Dr. Forbush Thinks

Look at the world through the eyes of Dr. Forbush. He leads you through politics, religion and science asking questions and attempting to answer them....

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Location: California, United States

Friday, November 14, 2008

Trial and Error

One of the major assumptions that we have in a capitalist free market system is that people acting in their self-interest will react for the greater good of our society. This assumption is flawed in several ways.

Let us look at an interesting example. During the 1970s an interesting phenomenon occurred with the birth of the Pet Rock. An entrepreneur discovered that he could market and sell rocks packed in little boxes and make millions of dollars. He acted in his self-interest to create a fad that basically moved rocks from one place to new places across the country. What greater good did this provide for society? We need to admit that this fellow was clever and creative, but his activity must also be described as a great waste of resources as well. In the end I am almost certain that very few of these rocks have been placed anywhere other than the backyard, and the container in the dump.

We could argue that people don’t buy pet rocks any more, so the system worked. Maybe we should overlook the great waste of resources created by this venture as part of the price that is paid for progress. However, pet rocks are not the only venture that wastes time, money and resources. In fact, the idea that people can make gold by selling rocks is alchemy made real today. With the modern idea that economics isn’t about the product, but only about the marketing we realize that this alchemy is the rule not the exception.

If we take a step back and try to look at the big picture we should realize that there is more to life than trying to figure out how to put more cash in your wallet. If this were the entire story then, why do we waste time following the laws? Why don’t we just go around and rob people at gunpoint? The fear of violence and jail might have something to do with that, but I would hope that people actually know that working within the system is good for our society. Even so, many people opt to take the easy way out and rob people but by hiding behind the rule of law. The seller of the pet rock didn’t break the law, but he broke the contract with society in which we try to make society better with my contribution to it.

There are so many ways that people do make society better through their area of business. Businesses make these decisions every day when they determine how they are going to develop their product. Do they consider safety, efficiency, and impact?

We only need to compare the Windows operating system to just about anything else out there to prove the point. The superiority of Apple computers to Windows PCs does not match the number of computers of each type sold. But, Apple learned its lesson when it marketed the Hell out of the iPod when Creative Technologies already had a much better product on the market. All, of the capitalist arguments for a free market don’t seem to prove the point. Instead, example seems to suggest that the biggest player with the largest backing comes out the winner, not the best product. Patents have been infringed upon and stolen from much less affluent people. Not, many people are willing to put in the same effort as the inventor of the intermittent windshield wipers was.

The point of this piece is not to argue the free market system, only to point out a weakness in it. In a fair world the free market system would most likely be a better system. In a world where people valued products that were good for society above products that were a waste of resources the system could work to make the world a better place. If people were rewarded for making society better rather than being rewarded for making a clever comment on the stupidity of the average person people would work for a better world instead of working to think up new ways to cheat the gullible out of their money.

Whether you believe it or not the average temperature of the Earth is increasing. There is clear data showing this. Similarly, whether you believe it or not more carbon dioxide in the atmosphere will trap more heat. This is also clearly proven with data. As we burn more carbon based fuel that was trapped out of the atmosphere millions of years ago the thicker the blanket we have over our world. Only an idiot would not see that this is a bad combination.

Of course, a supporter of the “free market only” system would conclude that when people got too hot they would realize that there was a problem and they would no longer buy the carbon-based fuels that are causing the problem. There are several holes in this reasoning. First, how do we know when we are “too” hot? Second, how do we switch to something new when we do realize that we are “too” hot? Third, a lot of the problem isn’t the final result, but the chaotic weather patterns that result from the sudden heating of the Earth, how do we prevent the destruction? Finally, when a customer has the option to pick between keeping the world just a little bit cooler or buying a new H2 Hummer -- what prevents the customer from rationalizing that the world won’t get “that much” hotter?

The purpose of the government is to protect us. No matter what your political persuasion is I am certain that I won’t find many people arguing with me on the assertion. The problems arise from the implementation of this idea of protection. Conservatives are the first to insist that a strong military will protect us from foreign threats and a strong police force will protect us from internal threats. Imagine if conservatives followed through on their idea that markets should be allowed to work to protect us. Everyone would put up as much money as they believed should go toward external and internal threats. Or, they should invent and improvise new ways of protecting ourselves. The markets would decide the best ideas. The best ideas would get the most money -- because they would be able to attach the highest level of support.

We all know that this would not work. Criminals would refuse to donate to the police force, because a weak police force is in their personal best interest. Many would refuse to send money to the military on ethical grounds as well as personal financial self-interest. Those who own the most property obviously demand the most protection, so the wealthy would need to beef up the various agencies and branches of the military. We would have everyone walking around armed because it would be cheaper to carry a gun than to hire a policeman to protect ones property.

If the job of government is to protect its people, then why is there a continuous argument about what the government should do? This is because the question of what protection of the people consists of. Should people be allowed to starve to death because they can’t afford food? Should people be allowed to die of a curable disease because they can’t afford the cure? Should diseases be allowed to spread through a community because the community can’t afford to pay for vaccinations? Should companies get money from the government to encourage development to spur job growth? What is protection and what is control?

Why should the government pay for education? What kind of protection is this?

With the election of Barack Obama there is a lot of talk about the new “New Deal” that this liberal Democrat is about to impose on us. I have seen people writing about the USA becoming the USSA -- The United Socialist States of America. Obviously I don’t agree with that. But, I do believe that there is a role for government to lead us as well as protect us.

If you are old enough to remember George H W Bush’s defeat to Bill Clinton you will also recall that he had a problem with “the vision thing.” In fact, if a country does not have leadership, then the country will grow in a random haphazard way. People need to be lead in a direction that will result in benefit to the common good, instead of benefit to the individual pocketbook.

Just think of the creativity that went into the creation of the Pet Rock. Or, for a more recent example, the Collateralized Debt Obligation (CDO) and the pooling of high risk mortgages. The creation of these financial instruments was meant to benefit the creators and the cost to society was not even considered. The lack of government concern resulted in the collapse of many of our financial institutions. Because of the web woven by these institutions the government has finally realized that allowing nature take its course is much too high a price to pay for this selfishness.

I hope and pray that the last eight years has finally taught Americans a lesson in what the role of government should be. Government needs to lead its people. In order to lead a government leads vision and perspective. Government should not force and demand what its people should do, but rather it should lead by encouragement. Based on his campaign, Barack Obama’s vision includes a new green country and a lot of work that is needed to get us moving in that direction. With the proper encouragement there are many opportunities for new ideas, new jobs and new money to be made.


Don't forget what Stephen Colbert said, "Reality has a well-known liberal bias."

Cross Posted @ Bring It On, tblog, Blogger and BlogSpirit