The Price isn't Right

Here at Sustainable Frederick, we believe in the mostly free market. There is no doubt that a market economy is among the most amazing inventions in the universe. Let's take a minute to admire it.

Milton Friedman is the famous classical economist that is most associated with touting the amazing benefits of the free market.

Friedman talks about the simple pencil and the important point that no one person or organization could plan to gather the resources -- wood, graphite, rubber, metal, paint and labor -- from around the world and put them together into a pencil that costs only pennies. It happens so cheaply because markets exist where sellers of those resources meet buyers and exchange the goods for money and everyone walks away happy. Here is the video -- its worth seeing because this idea is (was) truly revolutionary.



Friedman and his ilk contend that the one true evil in this scenario is regulation. Only by mucking around with rules can we diminish the magic of the market.

Oh, the idealist! Really, right wingers always talk about lefties living in a fantasy world, hanging on to unreal and insubstantial dreams that look good but aren't realistic. The problem I see is that these folks are the one's living in fantasy world.

Going back to the pencil, do you think that the company that clears the forest to extract the wood to sell to the pencil maker is paying the true costs of the wood? Sure, that company is paying the labor something (we won't even get into the topic of a fair wage here), and is paying for the oil that runs the chain saws and trucks and stuff, and is paying an accountant to track it all. That's the part of the system that works. But, that company is not paying the local population for the fact that their water is now polluted because it is NOT being filtered by the wood that is now a pencil and no longer a tree. That cost falls to the poor individuals who get sick, the local government, and international aid agencies (who get most of their money from us, by the way).

Eventually those costs cost someone a lot of money, but the pencil was used up years ago.

I was inspired to write this post by an op-ed in the TheWashingtonPost that makes this same case regarding the comparison of green energy and oil energy. Check it out.

Finally -- I am listing Friedman among my heroes of this blog for his theorizing that has inspired as much good as bad. That's sustainability.