Sunday, December 21, 2008

On Dogs and Free Markets

I want to talk about free market economies, but first I want to talk about dogs.

Dogs in the City
Dog-owners who live in cities and don't have yards know that they have to walk their dog once, sometimes twice a day.

Dogs are remarkable creatures. They're highly intelligent and blessed with sharp natural instincts as well. Their senses are far superior to ours and pound-per-pound, they are much stronger and faster than us, but, the city isn't their natural environment.

Owning a dog in the city means using a leash. The leash prevents the dog from walking in front of a moving bus, going into a sewer drain, after another dog, into a garbage can or humping a cop's leg. It keeps the dog safe and healthy and keeps the owner out of trouble.

The leash needs to be long enough to allow the dog some natural freedom of movement, but short enough to keep the dog out of dangerous situations and keep the owner out of trouble.

Dog owners will tell you that, at first, dogs hate the leash, but pretty soon they grow to love just the sight of it because it means they get to go outside.

Markets are like Dogs.
Markets are like dogs. They're remarkable creatures, but stable societies aren't their natural environment. Markets are made up of human beings, but they, themselves are not human and they require human supervision and control to keep them out of trouble.

Think of government regulation as a leash for markets. They prevent the market from wandering in front of a bus, chasing after squirrels or humping a cop's leg.

Completely free markets are like dogs in a city without a leash. They're free to run around and have a great time, but there's a really high risk they'll end up as road kill, getting lost, or getting the owner in some sort of trouble, so responsible owners invest in a leash.

Regulation isn't necessarily anti-capitalism. Its a recognition that, unlike ants, human beings clearly aren't more intelligent when they act in groups than they are individually and need some sort of guidance to prevent them from doing something really stupid.

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