Saturday, January 23, 2010

Economics probably began with barter. “Dude, I’ve got too many of these yummy berries and you’ve got more fish than you can eat before they start stinking, wanna trade?” Voila, the free market was born. When each person in a trade comes away feeling like he got a good deal, it’s a win-win, right? If I value a pound of my berries as being worth a pound of your fish and you agree, we both have created an economic balance, we’ve achieved equilibrium, forged positive relations between your lowland people and my highland people and improved each other’s nutrition. If you take my pound of berries to some people farther away and trace it for two pounds of their fish, it hasn’t hurt me and you’ve made an honest profit. Now, recognize the old phrase “buying a pig in a poke?” It refers to old markets where pigs were sold in bags, or pokes. As long as the pig seller was honest and each poke contained the promised pig, everybody was fine. If you bought a poke, took it home before opening it to find the squealing creature inside was not a pig but was a cat, then “the cat was out of the bag” and you’d know you’d been cheated. If your fish was caught last week and not last night, and I gave you my berries in good faith that the fish was fresh, then the free market system has not worked because at least one of the parties has cheated. If you tell me it’s not fresh, maybe we can still make a deal for a lower price. (Incidentally, if you buy reduced price produce and meat at Albertson’s or Safeway, it is very likely those products have been there a while, so don’t delay using them.)

Or perhaps on a small island, several people, some with fish, some with game, some with clams, and some with fruit formed a community wherein each person brought his or her specialty to the others and, behold, the birth of communism. The people worked all day or all week, produced far more of their specialty than they can use alone or in their family group, brought the excess each week to the collective meeting place and divided it up equally between all of the participants. Everybody works, everybody shares. Maybe one guy figures he can slack off and just show up without a full payload. If the community is small, he’ll probably be called out. If the community has grown large enough that he goes unnoticed, he can get away with it and the system has fallen apart because somebody cheated.

An open and above-board free market system or an equal-work-equal-pay commune system seem so obvious. Of course they work. To their proponents, each is a perfect system. The basic problem with the commune system is it must remain small. There have been several successful communes in our history, notable Home here in Washington State. There is a tipping point for all of them. As soon as the system becomes so large that even one person can malinger, yet still share the fruits of the effort of the community, that’s all she wrote.
The free market system, using supply and demand, should be perfect no matter how large it gets. If the market needs wheat, grow wheat, make money. If there is too much wheat, the markets will flood, the prices go down, so the market itself provides the disincentive to grow wheat. Supply and demand, if left alone, will create a balance. There’s the key, the phrase, “if left alone.” If nobody gets smart and tries to manipulate the market, the market will balance. Artificial attempts to change that balance, especially in order to make a bigger profit, tip the scales and the free market system isn’t. Isn’t free, free of interference by GREEDY PEOPLE! Create a monopoly and you can set prices wherever you want. Over-produce a commodity and you can shove prices down so far your competitors go broke. Or even better, threaten to over-produce and get a government to subsidize (bribe) you to keep supply low and artificially keep prices high. Flood a foreign market with cheaper products than that market can produce and you can thoroughly disrupt a country’s economy. Sound familiar? It happens all over the world and I’m not necessarily pointing fingers at the US.

Greed. That’s what it is, isn’t it? What makes someone surreptitiously cheat his neighbors in a commune? Why not just accept a fair price for your product? Why not cooperate with your economy, whether communal or free market? “I’m gonna get mine, forget the other guy.” It’s all based on greed: pure, unadulterated, unabashed greed. In the movie “Wall Street” Michael Douglas’s Gordon Gekko says,
“The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.”
I don’t know about you, but I’m not a fan of Wall Street right now. A small group of people, manipulating markets in secret, arcane ways, like, derivatives, are simply exercising their enormous penchant for greed.

That’s why liberals like me prefer to pay taxes so we can have regulations to overtly manipulate the so-called “free” market and hope to thwart the efforts of the secret manipulations being perpetrated by the greedy elements of big business. The US economy hasn’t been a “free” market since Captain John Smith instituted the “no work, no food” policy in Jamestown. Seriously!
Republicans! Quit lying! Quit being disingenuous about our economy. You know most people are not educated enough to understand the fine points and you are shamelessly using their ignorance to promote an agenda of greed!

1 comment:

Stephanie Frieze said...

Hear, hear, Pat! It is greed on the part of the financial industry and the American compulsion to get "stuff" that got us to where we are. My husband and I don't mind paying taxes because we view it as the dues we pay for living in a democracy with an infrastructure. Great post!