July 23, 2024

The Wisdom of Markets

Crowd-sourcing, capturing the “wisdom” of the mob, was what the cool kids were doing not so long ago.  Witness the rise of the Daily Kos and other such web sites.  One thing they failed to espouse in their almost universal progressive liberal dogma is that the idea of mining – and manipulating – the minds of the masses is not a new idea.  Free markets do that very same thing, efficiently causing desired products and services to spring into existence and eliminating the unwanted.  How could progressives have overlooked the most important example of their new idea?

The answer is that free markets usually don’t produce the outcomes that progressives want.  All to often, their reaction seems to be denial of the truth – that the masses simply don’t agree with their agenda – and they blame the market for some unnamed failure.

For example, imagine 1000 Ford Rangers sitting side-by-side at the dealership.  The vehicles are identical except for one minor detail:  half of the small trucks has a new anti-pollution device that costs an additional $2000 and will reduce gas mileage by 2 MPG.  Which vehicles will leave the lot first?  (Tell the truth.)

The fact that the cheaper, better-performing vehicle will sell – and has sold – better is, according to liberal values, a failure of the market.  Unfortunately that’s not true.  Consumers simply don’t value the reduction of air pollution as much as the left-wing of the American populace.  The failure, if there is one, is our own.

The New Yorker recent ran a piece by Elizabeth Kolbert in which she used improvements in refrigeration technology as an example of how government regulation “created” improvements in consumer products.  Certainly advances in efficiency have been made and Kolbert may be correct in giving credit to California’s efficiency mandate.

Then again, rising fuel prices in the 1970s made consumers aware of electricity costs; that fact alone would have spurred industry to respond in the same way – to the extent that consumers cared about such products.  But I think she’s correct in saying that the regulation helped.

Where Kolbert falls down is in her call for Congress to require large improvements in automobiles’ MPG ratings.  The parallel with the refrigeration technology is solid, so what’s the problem?

The fact that another of liberals’ key agenda items – reduction of air pollution – is directly responsible for reductions in automobile efficiency.  Their demands are effectively equivalent to saying, “Do more work with less energy while working with 1 arm tied behind your back.”

That’s the wisdom of social and environmental interventionists and not at all the result a crowd-sourced movement would have come up with.


Marc is a software developer, writer, and part-time political know-it-all who currently resides in Texas in the good ol' U.S.A.

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