EPTSystemic Change
How Markets and Nature Optimize.
How Markets and Nature Optimize.
First a preface. When discussing evolution the typical person, who accepts the theory, does so on the grounds that life doesn't spontaneously change from one form to another. It changes systemically. Gradually over time it accumulates changes and those changes good or bad, ultimately, lead to a new species. Bad changes disappear and the good changes continually compete against one another; this continues the evolutionary "arms-race".
A creationist says, "No! This cannot be the case, life needs some sort of creator to guide it, otherwise we'd end up with mutants and undesirables and the whole system wouldn't function!"
When discussing economics the typical libertarian or conservative defends the free market on the grounds that businesses, and their associated business models, compete in marketplace of customers - all of them vying for more customers (and, therefore, more profit). Over time the bad businesses will exit the market and the good businesses will compete against each other continuing the cycle of success and failure.
A liberal says, "No! This cannot be the case, the economy needs some sort of regulation to guide it, otherwise we'd end up with robber barons and crooks and the whole system wouldn't function!"
---
In a free market economy consumers have more power. Their individual decisions ripple through out the economy sending signals to businesses to change. Similar to the environmental pressures a species can come into contact with, a business must bow to these whims or else face extinction.
When a central planner (be it God or government) is present the system can't function properly. Suddenly these pressures aren't as effective or cease to exist entirely. When this occurs innovation, optimization and overall quality of output tend to decline. Because of this lack of signals businesses continue down a potentially harmful path because they simply lack the mechanism to correct themselves. This leads to inefficiencies within the economy.
This isn't to say the government can't have a very positive role in the economy. Nature, itself, has guidelines. From gravity to thermodynamics to the inner workings of the atom, all systems have some sort of set of rules by which they operate. Government establishes laws against burning down the competitions factory or dumping toxins into public waterways. There are a myriad of other ways that the government can be a positive factor in the economy. But all too often, after the best of intentions begin to pile up and stagnate, the economy buckles under the weight.
Thomas Paine said, "Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one."
But, perhaps, Gerald Ford said it best when he said in his Presidential address, "A government big enough to give you everything you want, is strong enough to take everything you have."
In light of recent events, such as Assange and Bradley Manning, I think its appropriate for us to take these words to heart.
Thanks for reading!
