Markets v. Command and Control = Freedom v. Coercion

"Most economic activity requires coordinating the activity of vast numbers of people. New Yorkers have bread on their tables thanks to the coordinated activity of farmers, bakers, truckers, the producers of fertilizers, pesticides, and tractors, the mechanics who maintain the tractors and the delivery trucks, and literally thousands of others. There are only two ways to organize that activity: Through the anonymous market place, where individuals respond to price signals (so that an increase in the demand for bread leads ultimately to an increase in demand for tractor maintenance, leading mechanics to voluntarily work overtime), or through top-down direction – in other words, coercion. In the latter case, we are all subject to the whims and the prejudices of the directors. That leaves the market as the only economic system conducive to freedom"(Friedman, "Capitalism and Freedom", The Essential Milton Friedman, p. 39, emphasis added).

 

Russ Roberts and the Wonderful Loaf is a great site.

1. Read the poem here. Some highlights are:
   "Because there’s order all around us—things look as if they’re planned
   Like the supply of bread in a city—enough to match up with demand
   And though flour is used for more than just bread, we never have to fight
   Over where it goes and who gets what. So why do we sleep so well at night
   
   "Knowing nobody’s in charge , it looks like all is left to chance
   Yet in New York, or London as well as Paris, France
   No one’s worried the shelves will be empty, we take supply for granted
   But it’s a marvel, it’s a miracle, the world’s somehow enchanted
   
   "Could a minister of bread do even half as well?
   Would there be enough of every kind of bread upon the shelves?
   How could he know how much to make of each kind every day?
   There’d be shortages and surpluses and waste and much dismay
   
   "Every morning the bakers rise early to make sure your bread is fresh
   And the world gets more complicated but the plans just continue to mesh
   Every morning the bakers rise early, though not under anyone’s command
   Where in the anatomy textbooks can I view an invisible hand?
   
   "The key to the process is prices and the freedom to shop where you want
   Competition among all the bakers, makes sure that they rise before dawn
   To make sure the bread’s near perfection, to make sure that the buyer’s content
   You don’t have to know economics to know when your money’s well-spent
   
   "With each other. Order’s everywhere. Yet we humans too create it
   It emerges. No one intends it. No one has to orchestrate it.
   It’s the product of our actions but no single mind’s designed it
   There’s magic without wizards if you just know how to find it."

1. The reading list is great. Two highlights are:
1. Hayak, "The Use of Knowledge in Society"
   "t is a problem of the utilization of knowledge which is not given to anyone in its totality"
2. Roberts, "Profits v. Love"
   " was induced by the invisible hand to be altruistic. How sad it is that people think economics is the study of money or that economists believe in elevating mercenary motives above compassion. The great insight of economics is that people make tradeoffs. The basis for that insight is a recognition that behavior is complex and that no one has a single-minded motivation or a single goal. "

Two perspectives on climate change

Click here (Stossel, Dec. 2020).

Private v. state ownership in China

Enterprises owned by private indivuals have higher rates of return than enterprises owned by the state (WSJ, Dec. 2020).

Walter Williams on the Invisible Hand

In the first 3 minutes of this video, Walter Williams argues that "greed" is a better motivator for doing wonderful things than "caring for others". 

The best herd immunity money can buy

Jason Riley promotes the idea of paying people to take the COVID vaccine (WSJ, Dec. 2020). Paying people to take a vaccine that protects bystanders is a way to internalize the external benefit.

Economists v. Politicians

"[Walter Williams] understood that economic processes take place against a backdrop of politics, law, and social mores and beliefs. He understood, as his long-time friend and colleague Thomas Sowell stressed, the first lesson of economics: We live in a world of scarcity, and thus we are required constantly to weigh trade-offs. In contrast, the first rule of politics is to deny that scarcity exists. In insisting that we never forget that hard choices must be made, Walter’s commentaries rained on the parade of promises from politicians and exposed the pretensions of the powerful. This led him to include moral arguments about personal responsibility and a deep commitment to liberty in his popular writings. His main argument was that human history is a story of the domination and arbitrary abuse of the powerful over the lives of ordinary individuals. What made America special was that we had found a set of formal institutions of governance and informal norms of morality that kept this power in check. Walter hoped that history would not record this period as an aberration, but rather as a critical turning point toward wider freedom. His advice to policymakers: adopt your own version of the Hippocratic oath and do no harm. Political institutions must not exhibit either domination or discrimination if progress toward greater freedom and prosperity is to be achieved" (City Journal, Dec. 2020).

Telling people how to use their capital is futile

Craig Smith summarizes the knowledge problem and the poor incentives in place when "statesmen" tell people how to use their assets (Cafe Hayak, Dec. 2020).

How the rich and privileged can skip the line for COVID-19 vaccines

 

"Black markets" are one way that people compete when the government tries to allocate something (STAT/Health, Dec. 2020.) A black market converts a command-and-control allocation into a market allocation.

Who loses if someone voluntarily sells their COVID-19 vaccine to someone else?

Who loses if a doctor voluntarily sells the opportunity to someone to "move to the head of the line" for the vaccine?