The Myth of Choice_ Personal Responsibility in a World of Limits - Kent Greenfield [52]
A mark of success for an economic system is how well it produces an abundance of choices for buyers and sellers and thus allows more people to satisfy more of their preferences more perfectly. By this measure, our economy is wildly successful. You or I can walk into our local Target or Costco and purchase anything from raisin bread to car wax. If what we want is not available in a physical store, we can go online and browse for hours on Amazon.com or other sites. Compared to the limited consumer choices available to billions of people around the world, we in the United States and other rich nations are surrounded by abundance.
The right to buy and sell is important not only for products. The right of individuals to sell their labor to those who would pay them a wage is such an important ideal that you could even say the United States fought a civil war over it. Slavery is, among other things, a ban on the selling of one’s own labor. With a free market for labor, you are assured that if you can add value by way of your effort, knowledge, or charisma, then you can derive additional income. The free market allows us to earn millions of dollars as hedge fund managers or NFL quarterbacks.3
So the market is a powerful and beneficial thing.
One of the almost magical effects of the free market is the “price mechanism”—the translation of the preferences and choices of millions of us into prices and wages. If we like a product, we are willing to pay for it. The more of us who are willing to pay, the more the supplier can charge, and vice versa. In this way, prices themselves embody information about people’s desires and tastes. If we value something, it has a high price; if we don’t, it doesn’t. That in turn means that resources flow, as economists say, toward “their best and highest use.” The free market allows finished products to be purchased by those who value them the most, since if someone else valued the product more they would simply outbid the other buyers. That prices fluctuate to reflect the preferences of potential buyers means that products end up, almost by operation of an invisible hand, with those who want them most.
The same can be said about raw materials, investment capital, or human labor and expertise. As long as the prices for those things are allowed to reflect the choices and preferences of those who want to buy them, these goods will flow to those who are willing to pay most for them. And as long as those willing to pay the most are the people who value them the most (although this is a problematic assumption), then all of those resources will flow to their best and highest use.
This story about the markets helps explain why economic libertarians hold up free choice as a fundamental value. Markets embody choice—look at how many things you can choose! And equally, markets depend on choice—if we all are free to choose, the market allocates resources to those who desire them. If choice is limited, the story goes, then people are less able to satisfy their preferences and thus worse off. What’s more, if choices are limited or certain preferences declared off limits, markets themselves work less efficiently because prices—and therefore resource allocation—will be skewed. The moral of this story is that we should not, say, impose rent control on apartments or ban marijuana. If we did, apartments would become too hard to find, and people would have to pay a black-market premium for their glaucoma medication.
But much conventional wisdom about the glory of unfettered markets is simply wrong.4 We should be less confident about the benefits of markets bestowing