Recently, a colleague disparaged my “reliance on markets” over his activist preference to use the government and its tax power to impose changes to technology and society. He berated me for believing that professionals should be at the forefront of changes that make lives better for fellow citizens. He derisively repeated the joke, how many conservatives does it take to change a light bulb? None, a free market will take care of it shortly.
Here is a little thought experiment to support my views: Imagine a hot July day in 1900. You are standing on a street corner in Manhattan looking at horse manure-covered streets while flies are buzzing around your head and spreading various diseases. You are 60 years old, and you were born in 1840 in Western Europe to a father who was born in 1810. All your life, you lived in pre-modern, agrarian, and feudal societies. The technologies that surround you are primitive. The question is: What would have been the smartest and fastest way to get the society from 1900 to 2020 levels? Activists like my colleague using tax dollars or the unplanned chaos of self-interested tinkerers and dreamers in the marketplace?
Consider how hard it would have been in 1900 to decide on the best future technologies and trajectories to get there. Back then, 4,192 cars were accounted for in the United States, 40 percent of which were steam-propelled. Air conditioning would be invented two years later by Willis Carrier. The first controlled little puddle jump flight was three years out. A tractor would be invented in 1904. Penicillin would happen in 1928. Something as simple as a shipping container would wait until 1956. The structure of atoms and DNA were still mysteries. There would be many decades until widespread water fluoridation. It would take the imaginations of many insightful people to build the future.
Let the market chaos reign to make us and future generations richer and better off beyond our dreams.
Fast-forward to 2020, and let’s repeat the same exercise. You are standing on a street corner in Manhattan with your smartphone and watching Uber and Amazon delivery trucks. You just checked on your house because someone knocked on your door. A few minutes earlier, you spoke with your daughter who is studying in Europe, and so on; we can continue listing our civilization’s conveniences. If the trend continues, and at a vastly accelerated pace, another 120 years out, in 2140, our descendants will be living stepped-up lives much different than the distance between 1900 and 2020. The same question stands: “what is the smartest and fastest way between 2020 and 2140 amazing future?”
When comparing 1900 to 2020, we recognize the enormity of revolutionary and transformative changes to everything around us that has gotten us here. For example, the heart treatments, kidney transplants, smartphones, modern airplanes, and inexhaustible entertainment options that are common today required numerous inventions over many decades to eventually enable today’s products and services. These inventions happened mostly by happenstance and a great deal of imagination—not as a result of conscious planning. It would have been a fantasy for someone in 1900 to draw a plan for the smartphone market release in 2007 and decide what should have been done in each decade between then and now and by whom to come up with a smartphone.
The Effects of Economic Freedom
Still not sure? Thirty years after the collapse of the Berlin Wall, East and West Germany are still different. They are the same people, but the West has been much richer and better off due to economic freedoms.
Even technology predictions about short-term events are rarely accurate. Just ask people who recently shorted the Tesla stock waiting for it to collapse because they doubted the technology readiness. In late October, they must have felt silly when Tesla stock price shot up from $254 to $328 per share. Why do we expect an activist or a government planner to be more successful than people betting their own money?
The problem with my colleague is that he does not recognize how technologically primitive our world will be to those in 2140. He does not have skin the game. He is not investing his money and does not consider trade-offs and alternatives. His blind spot is that while the single-technology focus may accelerate it, it is impossible to correctly optimize the economy with thousands of products and services over even a few years.
Society is better off with visionaries and dreamers using their money to test and try whatever they fancy without any country plan whatsoever.
Notice how many economic activities, investments, and trials happen out there. These are people who use their resources or for which they are responsible to investors at their risk. Some win, some fail—but they all learn. However, it is unacceptable when the government taxes us and unspecialized activists with no accountability decide which technologies should be funded. These people waste money on rear-view mirror ideas instead of building the future. They have good intentions and itch to do “something,” but they destroy wealth.
In 2020, as was the case in 1900, there will be no virtual signposts for technologies to focus on, but there will be thousands of haphazard and necessary discoveries that will happen in the meantime. From the perspective of 2140, what should professionals in 2020 be doing? Using their own (or investor) resources and relying on the chaos and unpredictability of the market to take us there. If we let activists take our money, we will end up much poorer and reach 2140 in 2240 instead.
Society is better off with visionaries and dreamers using their money to test and try whatever they fancy without any country plan whatsoever. Let the market chaos reign to make us and future generations richer and better off beyond our dreams.