A Different Look at Economic Systems
Your body functions are almost totally on autopilot. When you eat breakfast, you do not have to spend hours consciously telling your body to digest the food and then tell it what nutrients to send where. If you exercise, you do not have to monitor the amount of oxygen in your bloodstream, or decide at what rate your heart should beat. There is no need to remember to breathe. If there was, how could you sleep?
You simply eat pop-tarts, watch Bullwinkle, or whatever it is that you do while these remarkably complex functions carry on automatically. Your digestive system knows not only when you are hungry, but maintains proper nutrition levels for the trillions of cells that make up your body. How would you know when your heart needed more potassium, or your shoulder muscles needed some extra protein? Can you imagine a species that would have to devote thought to these basic survival instincts? That creature would not last long enough to make a fossil.
Now to the point: an economic system is just like a human body. Either you can let it run itself, or you can try to control it. Consider two examples:
Ours is an economy driven by prices. While you may not like prices, they are actually an incredible thing. When a car manufacturer makes a new model, they determine a price based on the money invested in the production of that vehicle (parts and labor). Consumers may like the features of the vehicle and feel that it is worth the price. If it is too expensive, or they do not like the features, they will not buy the vehicle. A strong demand shows the manufacturer they are in line with what consumers want. A lack of demand indicates that either the price is too high, or the model is unpopular. To stay in business, the company would have to modify future models.
Prices are a way of communicating what the consumers want. Prices also encourage consumers and producers to be efficient – you probably use a lot less gasoline when it is three dollars per gallon than when it was one dollar. The system works wonders if it is free from interference by the government. The free market, therefore, is like the cells in your body – millions of consumers functioning autonomously.
Now take the communist economy – it is like the species that has to think about every function in its body. In the Soviet Union, the government literally controlled everything. With no prices to govern the economy, manufacturers made too much of some products and not enough of others. People would stand in line for hours or perhaps days for boots while tomatoes wasted away in warehouses. There was no mechanism to monitor the demand or the quality of products; the consumers were simply stuck with what they had. The decisions for hundreds of millions of consumers were made by a handful of bureaucrats in Moscow.
The quality of life was drastically lower in the Soviet Union than in the United States. Because of prices, Americans had better products and were far more efficient than their communist counterparts.
The government knows how many tomatoes you need about as well as you know how much vitamin C to give one particular cell in your body. The free market works wonders, if left to function on its own. Our system is not perfect – we need major reform in certain areas. But we can be certain that government interference (like subsidies or universal health care) will throw a wrench into the greatest economy in history.
Chris Carter is the host of “Unto the Breach with Crushing Chris Carter.”
COPYRIGHT 2007 CHRIS CARTER