Is There Any Alternative to the Market?
One of the articles of conventional wisdom we all agree on is that, well, the market is all very well, but we can’t just throw people under the bus of the market. There have to be laws, regulations. To protect people.
But I think that, most of the time, when the government interferes with the market it Makes Things Worse.
In my view, the reason for the ailing Rust Belt in the old industrial heartland of the US is that the government’s labor laws encouraged workers to price themselves out of the market. And when change had to come it was almost impossible because of the rigidity of workforce categories and seniority rules. So, what happens is Mitt Romney and his Bain Capital. You basically destroy the ailing company and its employees in order to save it.
In my view the reason that blacks in the United States are hurting is that government has spent the last half century preventing blacks from adapting to an environment where they have full civil rights.
But I understand why most people think that “we” need to do something to soften the market.
In the first place, humans are “risk averse;” We fear losing and we avoid having to take a loss. We would rather keep on at the old farm, the old job, hoping that things will turn around.
And, I think, that desperate humans are not above attacking and looting the neighboring farm or city to stave off starvation. Which makes sense.
The fact is that every gig comes to an end. This was upfront in the industrial revolution. What did the hand spinnners do when the Spinning Jenny came in? Whatabout the handloom weavers when the flying shuttle and the power loom came in?
Well? Do we have a gubmint program to retrain the hand textile workers? Or do their kids get jobs in the new industries and just look after the old folks, like Andrew Carnegie, son of a handloom weaver?
What happens to corporations when the market changes? Whatabout IBM and its mainframes? Turns out that IBM still makes mainframes. They are now called System z. But IBM is also in what appear to be 20,000 other computer and software and web-related businesses. IBM adapted. But the iconic IBM PC of the 1980s with the operating system that launched Microsoft? It sold that business to the Chinese Lenovo.
To me, we live in a curious time. On the one hand, we have the educated ruling class that tells us everyday that it is here to protect us: from the Russians, the Chinese, from racism-sexism-homophobia. And from eevil corporations. And climate change. And it promises to protect us from economic disruption.
On the other hand we have the global market system that is a frenzy of innovation and adaptation that changes the marketplace and the labor market every day.
I say that government should stop pretending it can protect us from the future. The best it can do is help us adapt to it. Is China going to take over the world? Better figure out how we can deal with it. Is climate changing? Better figure out how to adapt.
So government and elites make a mistake when the promise to protect us from the future. They make a mistake when they promise to build a better future.
All that government can do is create an environment to help the people adapt to the future.
I know. In your dreams.