An Economic KICK (Keep It Complex, Knucklehead)
Posted on August 21, 2014
You have, no doubt, heard the famous advice to speakers, writers and salesmen, expressed in the abbreviation KISS: Keep It Simple, Stupid. It’s good advice for speaking, writing and sales. But it’s bad advice for other activities.
In fact, the bleating of sincere, moralistic souls for simplicity in modern life is often, by intent or not, a call for increased tyranny.
The Tyranny of Simplicity
In the economic sphere, the victory of simplicity almost always necessitates the deprivation of liberty. A good example is price controls. The economy sure would be a lot simpler if tomorrow the federal government decreed that the price for a dozen eggs across the country must be $1.00, the price for every loaf of bread must be $2.00, and the price for a gallon of low-fat milk must be $3.00. Just think how this would simplify certain calculations of grocery store owners and managers. It would be a simple and soon disastrous decision. Why? The free market rests on a highly complex interplay of human decisions, and it cannot be reduced to a simple formula.
I don’t understand all the motivations behind, and mechanisms implementing, the human decisions that every two weeks bring the ice cream truck to deliver to my very own doorstep chocolate mud pies, for which I fork over a little hard-earned cash and then greedily devour. It sure would be a lot simpler to explain why there should be a new law from the Sacramento capital requiring that a dozen chocolate mud pies be delivered to all Californians with the initials PAS.
A lot simpler, yes, but a lot less successful and, worse still, a lot more tyrannical.
In his astoundingly learned and extensively documented work Fire in the Minds of Men, James Billington observes again and again how that revolutionary socialists have historically been committed to a radical social simplicity. Among these revolutionaries, there has been an eerie obsession with geometric and mathematical formulas as a pattern by which society should be redrawn. “If Newton could discover the law of gravity and reduce it to a few simple formulas, why can’t we discover the laws of society and reduce them to a few simple formulas?” The problem is that human society is not analogous to the laws of gravity. Men, made in the image of God, are relatively free moral agents; and the attempts to reduce their society to a few simple formulas inevitably results in tyranny.
By intervening in the free decisions of the grocer, the state sets into motion processes that extract food from everyone’s table. The bewildering complexity of activities and processes that underlay the exchange of goods and services in the marketplace requires and perpetuates human liberty. Each of us makes thousands of decisions every day, most insignificant, some occasionally momentous. If those decisions are voluntary (non-coercive), without molesting life, liberty, or property, they combine with everybody else’s decisions to produce a dramatically free society.
Don’t ask how this happens. Don’t ask how my decision to buy my daughter a new pair of tennis shoes benefits not only the shoe salesman and the shoe store, but possibly a butler in Paris, a baker in San Jose, and a candlestick maker in Tokyo, but this very well could happen and this sort of thing happens every day. If you try to simplify this dizzying complexity, you end up stealing liberty from a lot of people and eventually produce massive shortages (just ask somebody who lived in the old Soviet Union or anybody who lives in today’s North Korea). The complexity of multi-billions of free decisions by millions of people fosters liberty, while the simplicity of a few thousand decisions by a few hundred government bureaucrats creates tyranny.
The High Cost of Simplicity
Now the main problem with “simple” price controls is that they absolutize economic information while lacking the capacity to absolutize the reality underlying that information. Imposing price controls on eggs, bread, and milk can’t make chickens lay more eggs, the soil grow more wheat, or cows give more milk. In a free market economy, prices are simply information about underlying realities, not greedily erected, artificial barriers to keep poor (or middle-class) people from getting what they “deserve.” You can’t change the underlying reality by freezing prices, but you sure can change the reality of available products and services by coercively freezing prices: price controls always produce shortages, which hurt everybody’s reality.
Complexity and Human Action
I repeat: almost every attempt to simplify the main factors in the realm of the exchange of goods and services in a market economy results in a loss of liberty. Why is this? Because the leading factors in a market economy are not products, services, or even prices, but human decisions and other human actions. Goods, services, prices, and exchanges are the result of human actions, not vice versa. State interference in the market disrupts these human choices and in so doing, creates tyranny. If, in an alleged effort to keep prices down for grocery shoppers, the state imposes price controls on eggs, bread, and milk, the result will (temporarily) benefit consumers (the first ones that get to the grocery); but it surely will not benefit the grocery owner, who, all other things being equal, is forced to pay fluctuating market prices to his suppliers for these products. It doesn’t take a Ph. D. in economics to figure out that the simplicity of price controls benefits one group at the expense of another group. Soon, such price controls will hurt almost everybody, because if the grocery owner isn’t free to charge the price he wants, he eventually won’t be able to afford to buy at his suppliers’ selling cost; and if the supplier can’t sell his goods to the grocer, he will eventually quit buying from the farmers and dairymen, who will be stuck with food that cannot readily enter the marketplace.
Note how complex the spurious attempts at economic simplicity can get.
In the realm of economics, we need to replace the KISS principle (Keep It Simple, Stupid) with the KICK principle (Keep It Complex, Knucklehead).