Earlier this week I wrote "Grammar Nazi Comment on Greco-Latin Words", and one of the topics I mentioned in the course of that post I discussed the situation which often arises in the real world, where a solution which works very well for a majority of situations can make things worse in a handful of exceptional situations. Not that such a situation is unusual. Ever since I started discussing the free market in "Greed Versus Evil",  "Planning For Imperfection" and "Fairness and the Free Market", I have pointed out that the free market does not produce perfect solutions, instead it tends to push us toward the ideal situation, but, over time, the idea changes, meaning it is chasing a moving target. As a result, the free market produces the best feasible solution, but something far from perfection. Likewise, many other solutions, federalism ("The Benefits of Federalism"), minimal government ("Negative and Positive Rights", "Symmetry and Asymmetry in Government", "My Vision of Government", "My Vision of Government Part II", "Man's Nature and Government", "Prelude"), favoring tradition ("Culture and Government ", "Cranky Old Man?", "Immigration and Assimilation "), and so on, all tend to produce solutions which are good but not perfect.

But there is a problem with systems which produce results in the real world. As perfection is unattainable, there will always be something to criticize. ("What We Deserve",  "Don't Blame the Politicians", "Who Is To Blame?", "What is Wrong with Us", "The Single Greatest Weakness", "The Difficulty of Principle", "Damn the Torpedoes!",  "You Lose When You Think You Win", "Why We Lose", "Giving Away the Game", "Of Wheat and Doctors") As a result, people will be able to complain that there is some flaw, and, so long as the audience is immature enough to believe in perfect solutions, those selling perfection will find themselves with a willing audience. ("Utopianism and Disaster") Not that I am suggesting liberals are dishonest. Many are themselves perfectionists who believe what they say. ("The Inherent Disappointment of Authoritarianism") However, it is depressing that not only so many liberals, but many more moderate voters, are open to those who promise perfection.

The situation is a familiar one. For example, a liberal activist will raise the issue of wage disparities based on race.  The proper response, yet sadly one all too infrequently given ("Pyrrhic Victories"), is that over time, left free of government interference, individual self-interest will correct any market disparities. ("Fairness and the Free Market") The basic premise, for those unfamiliar with the argument I have made many times ("Greed Versus Evil") is that every individual is a potential employer, and so unless every individual is racist, including the minorities themselves, someone will find the potential for profit too appealing. The greater the discrimination, the more severely minorities are underpaid, the more profit to be made, and the more likely even a cash-poor individual will be able to convince investors to risk some money. After all, if minorities are being paid only 10% if what the majority is, you could pay 20%, double their wages, get much appreciation and goodwill, and still make a massive profit. So, what is the likelihood no one on earth would be willing to exploit such a profit making opportunity?

Of course, over time, as one individual cashed in, others would follow, and so the wages would be driven closer and close to the market norm, leaving only those disparities which seem to be the result of legitimate reductions of productive abilities.(Eg. If a racial group, as a whole, is less educated than the majority, they may earn less as a group. However, when compared to a group of the majority with comparable education, it will be seen that it is not a "racist" disparity, but simply a market factor that correlates with race.)

The problem with this, according to the left is twofold. First, it is "slow" and leaves many inequities in place for "too long". Second, there exists the possibility that some isolated pockets of the market, where unusual conditions persist, might not be wholly remedied by market forces*. Based on these arguments, not only does the left justify its opposition to the free market, but somehow they manage to convince the majority that only the government can solve these problems, despite all evidence to the contrary. Even some on the right have bought into these arguments, defending violations of rights from the Civil Rights Act or the Sherman Antitrust Act as "necessary, given the times." ("Best of the Web gets It Very, Very Wrong")

Let us look at these two arguments to see how it works, both how the imperfection of the market is used to argue against it, and how the public at large is convinced by such arguments to support the government based solutions, even when they repeatedly fail.

