Friday, 5 October 2018

Party Conference Lament

Having watched all the party conferences, and listened to the squalid way that politicians speak untruths about reality, newer readers who haven’t trawled my archives (yet!) might appreciate a summary of the basic problems that underlie these political promises - promises that only gain traction because of the wilful ignorance of most of the electorate, who lap up this stuff like dogs lap up water from their drinking bowl.

The primary problem is the base fallacy that economies do not suffer terribly when politicians impede functioning markets. The reality is, they do! And almost every citizen’s well-being is negatively affected by it. Politicians impeding functioning markets - either by socialism, communism, theocracy, military dictatorship, political hegemony, or a combination of all five - encroach on the market’s efficiency, and obstruct the price system’s ability to allocate capital and labour to their most valued areas of society.

Instead of being driven by supply and demand and consumers’ revealed preferences, a top down interference in the economy is driven by the short-sighted whims of politicians, their self-serving manipulations of the system, and their Promethean fantasies that they know how to manage an economy better than individuals engaging in voluntary, mutually beneficial exchanges. This is the story of Cuba, North Korea and Venezuela, just as it was the story of the Soviet Union and East Germany - the effects of which are still felt in those countries today.

The free market is, by a long a way, the most effective and efficient way for societies to increase their health, wealth, well-being and standards of living. And what’s even more remarkable about it is that any individual agent in a marketplace - from the highest earners to the lowest earners - can only make themselves better off by serving the needs of others and adding value to society.

It’s not as though it’s especially difficult to see the extent to which political interference prevents the efficient functionality of the price system. Contrast the fruitful, dynamic, highly competitive industries of food, clothing, cars and digital technology with the bureaucratic, inefficient, uncompetitive, overly-regulated health, education and housing industries.

The party conferences differ slightly in content - but their overarching thematic is the same: more state interference sold under the pretext that it’s exactly what we need. Those who can see through it are painfully aware that what they are offering is a bit like a parent offering to increase the food supply of her morbidly obese teenager.