Quote of the Day: "This is my long-run forecast in brief: The material conditions of life will continue to get better for most people, in most countries, most of the time, indefinitely. Within a century or two, all nations, and most of humanity, will be at or above today's Western living standards. I also speculate, however, that many people will continue to think and say that the conditions of life are getting worse." -- Julian Simon
Subject: Many minds vs. few minds
The 1970s were bad. We had high inflation plus bouts of high interest rates, high unemployment, and high oil prices punctuated by severe gasoline shortages. Major American companies struggled to survive, factories closed, and the industrial north became known as the Rust Belt.
Major intellectuals talked of limits to growth and a bleak future that might even include an ice age. It was common in those days to think that things could only get worse, but a man named Julian Simon thought otherwise...
In 1980 Simon bet Paul Ehrlich, one of the prophets of doom and gloom, that the future would be more abundant, not more impoverished.
If Ehrlich was right, and limits to growth were near at hand, then prices would rise as resources depleted. But Simon argued that our greatest resource is human ingenuity -- the power of billions of human minds to constantly devise ways to do more with less.
Ehrlich bet that the price of five metals would be higher a decade later. Simon bet that they would be lower.
Simon won the bet. And so did humanity.
Things got much better after the 1970s, exactly for the reasons Simon proposed. Human minds figured out how to do more with less, but...
It's important to note a stipulation of Simon's bet with Ehrlich. The resources on which the bet was based had to be non-government controlled. The reason is simple...
* A few hundred politicians, or a few thousand bureaucrats, cannot possibly have sufficient knowledge to manage complex economics, solve complex problems, or match the brain power of billions of people operating in a free market.
* But politicians do have the power to distort the price signals that coordinate the free market, and that provide the incentives to accomplish more with less.
Simon won his bet because the free market is nothing less that the combined operation of billions of human minds coordinated by free floating prices. The bleak 70s turned into the prosperous 80s and 90s precisely because politicians and bureaucrats, both in the U.S., and around the world, stopped doing specific things to hamper the many minds of the free market. Here in the U.S. ...
* The Federal Reserve curtailed its counterfeiting activities
* Prices in huge areas of the economy, such as air travel, trucking, and oil, were de-regulated
* Tax rates were cut, providing incentives to investment and innovation
Now things have gone in the opposite direction. President Bush and the Republican Congress set new records for government expansion, and President Obama and the Democratic Congress want to make what the Republicans did seem small by comparison. But the many minds of the free market stand ever-ready to fix what the politicians break...
Yesterday we described the multiple ways the politicians have broken our health care system by damaging the free market. Even so, the many-minds of the free market are hard at work trying to fix specific parts of the damage, even while the policies that caused the damage remain in place...
* Businesses are responding to the shortage in primary care doctors by building a vast network of walk-in clinics
* Companies like Wal-mart are driving down the cost of prescription drugs
* Medical tourism is providing quality care at lower prices while exerting competitive pressure for domestic health care to improve
The many-minds of the free market are always working to do more with less, even when the politicians interfere. So just imagine how much could be done in health care, and how much less it would constantly cost to do it, if only the politicians would unleash the many minds of the free market.
For instance, the politicians could make health insurance much cheaper, with one simple change. They could allow consumers and employers to buy health insurance in states other than the one they reside in, thereby undoing some of the damage state politicians have done to the free market.
Please tell your Congressional representatives to do this using DownsizeDC.org's "Make Health Insurance Affordable" campaign.
Use your personal comments to tell them they should take this simple step, BEFORE they try to apply their few minds to the massive task of trying to decide how everyone's health care should be delivered.
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