The Everyday Economist

Tyler Cowen has written an excellent piece in the New York Times about the food crisis. Here is the conclusion:

Lately, it’s become fashionable to assert that, in this time of financial market turmoil, the market-oriented teachings of Milton Friedman belong more to the past than to the future. The sadder truth is that when it comes to food production — arguably the most important of all human activities — Mr. Friedman’s free-trade ideas still haven’t seen the light of day.

Read the whole thing.

Jeff Tucker channels Bastiat:

…the first assumption that we live in a free-market world is simply not true. In fact, it is sheer fantasy. How is it that journalists can continually get away with asserting that the fantasy is true? How can informed writers continue to fob off on us the idea that we live in a laissez-faire world that can only be improved by just a bit of public tinkering?

The reason is that most of our daily experience in life is not with the Department of Labor or Interior or Education or Justice. It is with Home Depot, McDonald’s, Kroger, and Pizza Hut. Our lives are spent dealing with the commercial sector mostly, because it is visible and accessible, whereas the depredations of the state are mostly abstract, and its destructive effects mostly unseen. We don’t see the inventions left on the shelf, the products not imported due to quotas, the people not working because of minimum wage laws, etc.

Because of this, we are tempted to believe the unbelievable, namely that government serves the function only of a night watchman. And only by believing in such a fantasy can we possibly believe the second assumption, which is that the problems of our society are due the to the market economy, not to the government that has intervened in the market economy. [Emphasis added.]

Al Roth has written a provocative article in the Journal of Economic Perspectives on markets and moral repugnance, particularly as it relates to organ sales. Here is a sample:

Apparently, some kinds of transactions are repugnant in some times and places and not in others. This essay examines repugnance and its consequences for what transactions and markets we see. When my colleagues and I have helped design markets and allocation procedures, we have often found that distaste for certain kinds of transactions can be a real constraint on markets and how they are designed, every bit as real as the constraints imposed by technology or by the requirements of incentives and efficiency.

[...]

The persistence of repugnance in many markets doesn’t mean that economists should give up on the important educational role of pointing to inefficiencies and tradeoffs, and costs and benefits. But neither should economists expect such arguments to win every debate immediately.

The article outlines the role repugnance has played in markets over time and how, in some cases, public opinion has changed and allowed markets to prosper. Roth does a great job thoroughly discussing both arguments for and against organ markets. In addition, and quite importantly, Roth points out that organ markets will not be a panacea to solve organ shortages. Overall, I found this article to be very thought-provoking.

Here is a non-gated version of the paper.

Also, for those interested, here is an article I wrote on organ sales.