Oct 13, 2009
Missing the Point
Reporting on this year's Nobel Prize winners in economics, Elinor Ostrom and Oliver Williamson, the New York Times said:
Note the key equivocation over the word regulation. Most people use that word to mean government interference with private market activity. So the Times at first seems to be saying that Ostrom and Williamson do not oppose such government interference. Maybe they don't, but that's not what the Times goes on to say. Instead, it says that both have shown that people often generate their own efficient rules -- governance -- independent of the State (and corporate authority).
It's as though the reporter said,"Neither has argued against taxation. Quite the contrary, they found that people use market prices to pay producers for their efforts."
What the Times reportermisses is that spontaneously evolved bottom-up rules are to be distinguished from top-down government regulation, which statists believe is indispensable. The former results from voluntary interaction by people on the spot, the latter from coercion by a central elite. The reporter seems more interested in getting in a subtle dig at the free market, which is alleged to be"unregulated." Of course it isn't, as I point out here.
Neither Ms. Ostrom nor Mr. Williamson has argued against regulation. Quite the contrary, their work found that people in business adopt for themselves numerous forms of regulation and rules of behavior — called “governance” in economic jargon — doing so independently of government or without being told to do so by corporate bosses.
Note the key equivocation over the word regulation. Most people use that word to mean government interference with private market activity. So the Times at first seems to be saying that Ostrom and Williamson do not oppose such government interference. Maybe they don't, but that's not what the Times goes on to say. Instead, it says that both have shown that people often generate their own efficient rules -- governance -- independent of the State (and corporate authority).
It's as though the reporter said,"Neither has argued against taxation. Quite the contrary, they found that people use market prices to pay producers for their efforts."
What the Times reportermisses is that spontaneously evolved bottom-up rules are to be distinguished from top-down government regulation, which statists believe is indispensable. The former results from voluntary interaction by people on the spot, the latter from coercion by a central elite. The reporter seems more interested in getting in a subtle dig at the free market, which is alleged to be"unregulated." Of course it isn't, as I point out here.