The first argument is the least compelling, often sounding a bit whiny. Or it would if we were to view it objectively. However, as we have come to accept sad stories and anecdotes as political arguments ("The Plural of Anecdote is Not Data") we are used to taking a single sad instance as an argument against a plan. And so, while the free market will eventually fix the problems, and fix them the faster the worse they are, as the more severe the discrimination, the greater the potential profit, it is dismissed as it will not remedy the problem all at once. As the argument is usually phrased "you expect these people to wait?" The implication being that once a problem has been identified, our obligation is not to fix it in the best way possible, but with the greatest speed. Regardless of the extra costs or the side effects, it is speed alone which is to be considered. As I said, were we not used to having our heart-strings tugged by sob stories, the childishness of this position would be horribly obvious.

Of course, the argument is clearly invalid, in any number of ways. For example, the simple fact that for all the government intervention, some going back to the end of the Civil War, though most from the 1960's, we still have Supreme Court justices saying we have at least 25 years more to go before we can even consider eliminating affirmative action. For a comparison, consider how quickly wages equalized for Irish, Jews, Italians, even the Chinese and Japanese, all of whom faced de facto discrimination and low wages, but once the possibility of earning more profits by paying them better wages was evident, they were swiftly integrated into the general body of workers. Even if we look at it most uncharitably, the Jews, Italians and Irish were all quite unwelcome in the 1890's, but by the 1920's were beginning to merge with the working class in general, and by the time of World War II, while still distinct ethnic groups, were largely competitive in the wage market. In other words, doing nothing allowed the market to fix a problem in less time than we have had affirmative action, and yet affirmative action has not come close to doing as well.

And that is the other issue. The argument is that free market solution is slow, and will leave some for a time in a bad situation, yet the government solution is no better. The government solution is as slow or slower, and produces no better results. Or, worse, it is fast, but produces so many destructive side effects that it is still more damaging than doing nothing. Of course, this fact is omitted, or, if the proponents are forced to notice, they argue that id the two are equally bad, then at least we are "doing something", as if futile action somehow had greater moral significance than avoiding doing harm.

But before I go on, let us look at the second argument, that the solution may not be perfect in terms of reaching everyone. This argument is sometimes presented in a dishonest way, either picking a situation while the system is correcting itself and presenting it as characteristic of the final condition, or else statistics are twisted create the impression of a problem that is not there. ("Statistical Artifacts", "Misusing Numbers ", "Mathematical Deception", "Bad Economics Part 1", "Shocking Numbers", "The Rubber Yardstick, "The Problem With Economic Debate", "Numbers Aren't Always What They Seem") Other times, the argument is honest, but theoretical. An economist will argue that in theory some conditions could exist which would allow discrimination to exist. And that is true, and there may be, at times, conditions allowing discrimination. However, even then, the market forces, coupled with mobility of labor and capital, tends to make it almost impossible to keep such situations without government intervention. Of course, the abstractions of economics make it easy to overlook factors, deceive the audience and create hypothetical situations which sound plausible, but in reality would never occur.

Which brings us to the other approach, one which is not strictly economic, but still is founded on the argument for perfection. This argument amounts to pointing out the ways in which a gradual, functional solution falls short of perfection, and then arguing that failing to address those situations would be immoral. For instance, as I have argued elsewhere ("Private Versus Public Racism", "The Danger Inherent in Banning "Bad Ideas"", "In Defense of Discrimination", "A Statute of Limitations for Race", "How to Handle Idiots", "Back Again"), there are good arguments for waiting for cultural pressures to eliminate personal racist beliefs, that eliminating rights of property, association and speech to try to change the minds of those holding unacceptable views int he end does not produce any better results, but destroys individual rights, and at the same time likely is less successful than waiting for society to change hearts and minds, possibly even creating resentments which were not previously there. In short, the approach which employs freedom may be imperfect, but so is the intrusive approach, yet the failure of only one is ever mentioned. ("Government Quackery ", "The Inherent Disappointment of Authoritarianism", "Recipe For Disaster", "How To Blame the Free Market")

