In 1998, inspired by watching a baseball game, the economist
Don Boudreaux wrote a short essay entitled Much
More Than Meets the Eye. It's a neat essay and well worth sharing (I've reprinted
the whole thing below) for the way Boudreaux uses a sporting analogy to
illustrate the widespread presumption of over-simplicity in the economy.
That is, just as the skill and dexterity combined with
lots of practice goes into the prowess of playing baseball, similarly society
and the economy appear to be a
lot simpler and easier to organise than they really are. Because of this,
third party politicians operate under the delusion that they know people's
wants and needs better than the individuals themselves, and can govern their
lives better than they can.
I have to admit, ever since being a young lad and
first getting into those academic subjects like economics that would titillate
and enhance the mind ever since, our sluggishness in evolving
beyond this state of stultifying dependency has struck me as strange. While I understand the human need to help others, I
remain perturbed by how, in a Jack and Jill scenario, we let so many Jacks dictate
to us Jills what our preferences are and how much we should value things.
It remains utterly
peculiar to me how almost everyone loves the idea that Jack knows enough to forcibly
prohibit Jill from selling her labour for lower than the rate that Jack (with
only a tiny fraction of all the facts) establishes is best for Jill. It remains utterly
peculiar to me how almost everyone loves the idea that Jack knows Jill's perceived
trade off in the pleasure of eating chocolate versus the prospect of being a
few grams heavier as a result.
The same applies to Jill's
wine, beer, cigarettes, number of hours she can work, whether she is allowed to
charge the market rate for renting out her apartment in London, and the extent to which supply, demand
and consumer choice ought to be factored in to getting a train, obtaining a
university degree, and so forth (there are still many people who support
nationalisation of railways and the scrapping of tuition fees).
I do sense that market-friendly thinking is on the rise, and with the mass-sharing of ideas thanks to the global online connectivity, and with hopefully enough people wanting to reap the benefits of critical thinking, it would be nice to see this trend continuing. For now though, there's still quite a way to go.
Here's the short essay…
Much More Than Meets the Eye
Last
October I watched a few telecasts of the Major League baseball playoffs. I
noticed the Atlanta Braves’s all-star pitcher Greg Maddux and asked myself:
“What makes this guy so special?”
I
studied his pitching motion. “It looks like something I could do with a bit of
practice. Why am I not making millions of dollars pitching in the Major
Leagues?”
Of
course, I know that I could never hurl a ball with Maddux’s combination of
speed and accuracy—even if I could mimic very accurately the outward
manifestations of his expert pitching style. Every single pitch delivered by
Maddux is the result of countless precise muscle movements, only a tiny
fraction of which are visible. In short, it is impossible really to observe how
Greg Maddux pitches. All we can observe are a few rough external movements—how
high he raises his leg, how far back he cocks his throwing arm, and so on. If
skilled pitching indeed involved mastery of nothing more than the external
movements every fan sees, then the world would be so awash with skilled
pitchers that Greg Maddux would have to work two jobs to earn enough money to
feed his family.
Maddux’s unusual expertise is invisible. This expertise is his rare knowledge of how to coordinate the tens of thousands of sequential minute muscle movements necessary to get the ball over the plate at lightning speed. Not only can no observer ever see the complex coordination of indescribably exact muscle movements in Maddux’s feet, legs, back, shoulders, arms, hands, and fingers, but Maddux himself could never hope to articulate to even the most perceptive listener just what he does.
In
fact, we can never really see, or learn by words, how any pitcher pitches. We
see only the surface phenomena—the tip of the iceberg. To watch a big-league
pitcher pitch is to risk being misled into thinking that we see how to pitch.
The actual pitching process is vastly more complicated than anything that can
be observed, measured, recorded, communicated, or mimicked.
In
this way, the market is like adroit pitching: everyone observes the surface
phenomena but no one ever sees the underlying mechanism—invisible in its
entirety—that gets the job done. Not even the most astute economist,
entrepreneur, or financial analyst ever sees more than a sliver of the vast and
intricate invisible workings of the market process that daily transforms raw
materials and human creativity into billions of consumer goods and services.
Leonard
Read explained what he called the “white magic” of the market process in his
justly praised article “I, Pencil.” No one knows how to make an ordinary
pencil; no one can ever know how to make a pencil. And yet pencils are produced
in such huge quantities that they are virtually free for the taking. We have
pencils not because some one person planned from the beginning the cutting of
cedar trees, the mining of graphite, alumina, and bauxite, the extraction of
petroleum and clay, or the organization of transportation to get supplies to
pencil factories and pencils to retailers. When you contemplate the
enormousness of all the tasks that are required to make a single pencil, you
understand that no one can know how to do more than a tiny fraction of these
tasks.
We
have pencils (along with indoor plumbing, electric lighting, microprocessors,
disposable diapers, camcorders, concert halls, . . . ) only because for each of
the countless tasks required for the production and distribution of each good
there are a few people who specialize in knowing how to perform these tasks.
But no one knows—or can know—how to perform all of the tasks required to
produce even the most commonplace of goods. The free market works as well as it
does because, when property rights are respected and fully transferrable, the
resulting prices tell each of the producers at the innumerable different
production “sites” just what (and how much) to produce and with what particular
combination of resources.
For
example, if the supply of crude oil falls, the resulting higher price will
prompt manufacturers of paint to produce less petroleum-based paints and more
linseed-oil or water-based paint. The resulting higher price of petroleum-based
paints will prompt pencil manufacturers to paint fewer of their pencils with
petroleum-based paints and more of their pencils with paints made of substances
other than petroleum. As F. A. Hayek taught, the pencil manufacturer need never
know why the price of petroleum-based paint rose; all that is required for this
manufacturer to act appropriately is for him to conserve on his use of
petroleum-based paint. The higher price of such paint achieves this goal.
Every
hour of every day millions upon millions of specialists around the world adjust
their plans based upon prevailing prices in light of their own unique knowledge
of their specialties. Each of these adjustments, in turn, spawns further price
changes that cause yet others to adjust their plans. This great web of mutual
and continual adjustments allows the free market to deliver the goods (both
literally and figuratively).
But
this web, though we know it exists, is invisible. We see only its surface
phenomena—goods on supermarket shelves, physicians’ offices filled with
magnificent diagnostic equipment, beer trucks making their daily rounds. No one
ever sees the immense expanse of human cooperation across space and time—or the
vision and gumption of entrepreneurs, or the highly specialized skills of
workers—all of which are necessary if we are to enjoy even the most mundane of
modern goods and services.
People
who would plan an economy, or even regulate an industry, commit the cardinal
sin against sound economics: believing that they can consciously improve that
which they cannot hope to know. Just as it is utterly ridiculous for me to
imagine that I can learn to pitch merely by studying videotapes of Greg Maddux,
it is equally ridiculous for politicians or bureaucrats to imagine that they
can improve upon the free market with knowledge only of the tiny part they are
able to observe. Such conceit is toxic for a free society.
Donald
J. Boudreaux
