A student recently expressed to me what she called her “innate distaste” for markets. In this young woman’s view, “when we act through government we all share, but when we act through markets, each of us goes it alone.”
This student’s perception of governments versus markets is widespread. It is also highly distorted. Real-world governments and markets differ greatly from this popular image of them.
Genuine sharing through political institutions can, of course, be imagined. And such sharing does exist in some actual settings, as when citizens of a small town literally have a town hall meeting and reach a consensus to combine their efforts and resources to build a community playground. Yet in reality, most of what government promotes is taking rather than sharing.
Taking Is Not Sharing
Tariffs take wealth from politically impotent legions of consumers to artificially enrich relatively few, but politically potent, producers.
Agricultural subsidies take resources from taxpayers to satisfy the greed of farmers.
Minimum wages take jobs from the lowest-skilled workers to boost the wages of more highly skilled workers.
Social Security takes income both from today’s workers and tomorrow’s taxpayers to inflate the incomes of today’s retirees.
Rent-control statutes intentionally take property rights from landlords, and unintentionally take some housing stock from would-be renters, to enable some existing tenants to pay below-market prices for their accommodations.
Occupational-licensing restrictions take income from consumers and income-earning opportunities from unlicensed suppliers to bloat the incomes of licensed suppliers.
Nanny-state prohibitions slake the vanity of the most arrogant amongst us by taking away everyone’s self-responsibility and freedom to choose.
Not one of these government actions involves the reciprocity, actual consent, and mutual benefits required for there to be genuine sharing. Instead, each of these actions is an avaricious exercise of power, despite its reality being veiled by political theater and mythology.
What Is Trade but Sharing?
As distorted as is the perception that politics is an arena that encourages and enables sharing, even more distorted is the perception that the market is an arena that discourages and prevents sharing. Long before the arrival of what we today call the “sharing economy,” the market has been, and continues to be, history’s most potent and skilled driver of sharing.
Most obviously, it is through the market that we share with each other what each of us produces. Each of us in modern society is a highly specialized producer. I produce only economics lectures and essays; my neighbor produces only the services of an attorney; one of my dearest friends produces only the boutique retailing of high-end women’s clothing. None of us personally produce any but the tiniest fraction of the many goods and services that we daily consume.
I acquire my food, my clothing, my medical care, my entertainment, and everything else that sustains and enriches my life by trading what I produce for the goods and services produced by countless others. Ditto for you. Ditto for everyone you know. And what is this globe-spanning system of specialized production and trading if not a system of sharing?
I suspect the student who finds markets to be distasteful would reply that the trading that we do in markets isn’t really sharing, because each of us in the market is motivated largely by our own self-interest. But this reply is weak.
Even when we share in non-market settings, each of us expects to benefit. In the idealized local town hall meeting, no citizen’s agreement to participate in the collective venture is an act of charity. Each citizen participates in order to obtain the benefit that he or she expects from the successful completion of the venture. In this setting, there is exchange no less than in conventional markets. Each citizen agrees to contribute in some manner to the venture in exchange for other citizens agreeing to do the same.
The most significant difference between the sharing that occurs in markets and the sharing that occurs in idealized town hall meetings is that market sharing is mediated by prices expressed in money. Yet rather than reduce “sharingness,” market prices increase and intensify it.
When an unexpected freeze destroys a large portion of Florida’s citrus crops, the prices of oranges, grapefruit, and other citrus fruits rise as far away as New England and even Canada. These higher prices oblige all citrus consumers, including those far from Florida, to share in the misfortune of Florida’s citrus growers. In this way, the market helps to ease the burden these growers bear because of the unexpected destruction of crops.
Likewise, when the citrus harvest is unusually abundant, reducing the prices of citrus fruits is the market’s way of obliging citrus growers to share their good fortune with strangers far and wide.
Prices also inspire consumers to share amongst themselves. When the citrus harvest is unusually meager, the resulting higher prices prompt some buyers more than others to reduce their purchases of citrus. If you enjoy oranges less than does your neighbor, you’re more likely than they are to be led by the higher price of oranges to buy fewer of these fruits. More oranges than otherwise are thus made available for purchase by your neighbor and by other orange lovers.
When several years ago Hurricane Isabel blew the cap off of my home’s chimney, I was deterred by the sudden spike in prices charged by handymen from immediately having it replaced. By not summoning a handyman during the days immediately after the hurricane to replace my chimney cap, I voluntarily made that handyman available to assist other homeowners with problems more pressing than a missing chimney cap.
That is, by persuading me to live for several days without a cap on my chimney, the higher prices of handymen services inspired me to share more than I would have otherwise in the larger misfortunes of my neighbors in Northern Virginia and Maryland.
In these ways, market prices weave consumers together with each other, and with producers, into a humane and peaceful community of sharers.