Just perusing the NYT today I read three articles in succession that all had to do with the power of markets to motivate people, but each article was missing in-depth analysis of what markets are and what they motivate people to do.
Before I critique the articles, you need to know something about real markets. When I say real, I’m not talking about the markets of Milton Friedman, or even Adam Smith. Whether or not we want certain markets, if demand exists the market will arise, provided the people have some money.
Often called black markets or grey markets, conservatives don’t seem to adore them. But love them or hate them, you’re going to get markets. And they’re going to make people do crazy things. Crazy like beheading the competition, and I’m not talking metaphorically. See the battle between pharmaceuticals in Mexico.
First up, the immigration law in Arizona. Let’s leave aside the facts that actual undocumented immigration has been going down, and crime has been decreasing, and that the real incentive behind the law is to “take back our country,” probably from a non-white president.
Nowhere in the article does it ask why people risk their lives to come across. They come for jobs. Next question. Why aren’t there enough jobs where they come from? Now the answers get more complex, but all related to markets, specifically the markets of international capital. We can revisit Adam Smith, who was a big fan of trade between nations (actually, states). Although Smith thought we should be trading goods, capital should remain at home. This was such a no-brainer for him, that he didn’t even think there needed to be restrictions on the flow of capital. He thought people would be constrained in their behavior by their love of country. His mistake. Instead, the power of markets trumps patriotism. You can’t begin to approach real immigration reform without looking at the entire market system, i.e. seeing what’s going on with capital flows relative to labor markets. Capital (meaning finance) seeks the greatest rate of return. Guess what. So does labor.
Second is an article that explores the tension between free health care in Haiti, and private health care. To first clear things up, we need to call a spade a spade (a saying from the Greeks). Private health care really means for-profit health care. There could be nonprofit health care, but although the author does call the US system for-profit, he claims the little “private” clinics in Haiti are analogous to our for-profit system. He also uses a little slight-of-hand by returning to calling our system “private.” There is a big difference, and they should not be conflated.
A small nonprofit clinic needs to make enough money to support its staff and overhead. A large for-profit insurance company in the US needs to make a profit for its investors. Also, please consider the incentives, which is what markets are all about. If you make money off of sick people, then the more sick people, the more money you make, which doesn’t give you any incentive to prioritize preventative medicine. Instead, it gives insurance companies a reason to fund campaigns to thwart policy that restricts fast food and cheap sucrose. (I’m not saying they do, but I wouldn’t be surprised.) The power of the market gives insurance companies reason to fight any reform.
I think you’re beginning to get the gist of how to analyze markets. It’s a bit like “follow the money.” Try it yourself on the following articles!
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