On Fri, 01 Sep 2000, you wrote:
>
> 1. Markets really are close to the best possible method for allocating
> resources and arbitrating disputes.
"Best possible" is open to interpretation. Free markets offer maximum
average efficiency, but not much else. However, many people (myself
included) value extreme efficiency in such things over other
considerations.
> Overall, I believe markets *are* better than centralized planning. I
> doubt that at our current level of technological and economic
> development we're going to come up with something that's better accross
> the board.
The human issue with centralized planning is difficult to ignore. For
example, right now I am an economically efficient individual, generating
plenty of value for both myself and those that I work for. However, I
have *chosen* to generate a relatively high economic value, and like most
people, I have done so based on a cost/benefit analysis of the options.
The problem is that what I do to generate maximum economic value is not
what I want to do; if the large benefit did not substantially
outweigh the personal cost, I'd be doing something else entirely.
This is the crux of the matter: economic efficiency is essentially the
delta between benefit and cost, the bigger the better. Maximizing
benefit has far more headroom than cost reduction for most people in
relatively free markets. As a result, people tend to select high benefit
activities as they typically also offer the highest economic efficiency.
However, in a controlled market, where benefits are essentially compressed
and given artificial ceilings and floors, economic efficiency can be
better realized for the individual by choosing activities with the lowest
personal cost. For most people, activities with the lowest personal cost
do not map well to activities that would be considered economically
efficient in a free market. As a result, the economy at large suffers.
Of course, the core problem is that the government cannot control all the
variables (such as the highly subjective parameter of "doing what you
like"), yet changing one affects the others. If everyone actually
preferred to do those things that offered the highest possible economic
efficiency, then centrally controlled markets would work very well.
-James Rogers
jamesr@best.com
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