Monday Morning Economic Thought


When it comes to political debates, the economic points can sometimes make one wonder, “We’re really arguing about this?”  Kevin Williamson has a knack for plucking those points out, as in last week’s essay about “Chinese volatility and American hubris”:

Volatility is not caused by the absence of artificial anti-volatility measures.

That’s something that is almost always overlooked in politics: X is not usually caused by the absence of measures against X. For instance, the United States doesn’t have high levels of violent crime because of an absence of laws against guns, but because we are a violent and unruly society. (If you think our rate of shootings is elevated, compare our rate of death by bludgeoning, or our rate of accidental vehicular deaths, to the rates in Switzerland or Singapore.) And it isn’t a lack of appropriate regulation that causes some business executives to make dumb decisions or to take on excessively risky investments, any more than car wrecks are caused by the absence of guard rails, or obesity by Happy Meals.

Human society cannot be guided by the nose, at least not for long.  Attempting to put a lid on some behavior — whether unhealthy eating or stock sell-offs — will often lead to the cask’s springing unpredictable leaks or just exploding.

This is why all but some irreducible rules ought to be resolved at the most-local level possible, and through the least intrusive social institution possible.  Locally is the only level at which people have a shot at figuring out what’s going on, and it’s where they should have a right to decide whether they want to fix it.  A local lid might leak the people causing the discord if they can go elsewhere to find what they want.  Moreover, at the local level, government isn’t the only means of affecting behavior, because cultural community activity has a greater influence.

Back to Williamson:

But every expensively miseducated jackass who thinks he should be president of these United States has an opinion about what a bottle of grape soda ought to cost in Des Moines or Dixville Notch. The assumptions in Washington are the same as those in Beijing: that everything is subject to political power, that it all comes down to having the right sort of enlightened rulers with the right sort of enlightened ideas, that everything else — the real world — is detail. But human beings, and their relationships, are not electrical circuits. They are not governed by circuit breakers. Not in reality.

It very well may be the single most discouraging thing about political and policy debate that so few people understand this or have such a need to believe otherwise that they, well, try to put a lid on it.