Should we fear the unknown of the markets?


People often worry about what will happen to any given industry or market if the government does not step in to protect it via regulation.  Left unfettered, would the lack of oversight of the individual actors in the market doom the industry to failure?  Competing firms slash prices to attract customers and consumers are only interested in satisfying their needs at the moment.  Isn’t a central authority needed for overseeing to make sure that the market doesn’t eat itself alive?

This is a fairly common line of thought and the motivation behind it fairly benevolent.  People who think this way do not necessarily intend to want to control, but instead think they’re simply helping things along or are providing a system that ensures people don’t inadvertently hurt themselves.  This is why it is so hard for them to hear that their seemingly harmless rules and regulations actually do cause problems.

Without even arguing against the notion that these “harmless regulations” are in fact means for the state to control the markets and thus the individuals in the markets, attempts of central planning are doomed to failure not because the central planners might be malevolent but because they have no way of predicting the future.  In other words, their knowledge of what the correct next step is or what works best is imperfect.  There is no “test kitchen” present to sift out the good ideas from the bad.

It sounds scary–saying that it’s okay to just let go–but the progress made by humanity by doing just that has been nothing short of amazing.  We love to predict what the future will look like and we also love to chuckle at how wrong people have been in the past trying to predict how today would look.  But there’s no shame in those incorrect visions as that imagination is the fuel for the innovations we enjoy today.  There is shame, however, when a group of people force their own view of the future on others by saying, “This is how you must do the following.”  The imagination and creative ways of solving problems is stifled.

Consider taxis as an example.  Ridesharing services such as Uber and Lyft have been developed over the last few years and have revolutionized the taxi industry.  Now Uber is even testing a self-driving car.  No bureaucrat or regulator or lawmaker came up with these ideas.  Had the state been more successful in regulating the taxi industry, i.e. preventing companies like Uber and Lyft from existing, we wouldn’t be enjoying these innovations.

Just imagine what other wonderful creations we’re missing out on because people are told how they can think and act.

Imagine someone telling you twenty years ago that terrestrial radio would almost disappear in the not so distant future?  You would think he was crazy.  How else would you listen to music, get the news, or hear talk shows?  Would you have to lug around a CD or two if you wanted to listen to music while you were in the car?  Should the state do something to protect it from going away?  

Now imagine today someone saying that terrestrial radio would soon go away.  That doesn’t sound so crazy, does it?  I’m not suggesting that will happen in the next year or so, but it is definitely on its way out.  Look at what we have instead now.  Apple developed the iPod and iTunes and other competitors developed mp3 players so that you could have your entire musical library fit in your pocket.  Considering a lot of us can remember our bookshelves of CDs, cassette tapes, 8-track tapes, and vinyl records, that is pretty amazing.  Satellite radio came along and, although you have to pay for it, has more and better channels than terrestrial radio and does not have commercials.  But now just about everyone has a smartphone and carries it everywhere.  Sure you can store downloaded music on it, but with services like Spotify you can stream just about any music you like (for free!).  There are many other music services out there too.  Do you want to listen to a talk show?  There are literally thousands of podcasts available to suit whatever taste you have.

And let’s not forget about the illicit services like Napster and other file sharing options.  Despite their illegal nature, the state was and continues to be unable to stamp them out, so it forces the white markets to become creative to find ways to attract consumers to their products.

The world is a truly amazing place and the innovations that people create are beautiful.  When people are presented with a problem, they find a way around it.  Let’s take a more positive view of how we can work together to make our lives better instead of the pessimistic view that we’re always one or two steps away from messing everything up.  We don’t need oversight from people we don’t know and who will never know what our desires, hopes, and dreams are.  We are not pawns on a chessboard, so let’s not act like we need a master to determine our moves.