I want to spend a couple minutes directing attention to this I want to spend a couple minutes directing attention to this post of Ryan's, in which he attempts to defend the honor of the free market in the face of scurrilous attacks from, well, me. As a disclaimer, Ryan's a really bright guy, and he runs a great blog -- but this post happens to aptly illustrate a certain strain of thought I've been tangling with lately.
Anyone paying attention to this site will know I happily deviate from the orthodoxy favored by full-throated, anti-government, free marketeers. I routinely call for greater government intervention in health care, fret over Wal-Mart's monopsonistic might, and wonder, loudly and regularly, if the coming service economy can possibly sustain a decent society without government or union intervention. Katy bar the door!
In the post Ryan's referencing, however, I merely noted the illogic of the stock market cheering Republican elections despite doing historically better under Democrats. This spurred Ryan to write: "I don't get this. What did the markets do to Ezra? There is a difference between being a Republican or a conservative and appreciating economics–often a very large one." Indeed there is. And it's terrifically unsettling that merely noting a political quirk within markets is enough to get one kicked out of the economics appreciation club.
There is, I think, little more beautiful or elegant in life than markets. Even Wal-Mart -- in fact, especially Wal-Mart -- is an awe-inspiring entity, gorgeously efficient and innovative and strong. But markets fail. As Ryan notes, there's a whole body of economic literature on when, why, and how that happens. And even a beautiful beast can attack if not watched and restrained. However, to note that markets have outcomes oriented towards ends not eternally or intrinsically constructive for society is somehow beyond the pale. To worry that the unceasing obsession for cost reductions by the greatest economic force in our age might harm labor standards and supplier autonomy somehow ejects you from polite company. Why?
