Tuesday, March 6, 2012

"Managing" An Economy

"The idea that even the brightest person or group of bright people, much less the U.S. Congress, can wisely manage an economy has to be the height of arrogance and conceit."
Walter E. Williams

Can I start with this?


Dr. Williams knows that! Any economist knows that!

No group of people, bureaucrats, congressmen (cough!), economists, statisticians, clairvoyants - you name it - no group of people can manage an economy!

What is the only thing that can "wisely manage an economy"?

The famous Adam Smith INVISIBLE HAND.

Milton Friedman went a step further. He called it the invisible hand, and foot.

So, what's this invisible hand thing?

Look at your shoe. Is there a shoe lace there? If so, I ask, how many people did it take to get that shoe lace onto your shoe? One? Seventeen? Over a hundred?

Well, the answer is millions. Untold millions. And none of them is working specifically with others in that group toward the goal of lacing your shoe. Each is doing a particular job in the vertical and horizontal integration of resource acquisition and development, production, marketing and distribution, sales - etc!

Nobody knows how to make a shoelace! But each mini department in that shoelace's development knows how to do what they do best.

This is efficiency at its micro best!

Can any group know how to "manage" those millions or billions of steps necessary to efficiently make something happen in an economy?


How about managing an industry, an economic program? Take health care for instance. Can it be "managed" or efficiently delivered by a group, any group, of people, most of whom have no medical training? Think carefully...

And do you think that lack of efficiency and abundance of waste will be delivered more cheaply? Think carefully...

And do you think this group thinks about you the same way your (former) doctor did? Think carefully...

And do you think money will be sufficient to bring this wondrous, so-called "affordable" health care system to you to the very end of your life? Think carefully...

And do you think the gubment will ever deliver the mail efficiently and profitably? Then how can it do something infinitely more complex and important like health care? Think carefully...

This is where Milton Friedman brought the invisible foot into the mix. He said, "when government attempts to substitute its own judgments for the judgments of free people, the results are usually disastrous. In contrast to the free market's invisible hand, which improves the lives of people, the government's invisible foot tramples on people's hopes and destroys their dreams." (emphases mine)

Read the Dr. Williams quote above once again.  I expect he would agree with me completely!


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