An Economic Thought

I recently heard a Libertarian (who also happens to be a scientist of some stature) refer to their brand of anarcho-capitalism as “evolutionary capitalism”. As a scientist that has had to defend evolution from all sorts of ridiculous attacks, he should have known that such a comparison wouldn’t help his position with other evolution supporters. While the selective mechanism certainly makes sense, a somewhat regulated market can still be selective, as well. Mutations and permutations of business, if correlated to evolutionary biology, don’t look that great. Mutations are more often harmful or benign than beneficial, so I don’t understand how protective regulation that prevents too many “harmful” mutations in the system is a bad thing. There are some things that are known to work or not work. There are things that, if changed, might be more convenient for a business, but could cause long-term harm to the consumer. Anarcho-capitalists figure that such things will eventually out and market pressure can force changes. The problem becomes, though, one of how many people have to deal with being harmed before it becomes unprofitable for the business. If regulations exist saying you need to cook meat to temperature X to reduce the chances of a nasty infection, that generally is easy to meet, has a discernable benefit, and prevents harm. I have heard it argued, however, that such a regulation is unnecessary. If a business chooses to undercook (or, in the real-world case of the argument I participated in, maintain a certain temperature level of meat in a holding area), they should be allowed to, and as people get sick, word will get around and people will stop eating there, forcing a change in practice or forcing the organization out of business. Now, that of course relies on people not only correctly identifying the source of illness, but that they make the results publicly known, that there are comprehensive outlets for finding and distributing such information, and that it happens with enough frequency that, likely, large numbers of people have been harmed on some level. That’s a lot of potential harm that could have been prevented with a single regulation.

Most of economics is a balancing act between market forces and regulations designed to prevent harm. If you regulate too tightly, it stifles innovation and even the ability to succeed. Too lightly, and you run the risk of a great harm of some type (health, financial, etc.) escaping notice until it is too late for some innocent schmuck to avoid. A lot of regulation comes after the horse has left the barn for the first time already; it just gets put in place to prevent it happening again. Too many of the big “L” guys seem perfectly fine with exposing me and mine to potential harm, as long as it all balances out in the end. The problem is that, sometimes, it’s easy to make a quick profit without and short- or long-term harm being noticeable. Market forces can’t be brought to bear in that case, but if regulation and enforcement are already in place, it stands as a potential barrier that wouldn’t be there otherwise. I can see anarcho-capitalism as a reaction against the sometimes-ludicrous over-regulation that occurs in the business world. Just because the system isn’t perfect, however, doesn’t mean we should scrap it. It still serves a strong and necessary purpose. You just have to work on that balancing act.