Sunday, May 19, 2013

The Tesla Ban: Markets for Thee, not for Me

Much good fun this week over the efforts by the North Carolina legislature to make life difficult for Tesla --thereby, as everybody except the participants appears to agree, insulating a favored constituency from the depredations of the free market.  I do not dissent but would this be as good a time as any to keep in mind that there has never, ever, been a truly principled devotee of free markets in any position of power in any sovereignty anywhere?  Folks like Luis Zingales and William Baumol may sketch entrancing models of free market paradise but Albert O. Hirschman (discussing economic growth) long ago articulated the paradox of perfect competition:
[S]ociety a a whole produces  comfortable and perhaps steadily increasing surplus, but every individual firm considered in isolating is barely getting by, so that a single false step will be its undoing.  As a result, everyone is constantly made to perform at the top of his form and society as a whole operates on its--forever expanding-- "production frontier," with economically useful resources fully occupied.
...the image, as Hirschman drily puts it, "of a relentlessly taut economy."  As someone somewhere put it, simply, the last thing you want in the world is a job where you get paid what you're worth--a job, that is, where marginal revenue=marginal cost, and where marginal cost=average cost.  Granted that there are visionaries who may be able to conjure up the image of such a society (usually from a cosseted hidey hole like a university professorship).    But these are few enough to begin with and if by accident they get a transitory grip on the levers of power they pretty quickly learn to unlearn their principled purity and to identify--often with total sincerity--their favorites who deserve protection.


Ebenezer Scrooge said...

Margaret Thatcher?

Buce said...

Hm, you may have me there, but I am tempted to respond that she was never driven by devotion to free markets; rather only by rage and rancor at those whom she felt were trying to belittle her. Which included just a about everybody except Keith Joseph.

Wonder how she felt about competition among beleaguered Grantham grocers.

Ebenezer Scrooge said...

Thatcher could sometimes get mawkishly philo-Semitic--Jewish parvenu entrepreneurs personified competition in her mind.

Did she idolize her Old Estonians because she hated her Old Etonians? Maybe. But I think that it wasn't all reactive.