Markets Allocate Resources

THROUGH A SIMPLE and atomized mechanism that sends feedback signals through the marketplace. These signals ride on transactions. They can be reduced to two objects — prices and products. A buyer offers a price for a product, a seller offers a product for a price. If they can agree, voila! — a sale. If not, then they either renegotiate, or the buyer goes elsewhere and the seller approaches his next mark.

This is a natural, spontaneous, self-actuating and self-regulating mechanism. When it operates properly, demand is met and products sell for the highest acceptable price.

Sellers get rich by meeting their buyers’ demands. Get rich by serving the needs and wants of others.

However, the mechanism breaks down when the quality of the information deteriorates. Parties not directly involved in a transaction can seek to alter it by meddling in the signals. In effect, they jam the transmission of information. Attempt to control prices, and shortages of the price-controlled goods ensue. New products appear on the market in attempts to circumvent the controls. Prices trend higher. Attempt to control supply, and buyers and sellers form new associations beyond the reach of the controlling authority — forming gray and black markets. Attempt to control demand, and your costs of administration skyrocket at the buyers revolt, necessitating ever-more-oppressive measures to control the market.

It is, therefor, a source of no small amusement to find the statists currently attempting to control simultaneously demand, supply, and price in the arena of medicine stymied by the objections of their constituents, essentially doing to them what they would do to those constituents, by jamming the transmission.

Except that the TEA partiers and townhall attendees protesting the oncoming health insurance debacle aren’t just putting static out there, although the Left may perceive it as such. They are actually transmitting information at higher volume than the controllers can overcome.

Must be frustrating as hell to have your own tactics used against you.

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