Fisher Investments Editorial Staff
Capitalism

The Good Life

By, 12/01/2009
 

Story Highlights:

 

  • Free markets allow resources from every global nook and cranny to circulate daily, magnetically drawing them to their best use by prices and profits.
  • There will inevitably be stumbling blocks, crooks, and inequities—but it's hubris to believe government administrators can do better.
  • In the end, the world is a far, far wealthier place thanks to functioning free markets.

 

After giving thanks for all we have, let's ponder just why we have so much. How can it be that our Thanksgiving feast took only a day or two's preparation; that our favorite ingredients were almost magically available; that we had the money to pay for it all; and that there are so many millions who, just like us, enjoyed a veritable cornucopia?

 

Listing every cog keeping the economic clock ticking for a day would take millennia—but the underlying principle is simple. Leonard Read penned his famous essay, "I, Pencil," 51 years ago. "I, Pencil" showed how great complexity can arise from the ground up and efficiently deal its many benefits unbidden. Thousands of workers come together to make a pencil, though none may necessarily desire the end product, let alone know how it's made.

 

If it's so tough just to understand how to make a pencil, how can we possibly conceive the workings of the entire economy? The world consists of millions of products and processes, most far more complex than a pencil. Free markets allow resources from every global nook and cranny to circulate daily, magnetically drawing them to their best use by prices and profits—a feat no human could hope to achieve.

 

And yet, not everyone shares this season's feast. "Capitalism is the worst economic system, except for all the others." Some of the world's poorest citizens reside in countries whose leaders refuse to relinquish economic control—Zimbabwe and North Korea, among many others. 

 

Nor is capitalism perfect. There will inevitably be stumbling blocks, crooks, and inequities. But it's hubris to believe government administrators can do better. Regulation of the framework within which markets operate is a good thing (stable property rights are a must), directing their many flows a great mistake—and an ongoing debate about which is which a necessity.

 

The world is a far, far wealthier place thanks to functioning free markets. An abundance that not only keeps us alive, but allows us to make life more livable.

*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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