The Reality of Markets

"Thomas Sowell likes to say that 'reality is not optional.' But we oh so want it to be. We want to change outcomes without consequences with the ease of adjusting the thermostat on the wall of our house. We want to dial incomes upward and gasoline prices downward. We want to blame Wal-Mart for the fact that its employees earn below the national average. We want to blame China (or Mexico or Japan or India) for our trade deficit. We want to blame or honor the occupant of the White House for whether new jobs are high-paying or low-paying. This worldview that flies in the face of reality and that ignores the inherent complexity of the real world is the bread-and-butter of journalism and the breeding ground for unintended consequences."

"Friedrich A. Hayek, in The Fatal Conceit, wrote that 'The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.' Unfortunately, when politicians try to dial down prices to preserve order, they only worsen the problem. We would do well to remember the emergent nature of prices, especially in times of crisis."

(Emphasis mine - HH)

Excerpts from The Reality of Markets, by Russell Roberts, professor of economics at George Mason University and the Features Editor at the Library of Economics and Liberty.