Or Faith and the Free Market Part VI

Gorham’s Disease, or vanishing bone disease, is a congenital disorder found primarily in children characterized by significant bone loss or bone lesions in one or several bones, including the skull and jaw and is also associated with swelling or abnormal blood vessel growth. It can be extremely painful and requires extensive treatment that can have debilitating side effects. The cause of the disease is unknown and, at present, there is no cure.

And, call me heartless, but I am not at all interested in spending any of my money to help search for one.

That statement sends liberals into paroxysms of rage. This is the problem with conservatives and libertarians: You just don’t care! If you did, we are told, you would be in favor of more governmental charity programs, more research into alternative fuels to save the planet, and more health care for everyone. If government didn’t do these things, the private sector simply couldn’t (or wouldn’t) do enough.

But how much is enough?

The answer to that question and the reason why I don’t wish to spend my hard earned dough on research into Gorham’s Disease or, more specifically, the inability of liberals to grasp those concepts is precisely the problem.

It isn’t that research into Gorham’s Disease (or anything else, for that matter) is without value – even to me. Of course, I care. But that is not the issue. It is simply that research into Gorham’s Disease is of insufficient value to me to warrant my allocating some of my limited resources to it. After meeting my own financial obligations – paying the mortgage, the electric bill, the insurance bills, tuition, etc. and investing enough into my own entertainment to keep from going off the deep end and opening fire on a gathering of liberals … so my in-laws very much approve of that expenditure – I have a limited amount of resources to devote to charitable endeavors. I give to diabetes and heart disease research, among other things, not just because of my own health issues (my donations to these causes precede my own diagnoses), but because breakthroughs in these areas will help far more people than the fewer than 200 currently diagnosed with Gorham’s Disease. And I give to the United Way as they have a means of assessing need among their member organizations that would take more time for me to perform as an individual.

And, because I know there are other people in the world who have different priorities than I do, I have every confidence that others will contribute to the search for a Gorham’s Disease cure. That is how the free market works. My resources are allocated based upon my personal desires. Your resources are allocated based upon your personal desires. As the shampoo commercial used to say, “and so on, and so on, and so on…”

In economic parlance, aggregate demand reflects all of the individual demand trees of all the individual free actors in the marketplace. That is, resources are allocated in the most efficient manner as determined by the accumulated desires of everyone. It is economic democracy in its purest form.

Now this means that more people will donate money for cancer research than for Gorham’s Disease and that more money will be allocated to the production of automobiles than will be spent on providing “free” condoms in schools. So what? Free individuals have made the decision – in the absence of coercion – to put their own money into these activities.

Research into alternative fuels is undertaken – in no small part by energy companies – because it is perceived that such an investment will ultimately yield an economic return sufficient to justify those investments. And this takes place in the complete absence of any interference from an outside source such as government.

The complaint, therefore, that, in the absence of government intervention, there would not be “enough” research or charity or health care provided is an explicit assertion that one not only believes that he knows better than everyone else how many resources should be spent on some endeavor (without regard for what those resources might otherwise have been used for) but that he is entitled to impose the costs of that determination upon everyone else. Last time I checked, that was the definition of tyranny.

But wait, we are told, the taking is justified because government (which is elected by us and is only exercising our aggregate desires) is better equipped to make such determinations.

Foolishness.

In 1920, economist and future Nobel laureate Ludwig von Mises proposed the “economic calculation problem” as a direct response to the notion that the state, under any circumstances, could allocate resources more efficiently than the free market. He posited that, since market prices are the most valuable piece of information used to determine the greater utility of any particular allocation of resources and that this information is only available from the interaction of supply and demand in a free market, that efforts on the part of the state (or individuals therein) could not possibly determine a rational allocation of resources in the absence of that data. Further, since pricing information is determined by the aggregation of countless individual transactions that instantly change the existing resource allocation, no individual or select group of individuals could possibly process the vast information necessary to even approach the allocation efficiency attained by the market without such interference.

The truth of this position has not only been verified and even expanded upon by countless economists since (most notably Hayek, but Boettke and Leeson, as well), but by the failure of planned economies the world over. When Kruschev banged his shoe on the podium and announced, “We will bury you!”, he wasn’t predicting military conquest; he was extolling the virtues of the Soviet Five Year Plans. In reality, they turned a country with vast tracts of some of the most fertile land in the world (the steppes) into an importer of wheat and made it impossible for the state to meet consumer needs while attempting to keep pace with American military expenditures. The only thing that planned economies “bury” is … planned economies.

And anyone who believes government responds well to the governed hasn't been paying attention.

The lesson not learned by liberals today is that the economic calculation problem is not restricted to attempts by the state to plan entire economies but is no less valid a criticism of individual examples of such planning to meet some specifically identified societal “need” that has not gotten “enough” attention from the private sector. They see governmental spending on research or health care or charity as a good thing without ever considering what those resources might otherwise have been used for or whether or not more efficient private sector solutions to societal problems exist.

They assume that no evidence exists that the free market can deal with these problems as well as government can when, in reality, there is no evidence that government can deal with these problems better than the free market can … and ample evidence of governmental inefficiency and incompetence.

And they accuse me of relying solely on faith....