Before I give the impression that this is all about race, or that I am using this argument against only one aspect of government, let me say that this failing, this demand for perfection or nothing -- though the proponents then happily accept a flawed government solution -- is a common trait of those proposing big government. It is hardly limited to matters of wage disparities or race relations. Time after time the government has been "forced" to act due to an imperfect solution ("Doing Something", ""Doing Something" Revisited",  "The Difficulty of Principle"), only to impose an even worse response. ("Recipe For Disaster", "The Endless Cycle of Intervention",  "The Cycle of Compassion")

Perhaps the best example is the free market as a whole. ("Greed Versus Evil", "How To Blame the Free Market", "Planning For Imperfection") It seems every specific aspect of the free market is attacked, repeatedly, for falling short of perfection. When the free market makes everyone more wealthy, it is criticized for making the rich wealthy faster, or, if that doesn't happen, for still retaining some disparity in wages. Or it is criticized for making some goods too expensive for general consumption, overlooking the fact that, with time, the "toys of the rich" become the common consumer goods of the next generation. And if the populist arguments are not enough, the professional economists jump in, arguing that "imperfect information" leaves the free market functioning at less than optimal conditions, ignoring the fact that the free market is still superior to all alternatives. Or they fall back on the ludicrous hunt for "waste" in the free market, finding all those expenditures not directly related to production or distribution and imaging they can be eliminated without any harm. ("Bad Economics Part 10", "Pro Hoc, Ergo Propter Hoc", "Cutting "Costs"", "Misunderstanding Profits",  "Two Examples of "Inefficiency" in Capitalism")

In some ways, the free market proponents have set themselves up for this, by overselling the free market. All the talk of invisible hands and magic of the market leads those without an intuitive feel for economics to think the free market produces an optimal situation which then stays that way forever. Of course that is nonsense. ("The Limits of "Scientific" Management", ""The Limits of Technocracy",  "The Limits of Econometrics", "Knowing Our Limits", "Bad Economics Part 4", "Bad Economics Part 16") Individual desires change constantly, from moment to moment. As one need is satisfied, others arise. As an individual becomes aware of new products, his desires are rearranged. In addition, the world changes, the circumstances of production, of transportation, the availability of labor and raw materials, everything changes. Thus there is no "perfect" answer. At a given instant in time, there is a solution which produces optimum satisfaction, that is the greatest satisfaction for the greatest number, but the market very rarely, if ever matches that situation. And, it doesn't matter. A fraction of a second later, the optimal answer has changed. And so has the market. The market does not produce optimal answers, it tends to move the market toward the present optimum, which produces not perfection, but the best possible set of points, a series of solutions which are the closest it is possible to come to the ideal. But there will always be waste, wrong steps, mistakes, and the like. Humans are flawed. But by mistakes we also learn. Without mistakes we would not know what to avoid, or how correct our other answers are.

But the critics take these realistic limits, the fact that the free market has bankruptcies, spends money on advertising, does not produce the absolutely optimal combination of supply and demands, any of those shortcomings, and argues they show where the free market can be "improved". Rather than accepting that the free market is a comprehensive system, which produces the best possible results, but with some failings, they hope to take it and add "patches", or maybe replace it entirely, with something they claim will produce perfection.

And, in a few cases, the "fix" may make the  aspect upon which it focuses more efficient than the free market, though at the expense of imposing additional costs elsewhere. (Eg. Inflationary schemes do decrease unemployment below market for a time, under some conditions, but over time they cause much worse results -- see "Bad Economics Part 14", "Inflation and Uncertainty", "Explaining Past Crashes", "The Best Historical Example" and "The Inflation Engine") But in most cases, even in the area which is being repaired, the "improvement" ends up breaking the system, making things worse even in those aspects which were supposed to be improved. Which will be the subject of our next example

