January 14, 2007
Markets at Work
Perry at Eidelblog follows up on an 18-month old post and makes a reasonable and readable argument for free market economics.
In August 2005, he had blogged about a movie lover who had patiently watched the prices of the big flat-screen TVs climb down from $20K and bought a 50" plasma for $3800. That TV is advertised for $2300 today and Perry posits that prices are going lower as Sharp is building a new factory in Mexico.
Actually the prices are so good even I am thinking of getting in (though a giant Larry Kudlow may induce nightmares)
Eidlebus dismisses the arguments of killjoys who would have had them wait: the happy couple got 17 months of enjoyment for $1500. Of course, if folks aren't around to but it for 20,000 and 3800, it's not going to make it to 2300. He also dismisses protectionists who would demand the factory be built in the US.
And, being Perry, he sneaks in the obligatory Bastiat reference:
Will "worshippers of government" (my favorite of all Bastiat's terms), from full-blown socialists to the "progressives" who believe government must "help," ever look at the myriad examples of modern technology and finally understand that government can never stimulate nor inspire invention and creativity? And with regard to social customs, look at what the free market hath wrought, things government takes credit for but could have never effected. Only the uncompetitive, slothful and tyrannical need fear free markets, which is precisely why the supporters of government intervention can always be lumped into one of the three.
I refer it to the wealth creation documented in Alan Reynolds's "Income and Wealth." Paul Krugman says that real incomes are stagnant and that 90% of the workers are no better off than when the Stones released "Goats Head Soup" in 1973. Krugman and his cohorts are willing to torture the statistics to unconscionable levels to prove it.
Reynolds brilliantly discredits the Krugman Krowd (KK) with mathematics. For those who can't or won't dig into that, I suggest that it doesn't pass the smell test. In 1973, a 19" color-TV was a major purchase. With a roof antenna, you could watch "All In The Family" in glorious color. Today, the same socioeconomic class can get a 42" or larger, flat, HDTV with Satellite or Digital Cable. This does not count as an increase in Wealth to the KK.
Nor does it count that the most extravagant luxury of 1973, the car phone, is now given to half of the kids in Junior High, that you can fly to Europe for a few hundred bucks, laptops, Internet. (Reynolds does point out that we're not driving Pintos and Vegas anymore, that's another huge plus).
The market creates wealth and drives innovation. I was around in '73. Goats Head Soup was a good record but I'll take 2007.