If a reminder should be tattooed on the arms of all politicians and bureaucrats, it would be the reflection of the Russian official who, after the breakup of the Soviet Union, asked British economist Paul Seabright (quoted in Philip Coggan, More [The Economist, 2020], p. 357):
Who is in charge of the supply of bread to the population of London?
But I agree that a compulsory course in microeconomics would be more effective than a tattoo.
During the pandemic, it was thought that a czar should be in charge of the production or distribution of masks and other medical supplies in America. The situation was not better in most countries. Donald Trump named Peter Navarro as his “equipment czar.” Nararro talked tough, a bit like the speculator fighters during the French Revolution—see my post “When Free-Market Prices are Banned,” April 1, 2020. (He was then very much law-and-order, until he was prosecuted by the other tough-speaking law-and-order types.) It is revealing that powerful government figures are affectionately called by the name of the Russian absolute rulers (whose two-headed symbol adorns the featured image of this post). So, the US government subsidized domestic companies to produce masks and Americans are now stuck with the inefficiency of the beneficiaries (“The U.S. Invested Millions to Produce Masks at Home. Now Nobody’s Buying,” Wall Street Journal, February 4, 2024):
By early 2022, Moldex was producing 5 million medical-grade N95 masks a month. Most were bought by HHS [Department of Health and Human Services] and distributed to hospitals and government agencies. Mask orders dropped off later that year, causing Moldex to stop most production at the Tennessee plant in early 2023.
American health services, like the bread vendors in London, are again in charge of their own supplies. They buy less expensive masks, which are not surprisingly produced in developing countries with their relatively unproductive (and thus inexpensive) labor. Apparently, some conclude that the “price playing field” should be “leveled”:
“How do you level the price playing field? That’s what it comes down to,” said Mike Schiller, interim director of the Association for Health Care Resource & Materials Management.
The only efficient way to “level the price playing field” is to let competition free, which amounts to saying that everyone is at liberty to buy where he considers the best bargain, at home or abroad, and any producer is free to respond to demand. It is called economic freedom. The current drama is that, as national states are rediscovering their pre-industrial habit of restricting exports, buyers may tomorrow have to pay a premium for domestically produced goods. But let them make their own trade-offs. Laissez-faire, morbleu!
That this lesson has not been learned is an intriguing phenomenon. Many factors must be in play: the non-intuitive character of economic theory compared with the tribal intuitions and authoritarian experience of mankind during the 500,000 or so preceding the epoch of Adam Smith; the values or interests of those who, consciously or not, undervalue the welfare of the common people; and our political technology, which gives coercive power to 50%+1 of the voters or to others who control the political agenda.
The ordinary people who made the Industrial Revolution and to whom we owe our wealth and our (much threatened) liberties were celebrated by Deirde McCloskey in her Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World (University of Chicago Press, 2016):
In the eighteenth century certain members of the clerisy [artists, intellectuals, journalists, professionals, and bureaucrats], such as Voltaire and Tom Paine, courageously advocated our liberties in trade. And in truth our main protection against the ravenous has been just such competition in trade—not Citi Hall or Whitehall, which have their own ravenous habits, backed by violence. …
Much of the clerisy [later] mislaid its former commitment to a free and dignified common people. It forgot the main, and the one scientifically proven, social discovery of the nineteenth century … that ordinary men and women do not need to be directed from above, and when honored and left alone become immensely creative. …
The modern world was made by a slow-motion revolution in ethical convictions about virtues and vices, in particular by a much higher level than in earlier times of toleration for trade-tested progress—letting people make mutually advantageous deals, and even admiring them for doing so, and especially admiring them when, Steve-Jobs like, they imagine betterments. … Trade-and-betterment toleration was advocated first by the bourgeoisie itself, then more consequentially by the clerisy, which for a century before 1848, I have noted, admired economic liberty and bourgeois dignity … By then, however, as I also noted, much of the avant-garde of the clerisy worldwide had turned decisively against the bourgeoisie, on the road to twentieth-century fascism and communism.” …
The original and sustaining causes of the modern world … were the widening adoption of two mere ideas, the new and liberal economic idea of liberty for ordinary people and the new and democratic social idea of dignity for them.
When ordinary people want to rule, instead of exercising their equal individual liberty in voluntary social cooperation, the result is not democracy as McCloskey and classical liberals understand it, but competitive czarism. The true democratic ideal is that each ordinary individual rule over himself (or herself, of course).