The specific aspect of the free market which is the best example of dismissing a theory for failing to be perfect is the gold standard. Even many conservatives, even those claiming to be libertarians or economic conservatives, accept the conventional wisdom that gold is an anachronism and fiat currency ("managed currency" as they prefer to call it), is the only viable currency. ("What Is Money? ", "What Is A Dollar?", "Bad Economics Part 7", "Bad Economics Part 8", "Why Gold?",  "Monetary Issues Made Simple Part I", "Monetary Issues Made Simple Part II", "Selling Yourself Cheap") Granted, monetary theory is pretty distant from everyday concerns, and most people lack the economic understanding to truly argue this issue in detail, but that is no explanation for the uniform opinion. In the late 19th century there was heated debate over gold versus silver, even among the uneducated masses**. Mostly this amounted to following the party line on the question, but it still shows even such abstract economic questions can gain public attention. So, why is that today, what was once a question that evoked heated debate, now elicits a yawn and a party line that spans both parties and everything in between?

Is it because gold truly is wrong? Is it really such a bad idea?

Far from it. As I have argued repeatedly ("You Gotta Have Faith", "Cause or Symptom? or, Who's to Blame?", "Hair of the Dog?", "The Inflation Engine"), every complaint raised against gold, every "problem" managed gold, and later paper fiat currency, was supposed to fix, not only persisted, but grew worse. Rather than stop recessions, barely in the second decade of managed currency e experienced the worst depression in our history. Instead of stopping the "boom-bust cycle" (which was actually the fault of earlier inflationary intervention), the Federal reserve accelerated it, even more so once the dollar was divorced from gold.

No, there is nothing to argue against gold. Except that it is not perfect. But that is precise what is offered to condemn it.

The arguments offered are of two types. Some argue that gold "can't increase to match growth" or "there isn't enough gold", but those arguments are the byproduct of our current system. Until we became besotted with inflationary paper, no one imagined money should "expand" to "match growth", nor did anyone believe we needed to keep prices stable. If prices fell, everyone except the sellers were happy, and if they rose, well, the sellers were happy then. But no one thought it was a crisis. (Ironically, despite the fears of unstable prices, fiat currency has created less price stability than we had on the gold standard. Our regular 3-5% decline in purchasing power would have been seen as a crisis in years passed.)

The original arguments were all about the imperfections of the gold standard. That sometimes banks would overextend themselves, and in that case banks would fail and deposit holders might suffer, as well as the economy suffering. But the solution, centralizing inflation, and insuring deposits, actually created more and worse inflation and crashes.

Likewise, there was the argument that gold did not allow the creation of continual growth, that is the supposed benefit of "infusions" of cash from time to time. However, can anyone say that since 1917 we have had "continual growth"? Or the other sacred cow "full employment"? Despite the claims of the fiat currency crowd, fiat currency can no more provide economic utopia than the gold standard could, but the gold standard was condemned on those grounds.

But we do not need to stick with economics. Look at gun control. Because some individuals may misuse a gun, we must all be regulated. Or food and drug regulation. The law already punished those who committed fraud. But because some honest mistakes might make it through, or because some might be harmed before the law stepped in, we are saddled with regulations which produce no better results, or even make things worse. ("Gun Control, The FDA and Regulating the Law Abiding", "Professional Education", "Licensing", "Business Licensing and Regulation", "Bad Economics Part 12", "Real Life and Regulation", , "Insider Trading") Time and again, because the law cannot promise perfection, because sometimes harm is done before we can intervene, or because sometimes fate is unkind, because sometimes blameless people come to harm, or those we would want to blame profit, many feel the need to destroy a very good system and replace it with something worse that promises perfection.

Which brings me to the final example, the one which is so much in the news today, and yet so poorly understood. The medical system. Without doctors and the free market in medicine, there is no medicine. Doctors, insurers, hospitals, pharmaceutical companies and the rest are not "keeping patients from care", they provide care to those they can, on terms they set. Without them there is no care. But, instead of delighting in how much care we can provide, the left laments that not everyone can get top notch care at no cost, and so destroys the entire system in order to avoid its imperfections. Yet again, imposing an even worse system just because the alternative is not perfect. (See "Redefining Insurance... To Actually BE Insurance", "The Insurance Sham", "My Health Care Plan", "Medical Reform, An Overview", "High Cost of Medical Care", "Reviving Nonsense in the White House".)

