Karl and I were talking the night before he left to go home. In several of our conversations I noticed that he had a fairly common bias when trying to figure out how to get things accomplished. “If the government doesn’t do it, it won’t happen,” is a really common attitude. Almost without exception, the people that ardently believe in this are afraid of what people will do if left to their own devices. They see no hope of charity, care, or understanding from people. It’s really a cynical viewpoint if you think about it. The alternative to allowing people to do what they want is to force people to do what the government, or in a best case scenario, what the majority of people want to do. They of course do this by forcibly taking money from us and forcing us to follow whatever program they come up with.
As you may guess, I feel that things should be left to people to decide for themselves first before any government involvement kicks in. This is rarely allowed to happen, there is usually some sort of regulations in effect for just about everything out there. Usually, it is the government interference that allows “market failures” to happen. For me, what defines a market failure is that everyone can do whatever they like and nobody is happy with the outcome. I had been a believer in the idea that market failures didn’t really exist without govt. meddling. Living in Yemen has made me rethink some of those ideas.
Two examples of actual market failures that I have seen here are the unbelievable amounts of litter and the horrendous (and dangerous) traffic. I have no idea what’s going on with the litter, seemingly everyone complains about it, but is unwilling to do anything about it. I once had someone lament how dirty Yemen is while he threw a wrapper on the ground! My only guess is that there is some sort of cultural bias towards littering or away from preventing it… The traffic example is a little easier to explain I think. There is relatively little enforcement of traffic laws here, so people drive however they choose, with disastrous results. There are constant traffic jams (usually caused by terrible parking in busy areas), intersections are both risky and harrowing, and the flow of traffic in general is incredibly slow. The noise of horns is deafening, and it leads to you tuning them out for the most part. My idea behind why the “market” for traffic running smoothly doesn’t work so well is one of transaction costs. In any market, actors in it must be free to negotiate between themselves for the outcomes that they both want, for the ones they are willing to “trade” for. If the cost of doing the transaction is too high, it doesn’t happen. Imagine trying to import a plow from England to colonial Virginia. It was far too costly in terms of time to bother with getting it from England, they just went down to the local blacksmith and got one instead. In the same way, traffic moves too quickly for there to be too many “negotiations” to occur. What results is the traffic that we have here. The government (through rules and enforcement) sets up the negotiations beforehand (right of way, traffic lights, etc.) so that no time is needed to figure out who should go where. Traffic tends to be much more efficient (more cars through a given area in a given time) and I believe safer with these negotiations taken care of in advance. So yes, we give up some freedom, but because there isn’t a way for us to make transactions in the market otherwise, the government solution works fairly well.
Here’s where my ideas get a little more difficult to think about. I do believe that people should be allowed to try interact among themselves first before relying on the government to “fix” things. The trouble is, as in the case of traffic here in Yemen, if you allow the market to do its own thing, I’m not sure you can “fix” it later on. I have no idea how the government could step in now and correct the big problems with traffic here. So maybe things like high transactions costs could be predictors in advance whether or not the govt. should be involved. There may be some other factors as well, but the possibility that people may be stupid or evil are not (IMO) good reasons to mandate government control over something. Let people interact with each other freely and usually good things will come about…