Tuesday, May 27, 2008
Chapter 1: The power of the market
Friedman begins his work by outlining what I predict we will see are his most important points. First of all, we can best cooperate by engaging in voluntary exchange. As long as we are always exchanging something we find of lesser personal value for something of greater personal value we are making the world a better place. Secondly, prices are countlessly valuable because they, transmit information nearly perfectly. Lastly government should stay out of this equation as much as possible because they disrupt the flow of the machine that is the free market.
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I will begin my first response by admitting that all my responses are certainly going to hold a critical edge. I think it's healthy for me to do so, just like questioning religious beliefs is healthy; esp. considering some economists hold the the market as their own pseudo-religion, which I've ranted about before in the Sojourn. Also, I'm lazy and not reading the book, so perhaps my comments are not valid. But I had enough of the libertarian brainwashing to know the basic arguments.
The largest omission I see in "trading from lesser to higher value" is negative externalities. I'd like to hear how society can deal with these without gov regulation, inefficient as it is. Pollution is the easiest example. Go to the ghettos in large cities and you're sure to find all kinds of air-quality problems, noise, etc. This aggravates the poor's already precarious situation if they are raising kids and working $8/hr jobs (the free market wage). Not wanting to have an asthma attack so they stay inside, become obese, etc. Pollution will find the place of least resistance - the hood. As a byproduct of our industrial lives, we'll have to live with some of it, but perhaps the middle-class economists who can afford not to live there are the ones telling me that a certain level of negative externalities are worth handling - although some handle more than others.
The international situation is even more severe because it is out of sight, continents away, and they are even poorer.
One of our IWU econ profs used an example from his property - the negative externalities of his neighbor's dandelion seeds falling on his grass. I think that shows the nature of personal experience with the market - it has served him well.
To properly evaluate the market / government question, I think we need to have one foot in the shoe of "the other" who is suffering and one foot in the shoe of the knowledge of good and evil - economic / social policies.
Blah.
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