March 29, 2005

Unregulated Success

Russell Roberts at Cafe Hayek is talking (very intelligently and optimistically) about how he has an implicit trust in FedEx to deliver his package on time and confidentially, even though the process involves a lot of people he doesn't know and will never see.

I'd like to hit on a related point: regulation. If we had known nothing but the US Postal Service and some Senator suggesting opening the market up to competition, we'd no doubt hear most Democrats and at least a few Republicans saying it's unreliable and unpredictable; "we need government involved for the oversight and the privacy." In other words, we can't trust the market to provide affordable, fast, reliable, confidential parcel service.

Since we don't live in that alternate US, we all know that FedEx and UPS are tremendously successful services that are affordable and quite fast. But what if we'd never had them and then we were asked about a market alternative? No doubt most people would be at least more skeptical then than they are now of a market package carrier. Yet we know that any such fears are completed unfounded.

The lesson is clear: we need to stop shaping our view of the economy and businesses based on what is. Experience is a wonderful thing that ought to be examined for all it can teach us. But we shouldn't tie ourselves to past experience and then pass it off as science or reason. Tradition is not reason.

There's no great reason why a private market function for railways, retirement or other aspects of life couldn't work. But since we've had Social Security for seven decades and Amtrak for more than three, people feel accustomed to them.

Fear of change and lack of vision are horrible reasons to maintain an inefficient, rigid status quo.

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