits accrue more to upper-income users while the costs fall on the whole population. That’s just what we need: another way to transfer wealth from the poor to the rich.
November 7, 2017
Le Corbusier
Theodore Dalrymple could never be called a fan of Le Corbusier’s architecture:
The French fascist architect Charles-Édouard Jeanneret, better known as Le Corbusier, was another of this charmless ilk, though cleaner than Brecht (a Marxist, the latter’s decision not to wash was his tribute, albeit not a very flattering one, to the proletariat). Jeanneret’s inhumanity, his rage against humans, is evident in his architecture and in his writings. He felt the level of affection and concern for them that most people feel for cockroaches.
Like Hitler, Jeanneret wanted to be an artist, and, as with Hitler, the world would have been a better place if he had achieved his ambition. Had he been merely an artist, one could have avoided his productions if one so wished; but the buildings that he and his myriad acolytes have built unavoidably scour the retina of the viewer and cause a decline in the pleasure of his existence.
One of Jeanneret’s buildings can devastate a landscape or destroy an ancient townscape once and for all, with a finality that is quite without appeal; as for his city planning, it was of a childish inhumanity and rank amateurism that would have been mildly amusing had it remained purely theoretical and had no one taken it seriously.
A book has just been published — Le Corbusier: The Dishonest Architect, by Malcolm Millais — that reads like the indictment of a serial killer who can offer no defense (except, possibly, a psychiatric one). The author shares with me an aesthetic detestation of Jeanneret, and also of his casual but deeply vicious totalitarianism; but, unlike me, the author both has a scholarly knowledge of his subject’s life and writings, of which the perusal of only a few has more than sufficed for me, and is a highly qualified structural engineer. Mr. Millais is able to prove not only that Jeanneret was a liar, cheat, thief, and plagiarist in the most literal sense of the words, a criminal as well as being personally unpleasant on many occasions, but that he was technically grossly ignorant and incompetent, indeed laughably so. His roofs leaked, his materials deteriorated. He never grasped the elementary principles of engineering. All his ideas were gimcrack at best, and often far worse than merely bad. To commission a building from Jeanneret was to tie a ball and chain around one’s own ankle, committing oneself to endless, Sisyphean bills for alteration and maintenance, as well as to a dishonest estimate of what the building would cost to build in the first place. A house by Jeanneret was not so much a machine for living in (to quote the most famous of his many fatuous dicta) as a machine for generating costs and for moving out of. In the name of functionality, Jeanneret built what did not work; in the name of mass production, everything he used had to be individually fashioned. Having no human qualities himself, and lacking all imagination, he did not even understand that shade in a hot climate was desirable, indeed essential.
October 5, 2017
Out of Frame: The Real Life Wilson Fisk
Foundation for Economic Education
Published on 5 Oct 2017Wilson Fisk is one of the most terrifying villains in the Marvel universe. Good thing he’s just fictional, right? Wrong!
In this episode of Out of Frame, we explore the real-life Wilson Fisk, a central planner from America’s not so distant past.
Learn more about Robert Moses and his greatest nemesis, Jane Jacobs at FEE: https://fee.org/articles/jane-jacobs/
August 7, 2017
July 19, 2017
QotD: Prices in a post-scarcity economy
The most important piece of information that the price system provides is “How much do I want this, given that other people want it too?” That’s the question that millions of people are answering, when they decide to use less tin, or pay more for tin and use less of something else. Computers are not good at answering this question.
How would a computer even get the information to make a good guess, in the absence of a price system? Please do not say surveys. You know what did really well on surveys? New Coke. Also, Donald Trump, who is not going to be president. We are, in fact, back to some version of the incentive problem, which is that when the stakes are low, people don’t put too much thought into their answers.
In many cases, people are interested in getting rid of prices precisely because they don’t like the signal that it is sending — that the best possible medical care is a scarce good that few people are going to get, or that other people do not value your labor very much. People are trying to override that information with a better program.
But even if we decide that the planners know best, we still have to contend with the resistance that will arise to their plan. Just as Communism’s critics need to remember that money is not the only reason people strive, post-capitalists need to remember that they will be dealing with people — cantankerous, willful and capable of all manner of subversions if the plan is not paying sufficient attention to their needs.
It’s possible that we’ll see versions of a “post-scarcity” economy in things like music and writing, since these are basically versions of activities that people have been doing for free for thousands of years. But when it comes to unpleasant labor like slaughtering animals, mining ore and scrubbing floors, even an advanced society needs to figure out exactly how badly it wants those things done. And so far, nothing beats prices for eliciting that information.
Megan McArdle, “Yes, Computers Have Improved. No, Communism Hasn’t”, Bloomberg View, 2015-09-02.
