COLUMN: Democracy should apply to economics

Carl Schierhorn

I’m grateful to live in a capitalist country like the United States. Sadly, it’s not quite as capitalist as many may think. For an excellent example of American free markets, look at the fast food industry.

In Kent, we have a Rockne’s, Arby’s, Main Street Coneys, two Burger Kings, Taco Bell, Wendy’s, Chipotle, Europe Gyro, McDonald’s, Dairy Queen and others.

That’s a very competitive market!

Even if all of the above establishments colluded to raise their prices, you can buy spaghetti and sauce at Giant Eagle quite cheaply.

No matter which you choose, it will be edible and maybe even fast.

It’s amazing how all that competition prevents us from complaining about prices and service in the food industry (except on campus where Dining Services has a monopoly on the board plan).

The obvious question is: Why isn’t this working in other markets? The answer is government intervention.

Many are complaining about rising gas prices. In a truly free market, record profits would inspire new companies to get a piece of the action. These new companies would build their own refineries with greatest celerity and take profits from pre-existing companies.

What’s stopping new competitors? Go to www.regulations.gov and see for yourself. Go ahead, just a quick look.

Imposing, isn’t it? I have neither the time nor the patience to cut through all that red tape. It’s amazing anything gets done in this country.

Remember when the federal government gave billions of dollars to the airline industry shortly after Sept. 11? Is it really safe to fly?

In a truly free market, the airlines would have had to earn consumer confidence with such mind-boggling innovations as bulletproof cockpit doors with biometric locks so that only the pilots can open them. (We can build them! We have the technology! This is a “Six Million Dollar Man” joke.)

Thanks to the bailout, I could kick down a cockpit door just as easily today as then. Did we really benefit from this?

If one of the airlines had gone bankrupt, it would have deserved it for failing to meet consumer needs. The important thing is that the surviving companies would be safer.

I’m sure any socialist who’s still reading this insists the problems described above result from partial intervention, i.e., companies still maintain considerable autonomy. Congress could have ordered the airlines to spend the bailout money on safety improvements. Congress could subsidize new oil refineries.

Total control is absolutely necessary according to socialists. The problem with total control is that it completely overestimates human abilities.

In order for the government to distribute goods throughout the country and set their prices to prevent riots over shortages, the government must know how people’s preferences vary throughout the country and over time.

Since preferences are irrational, there is no way to predict those changes. The information must be measured daily (at least) and sent to Washington. By the time the bureaucrats digest that tremendous amount of information and make decisions, it’s too late. Everything has changed. Under the free market, no one has to know anything more than his own preferences. He simply follows the prices from there.

Don Norvell is a physics graduate assistant and a point/counterpoint columnist for the Daily Kent Stater. Contact him at [email protected]