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Thursday, October 6, 2016

Spontaneous Cooperation Is Why Your Life Rocks

Millions of strangers all pursuing self interests leads to a better life for us all.

The quotation of the day is from pages 1-2 of Arnold Kling’s excellent new book (2016), Specialization and Trade: A Re-introduction to Economics:

In a modern economy, no one is self-sufficient. Instead, people are specialized. The work you do probably does not produce something you could consume. Even more striking is the fact that almost everything you consume is something you could not possibly produce. Your daily life depends on the cooperation of hundreds of millions of other people.

Just as it is inconceivable that human society would have evolved to its present state without language, it is inconceivable that we would have gotten to this point without specialization and trade. Moreover, in order for society to progress further, patterns of specialization and trade must continue to evolve.

All so incontestably true.

For the past 40 years – since I first encountered introductory price theory as an 18-year-old freshman at Nicholls State University (taught to me by my wonderful first economics teacher, the late Michelle Bailliet) – not a day passes when I do not marvel at what appears to be the miracle of the market. But it is no miracle. It is modern reality made possible by market prices, trade, and specialization. The most ordinary, indeed even the poorest American – and even back then, in the much-poorer 1970s – is lavished daily with goods and services the creation and supply of which require the brains and brawn of hundreds of millions of individuals, most working with machines, spread out across the globe.

The Wonders Of Outsourcing

You – you ordinary American you – you wake up and flick a switch or two and light, that does not pollute the indoors of your home, immediately bathes the rooms you occupy. Strangers contribute their creativity and efforts to produce all the things that you consume.You lift a lever or twist a knob and potable water, as hot or as cold as you prefer, gushes forth for you to use to shower or to quench your thirst. (The rate at which this water gushes in the U.S. has been annoyingly, artificially slowed in recent years by the government mandate of ‘low-flow’ faucets. I recommend that you do as I do: remove the tip of each of your faucets and extract the barriers that absurdly slow the flow of water. You’ll then enjoy proper water flow.) You press a few more buttons and you have a steaming cup or two of delicious Arabica-bean coffee in your mug that you then place on your granite kitchen counter top beside your laptop computer. You sip your coffee as you surf the Web before you slip into pants or a skirt that you played no role in making (and don’t begin to know how to make). Ditto for your shirt or blouse, your underwear, your shoes, your raincoat, your umbrella.

You drive to school or the supermarket or your office at the Sierra Club in what as recently as the lifetime of George Washington would have been regarded as an impossible, and impossibly wonderful, science-fiction machine. This machine is air-conditioned and contains a device that allows you to listen to your choice of tens of thousands of musical recordings, some of them made 60 years ago yet sound today as if the artists are performing live for you as you glide along smooth, paved roads at speeds never experienced by any human being as recently as 200 years ago.

You pass a gasoline station and are annoyed to see that the price of gasoline has risen since yesterday by seven cents per gallon. “Greedy oil companies!” you mutter self-righteously to yourself, unaware both that the rising price ensures that you’ll be able to refuel your car whenever you wish and in just a matter of minutes, and that the rising price is at least as much the result of your and your fellow consumers’ “greed” for gasoline as it is of the “greed” of oil-company shareholders for profits that will help them enjoy the two decades of life they’ll enjoy after they, like you, retire at the age of 65.

You dine – at breakfast, lunch, and dinner – on foods that you have no inkling how to grow and process. On those many occasions when you dine out, you don’t even perform the final stage – cooking – of the food. Strangers do that for you.

At work you, specialist that you are, produce – quite skillfully – some do-dads, or you perform some small set of tasks, that, standing alone, are worthless. The fruits of your labor become valuable only by being combined with the fruits of the specialized labors of hundreds of millions, perhaps literally billions, of your fellow human beings, almost none of whom you know or care about beyond your caring in the abstract about ‘humanity.’ Yet the income you earn from churning out your do-dads, or from performing your tasks, allows you every day to command for your and your family’s consumption countless goods and services each of which exists only because hundreds of millions, perhaps literally billions, of strangers contributed their creativity and efforts to a globe-spanning process that produces all the things that you consume in such abundance that you and hundreds of millions of your fellow citizens acquire and use them daily and think nothing of it.

Let Markets Live

The worldwide market of which you are a part – indeed, which is responsible for your very existence – is not nirvana. It doesn’t work as perfectly as our vivid imaginations are capable of conceiving. But here’s the thing: it works so damn well that what we notice are its relatively few failures to work smoothly; we don’t notice – because it is so common – its routine, smooth, everyday marvelous successes.

Especially annoyingly to anyone who truly understands economics, and who sees reality through the lenses that sound economics supplies, are all the uninformed griping and moaning and complaining when we are required to adjust in ways that keep this marvelous market order operating. “I don’t want my customers to have the freedom to switch their patronage to a rival located in China! Stop them, O Wise State, from doing so!” “I don’t want to pay higher prices for gasoline – or for medicines, or for residential living space, or for a tank of propane in the days immediately after my town is leveled by a hurricane! O Wise and All-Giving State, save me from this inconvenience and from the greed of those who inflict this inconvenience on me!”

Opportunistic politicians, of course, are never in short supply to prey upon such ignorance and greed of those who mistake their own greed for magnanimity.

Republished from Cafe Hayek

  • Donald J. Boudreaux is a senior fellow with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University, a Mercatus Center Board Member, and a professor of economics and former economics-department chair at George Mason University.