Tuesday, April 25, 2006

Journey Through The Market Economy

It's a gorgeous Saturday. You are circumambulating the Beltway, cruising along at a reasonable 63 miles per hour. Suddenly, without warning, brake lights flash and the right lane screeches to a halt. What do you do? Being the clever Beltway Bandit that you are, you throw on the blinker, glance over your shoulder, and jump over two lanes where the traffic is flowing like boxed wine at a spring sorority formal on the south lawn of your grandmother's estate in the Hamptons.

This, my friend, is the most tangible, immediate example of the free market. John Q. Supply and Roger P. Demand at their most obvious. You, the driver, demand to get from Point A to Point B in as little time as possible. The Beltway supplies an efficient means to your end. The faster a lane moves, the more you want to be in it (assuming, of course, you know how to drive like a true DCer). The comparisons between unadulterated market behavior and driving are endless. Looking for a black market? Consider the wahoo that cruises on the shoulder during bumper-to-bumper traffic. In the most basic form, driving is as individualistic an act as you can find. It's all about getting where you need to go without hurting yourself. And I think Adam Smith would agree. If everyone drove as fast as they wanted to, all the while feeling safe, traffic would be at it's most efficient.

But let's not get ahead of ourselves.

What about lanes, traffic lights, stop signs, and crosswalk guards? Aren't those, in effect, market controls? Doesn't that obnoxiously bright red stop sign prevent you from getting to where you need to go as quickly as possible? It's not like you need it. You are intelligent, and you know that hitting stationary objects hurts. Similarly, you don't need lanes because you know that the shortest - and therefore fastest - distance between two points is a straight line. The Beltway, after all, is round. So why do we have speed limits and other "traffic calming" mechanisms?

The answer lies with the inherent flaws of a strict interpretation of laissez-faire economics. People do not always act in their best interest, nor do they always act as rational beings. I've driven tired and fallen asleep behind the wheel - only to be safely awoken by a rumble strip. You see, Mr. Smith's suggested "Invisible Hand" will not lead us to an economic Mecca, free from poverty and financial disaster. Government intervention into the market is absolutely necessary, and, in fact, beneficial to society as a whole.

If you don't believe me, I suggest an easy test: implement a free market approach to driving for one hour and try not to hit something. Even the most provincial economist would call you a fool.


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