Friday, November 27, 2009

Stuck in Traffic with Adam Smith

congressman_joe_wilson_scBy Baynard Woods

I drove from Washington to South Carolina for Thanksgiving. South Carolina’s representatives probably flew home. If they had driven, they would have learned something about capitalism.  For anyone who may have forgotten, Adam Smith’s Wealth of Nations articulates three major ‘laws of capitalism.’

  1. Self-interest (it is better for the nation as a whole when I seek what it good for me)

  2. Competition (it is better for the nation when people compete economically)

  3. Supply and demand (prices are set through the complex balance of availability and desire).



All three of these argue that economic health is determined by millions of small actions rather than centralized orchestration. These ideas sound right (unless you’re reading Ayn Rand in which case the same ideas sound like the ridiculous ravings of a b-movie idiot). But are they?

I thought a lot about this as I sat stalled in an infinite line of red break-lights beaming through the dreary rain in Northern Virginia. Like economic interactions, highway traffic patterns are also determined by the effect of millions of small actions. And in the world of holiday travel, Smith’s laws fall apart. Supply and Demand doesn’t quite fit. But in the complex system of traffic, competition and pure self-interest are bad for us all.

Here’s the classic example. Lane closed ahead, merge right. We all know what happens. Some people go ahead and merge right. But there are those who will not merge right until the very last moment. They speed ahead, zooming past everyone waiting to get through the bottleneck. When the left lane finally closes and all of those competitive self-interest drivers cut their way into the line in the right, they slow the traffic behind them for miles back. In fact, it turns out that those drivers are the ones who create the jam in the first place. Nobody would be waiting at all if it were not for the people who looked out only for their own best interests.

When Smith wrote the Wealth of Nations the world’s population was small and disconnected. Capital could not be transferred electronically. There were no complex derivatives. There were no speed limits for horses and buggies because their speed was limited by nature. Traffic laws and even drunk driving are not strictly enforced where populations are small. DeMint, Wilson and other conservatives argue that what worked for the horse and buggy should work for the race car.

They want you to make a Smoky and the Bandit gamble. “Keep your foot hard on the peddle, never mind the brakes, let it all hang out cause we got a run to make,” the immortal Jerry Reed sang. If you don’t make it back to Atlanta from Texarkana with that case of Coors, you lose your retirement, your savings, and your job.

Jim DeMint and Joe Wilson are like Big and Little Enos Burdette, the evil Texans who orchestrate the whole thing in the 1977 Burt Reynolds vehicle. Except, they’re gambling with your money. They don’t want to do the right thing. They say what they say to get the votes of people frustrated by our slow advance forward.

Sure, slow progress is frustrating. We don’t like traffic jams. And we don’t like the Highway Patrol. But, when we’re stopped in a traffic jam, we don’t listen to the maniac in the car beside us yelling “gun it” and honking his horn. If you wonder what could happen if the Big and Little Enos get their way, just remember back to 2005. DeMint championed privatizing social security. If you want something to be thankful for this year, imagine what it would be like if your Social Security as well as your 401k was in the trunk of the car in flames at the bottom of an economic gully. Our elderly would be devastated this holiday if we had listened to DeMint. So, next time people talk about Big Government wanting to kill grandma, remember, they’re actually talking about Big Enos DeMint.

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