Two on the power of markets

Got a disaster? Katrina, say? Trust Wal-Mart, not the government.

Is capitalism all about "greed"? In a word, says James Surowiecki, no.

. . . the evolution of capitalism has been in the direction of more trust and transparency, and less self-serving behavior; not coincidentally, this evolution has brought with it greater productivity and economic growth. 

Comments

[kyle N]

Just to play devils advocate I would say that some of the changes in capitalist behavior since the days of the robber barons and the pollution dumping days has been both from changing public opinions due to left wing, or progressive voices. And part of it was the threat of government interference and legislation.

I say this because I perceive that both conservatives and libertarians are just as guilty as left wingers in believing that their own version of utopia can exist with no compromises.

The truth is that although I do not want left wingers to have too much power or influence, because they are dangerous, we need them.

We need them because they sometimes reveal problems, even if their solutions are usually suspect.

I would not want to live in a perfectly conservative or perfectly libertarian society anymore than I would want to live in a perfectly progressive society. Of course we can move a whole lot more in a rightward direction before there is any threat of that happening.

[JorgXMcKie]

Of course the point is that in our hypothetical 'perfect' world, free markets would inevitably drive the system towards transparency and trust and less self-serving behavior. Unfortunately, neither the world nor the people in it are perfect (else Marxism would work). Politicians are, if anything, as a group more self-serving, transparent and deserving of the trust than businessmen as a group. All the businessmen want is my money.

[Ken]

Kyle,

The robber barons weren't robbers. They were good business men, which generally people don't like because they can't understand that people can earn so much money. It is assumed (incorrectly) that anyone with that amount of money, it must have been stolen.

Secondly, pollution dumping is a failure of government more than a market failure. Pollution dumping occurs when there are ill defined property rights. So you get the tragedy of the commons. Property rights are NOT the ideas expressed in left wing or "progressive" thought (it's a joke that people that call themselves progressives are in fact mini-tyrants).

Craig,

I find the Wal-Mart article especially timely, since I just got into an argument with someone that stated the private sector couldn't handle disasters such as Katrina- that we needed FEMA. Through the discussion it became clear that he did not care about the results of actions, only on intentions. If the situation was improved because they responded to incentives he did not approve of, the situation could not really be said to have improved. At the same time, he insisted that it's okay to have certain laws in place because they are the 'right' laws, even if they make the situation worse.

Specifically, we talked about the so called 'price gouging' laws- laws that prohibit prices from sharply increasing due to the sudden shortages. I explained to him that prices transmitted necessary information to the market that would motivate the otherwise unmotivated to load up a truck and bring water/food/generators/etc. because of the nice profits they would make. I explained that the sharp increases in prices bring in more resources than would otherwise be brought.

He wasn't buying it because he said that FEMA could take care of it despite the fact that FEMA hurt as much as it helped. It seems that facts do not carry the day against ideology. I should be old enough to know this, but I still get apoplectically angry and at the same time deeply saddened that most people think that intentions matter more than results.

I understand that intentions matter, but they matter very little in a situation as horrifying as the Katrina disaster. Denying an influx of resources because the reasons are unsavory is disgusting. And he kept trying to tell me how much moral it is to use FEMA than to allow the market to do its thing.

I try not to think of him as evil because he's not. But he and people like him do enormous damage. I sadly won't forward this article to him because he would dismiss it as an anomoly and I don't feel like listening to his ignorant rants again.

-Ken