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The realities of market allocation in our society

POSTED January 25, 2011 8:58 p.m.

Understanding the sources of our national divisions is certainly important, particularly in light of recent events in Tucson. But the analysis offered by economics professor Walter Williams (“Why we’re a divided nation,” Jan. 19) is too simplistic, naïve, and historically myopic to help us much.

Williams’ central point is that that “political allocation of resources is conflict-enhancing, while market allocation is conflict-reducing.”  But he offers little explanation of what ‘market allocation’ is, probably because that term falsely and too simply assumes that the market is somehow removed from human decision-making and that the resources being allocated are limitless.

History reminds us – and Williams and those who accept his logic apparently need reminding – of why our government assumed the roles it has taken on.  As the emergent large corporations of the late nineteenth century made evident, unregulated “market allocation,” driven by principles of supply and demand and, ultimately, by the unbridled self-interest of the corporate leaders dubbed “robber barons,” undermined competition and consumer choice; created enormous, tension-generating inequities of power and wealth; and ushered in an economic world far removed from that of the nation’s founders.  Rising public concern about corporate rapaciousness, manifested in numerous episodes of protest and violence, led the government to enact regulatory legislation.  The circumstances of the Great Depression a few decades later prompted the additional measures of the New Deal – a set of programs that elicited much the same panicky response from economic conservatives that Williams offers recent healthcare legislation.

Not to say that “political allocation” is problem-free (history provides examples aplenty to counteract that sort of naïvete, too); but neither is “market allocation.”  Does Professor Williams really think otherwise?  His advice that we’d get along better if only we’d accept the Republican party line is either hopelessly naïve or – if he understands the realities of “market allocation” better than he lets on – unacceptably disingenuous.

— Bret Carroll

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