Less than one week removed from his John Locke Foundation Headliner appearance, the Washington Examiner‘s Timothy P. Carney is tackling the cronyism inherent in “government-managed markets.”
Central planners — whether in governments or huge corporations — cannot judge and balance supply and demand as well as the market can, through the independent actions of numerous individuals. A classic critique of planned economies is that it leads to shortages and excesses — that is, waste and inefficiency — and thus leaves everyone poorer than if producers were responding to price signals and thus producing what people want and need.
But there’s another relevant critique of planned economies, particularly as we have a president who continues to campaign on the platform of battling the special interests: When a few bureaucrats or politicians try to set supply and demand, they will often act so as to benefit the well-connected incumbent businesses.
Witness the DC government’s proposals on taxis. …
… Who has more resources to spend on this matter, and who has more concentrated interests at stake? The incumbent cabbies do, far more than the passengers or the theoretical future cabbies. So the sellers (cabbies) will always argue that “the market is saturated.” …
… I’ve got nothing against cabbies getting rich. I do have a problem, however, with cabbies using government might to deprive future competitors (who are probably immigrants) from one way of making a living, and creating shortages for customers at the same time.
