Litany for Labor and Social Justice

Started by J. Thomas Shelley, September 05, 2009, 01:49:50 PM

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Team Hesse

Quote from: Kurt Weinelt on September 03, 2012, 11:00:25 AM
On this day, I am thankful for self-interest, saith this economics teacher. The litany above condemns greed, but does not offer thanks for self-interest, which is mere oversight I'm sure.  ;)

Why am I thankful for self-interest? For when there is a shortage or increased demand, the price increases. Suppliers recognize that there is a shortage because of the increased price, and increase production because it is in their self-interest to provide what their neighbors need. When there is a surplus, the price drops because there neighbors do not need quite so much of that product. Thus the supplier is able to redirect their productive capacity to produce what their neighbors need. In either case, price is the unspoken means of communication between demander and supplier which enables markets to seek equilibrium and use resources more efficiently to meet society's needs, and as a byproduct produces both jobs at market prices, and preserves economic freedom. Of course, when any government intervenes to determine what to produce, how to produce, and for whom to produce, then this marvelous natural order is destroyed, and the very market failures the government seeks to remedy become permanent.

The litany is a product of its New Deal era, and would need much reworking to not sound 71 years out of date; i.e., a little less Keynes and a little more Friedman. ;D

So is it "self-interest" or "neighbor need" that really drives the market? Can they easily be separated?

It is my self-interest to rightly gauge my neighbor's need and respond to it. And is there not an over-arching word which properly bounds both neighbor need and self-interest?

My neighbor may "need" ever increasing amounts of heroin to feed an addiction, but I would think it should never be in my self-interest to feed that need. Though in a fully unregulated economy I could become very wealthy doing so.

Lou

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