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Tuesday, March 24, 2015

The Tasted and the Untasted

What a common cold teaches us about economics and life

This past weekend, a nasty chest cold rose inexorably to my sinuses and took root, shutting down my senses of smell and taste. I only realized it when I was at lunch with friends. I ordered the clam chowder. I couldn’t taste a thing. It was all texture and no flavor: chewy bits of meat, mushy potatoes, and some tasteless soup with a milky texture.

Everyone else was raving about their bowls of chowder. I could only experience it vicariously. It was strangely demoralizing: a major way that I perceive things around me was suddenly gone.

At first I thought losing my senses of smell and taste would be no big deal. But as the day went on, the implications became more obvious. Coffee? Just hot liquid. Cheez-It crackers might as well have been crunchy cardboard. Wine was just red water. Gin seemed like a chemical. Toothpaste had no freshness. There were no smells in the air, good, bad, or otherwise.

I thought I could deal with the loss just fine, but as the evening approached, I realized that I was oddly down in the dumps, like I was just feeling my way through life. I didn’t want to eat, drink, chew tobacco, or anything. My spirits sank further.

Then, suddenly, out of nowhere, the sense of smell and taste came back. It was intense. The room took on a different character. I dived back into my crackers. I took a sip of wine. I smelled the sheets. I smelled the soap. I had a cup of tea. A smile came back to my face.

Sadly, this new sense of things only lasted about an hour, and then it was gone again. This is what happens with an on-again–off-again cold. At least that’s what Google told me, and every forum suggested that I shouldn’t worry. Normalcy would return in a day or two.

But the whole thing got me thinking about how much our lives depend on things we take for granted. What if there were a fire? I wouldn’t smell the smoke. What if there were a gas leak? I would have no idea. And a major reason for eating and drinking is absolutely taken away. It seems like a great premise for a diet drug: a pill that deletes the sense of taste.

When my full sense of taste returns, it will probably take me about an hour to adjust and go on with life, not thinking again about its importance to my well-being.

How many other things that we consider essential to life do we take for granted? The Internet didn’t exist in anything like the present form for most of us until 1995. Smartphones became widely available in consumer markets only in 2008. The world-changing app economy, now bigger than Hollywood, didn’t emerge until five years ago!

What if it all went away? What if just one piece of it, the applications we use on our smartphones, all vanished one day, just as my sense of smell went away? This is a catastrophic thought.

And here’s an interesting question. If you could give up one of two things, smartphone applications or your sense of taste, which would it be? It’s not an easy question to answer. After some thought, and even given what I’ve just been through, I think I would have to say that I would give up my sense of taste. Without my apps, my life would be severely diminished, not just immediately but in the future, too. Look at how much social and economic development I would miss!

Where did this app economy come from? Who gave it to us? It was the product of spontaneous development out of open-source software. It emerged as the unplanned production of thousands and now millions of developers and users. And it never stops evolving through trial and error. It is the closest thing we have today to a beautiful example of the free market in action.

What if the app economy had never developed? We would never know what we were missing. Imagine that a law had given Apple’s operating system monopolistic control and that there had never been the competitive platform of the Android OS pushed out by Google. The world would be very different today, but how would we know? The costs of such an intervention would be completely unseen.

Frédéric Bastiat always emphasized that the main costs of legal intervention in the market economy are not the direct costs. The main costs are in the developments and innovations that we do not experience because they do not exist. It’s not just that the innovations are left on the shelf: they are never imagined to begin with.

These costs are uncountable. Innovations are networked over time. Mobile devices gave rise to the app economy, which in turns is providing massive support for the global economy and creating a starburst effect of ever more innovations. What if telecommunications had never been deregulated? What if government controls over commercial Internet traffic had not ended in 1995? Only a handful of visionaries would even know what we were missing.

Consider the education sector. It is dominated by one government-imposed model. Alternatives are strictly regulated. You can’t just stop paying for the existing schools, and you can’t just freely experiment with alternatives. Any education entrepreneur faces gigantic regulatory hurdles — many of which distort the original vision — just to get off the ground at all.

What are we missing as a result? We will never know, not until that great day in the future when the monopoly collapses and all the regulations, taxes, mandates, and controls are removed. Then we will see the education sector flourish like the app economy has.

Already with transportation, we are starting to see the results of what competition can do. It is easier to get around in cities today than it was five years ago, thanks to the innovations of ride-sharing apps and services like Uber and Lyft.

But so many other areas remain monopolized and therefore stultified in their development. Consider money transfers, financial markets, and banking — financial sectors so regulated and cartelized that they might as well be monopolies. And until the innovation of cryptocurrency, money was wholly monopolized by the state, and had been for the better part of a century.

It’s the same in energy, health care, food production, philanthropy, insurance, medical care, and just about every other sector you can name. A de facto central plan rules them all. In each area of life, at some point in history, a ruling class decided it knew what was best and gave it to us good and hard, pushing aside other alternatives. This is not the way forward. This is not a path of progress. It robs us of better ways of doing things.

It’s the nature of the human mind only to be aware of essential and wonderful things in life — such as the senses of smell and taste — once they are taken away. That’s when the costs impress themselves on our minds and we are overwhelmed and even demoralized. If, however, we never had the ability to taste food, we would never miss it. All food and drink would be dull, but we’d never know to wish otherwise.

How much are we missing in our world due to the controls on creativity and innovation that surround us? We will never know for sure. We only know that the costs are high. We need somehow to learn to imagine a better world than the one we know, to have the confidence that it can be created if only we gain the freedom to do so, and to work for a world in which all imagined possibilities are permitted a chance to become part of our lives.