What we need to recall, and remind everyone else, is that perfection is not for this world, and sometimes in this life things are not quite as we would wish. ("Life Is Not Fair - And Trying To Make It So Makes Things Worse") But just because things don't always work out the way we would like, that is no reason to eliminate a system which has worked very well.  First, because very often the government is the wrong choice ("Tools",  "An Analogy For Government"), the wrong tool. Private charity and individual support is often a much better remedy ("Private Charity", "Private Charity Take Two", "Liberalism's False Dichotomy"), though one also rejected for being imperfect, as there is no way to legally compel private charity, making its receipt uncertain, and thus "imperfect". Second, because even if you might think the state is the right tool, even if you think the current system is imperfect, you have to ask if the solution does more good than harm, and in most cases, by focusing on one single issue, what I called "keyhole thinking" ("The Shortcomings of Pragmatism"), you end up creating solutions which cause many times more damage than they fix. ("Pragmatism Revisited", "Pragmatism Revistied, Again", "The Plural of Anecdote is Not Data", "Rules of Grammar and Pragmatism") And we need to keep both of those facts in mind, and remind everyone around us, whenever we hear an argument that a system must be changed due to some specific imperfection.
 
-------------------------------------------------------------------

* I often have argued that the left also dislikes market solutions because it does not allow them to make grand gestures aimed at "saving the world" ("Why We Need Adults", ""Selling Out"", "Cigarettes, Sudan and Abortion"). In addition, as it provides no easy heroes and villains ("The Nature of Evil", "Life Without Villains", "Enemies Into Villains", "Rethinking My Earlier Position") it does not provide the dramatic story that many, right and left, like in their politics. However, these reasons are, obviously, not openly stated, and thus are not relevant here. In any case, the arguments used to cover such feelings are the ones offered above, so even those who truly are interested only in the drama of becoming a world savior tend to use the argument that market solutions are imperfect.

** In "The Case For Gold" (Ron Paul and Lewis Lehrman), there is an amusing mention of the fact that Johan Most, noted anarchist, actually went on record taking sides in the gold versus silver debate, so strong was the opinion in the German immigrant community. Now, I will grant that the authors of that work do have some small problems (eg. choosing measures which show the greatest impact, such as always measuring price inflation in terms of the price of gold rather than CPI or another index), but nothing in their work is dishonest, they simply choose their arguments for the greatest rhetorical effect, which can sometimes be slightly misleading. Still, the discussion of the public involvement in the debate over inflationary silver money is shocking for modern readers, so used to apathy about even crushing federal debt, as well as consistent 5% inflation or worse. It is a bit depressing to realize how much abusive treatment we have come to take for granted from the government.

----------------------------------------------------

POSTSCRIPT

This is a topic I have mentioned many times before, in many contexts. Since I could hardly link to all those posts, I would recommend examining two related series of posts, which may prove interesting. First, my series "Bad Economics", which can be read starting from the most recent, "Bad Economics Part 18", and following the list of links at the bottom of the page. Second, my "web book" "Liberalism, Its Origins and Consequences", though it is as yet incomplete, which can be found by starting at "Liberalism, Its Origins and Consequences - Preface" and following the links to each successive chapter.

POSTSCRIPT II

In a sense, all of liberalism can be seen as an endorsement of assumed perfection over practical, good solutions. Rather than pursue gradual improvement through federalism, the free market and limited government, the liberals wish to impose their preferences, which they assume to be the perfect choice, on all by force (as that is what government is, regardless of what anyone thinks). That their solutions turn out to be far from perfect in practice is never an impediment to their arguments, they simply ignore their failures and harp on the "shortcomings" of workable, but realistic, solutions.