Red Plenty

Benedict Evans: Part of this is that like in most non-emotive fields, we kind of do, like you understand, people understand that, you know, if you make, you know, more employment regulation tends to produce slower growth but more protection for employment and you you're choosing a trade-off. You, people kind of I think everybody on both sides of that equation understands that that, that's a trade-off and you're choosing one versus the other.

The point is you can have a fully functioning free market and you can regulate some of the negative externalities of free markets that anybody in any part of the economic spectrum understands there are negative externalities to free markets. You can also have like a government provided alternative. You can have the government do the fire department where you have some of the kind of most obvious gaps between the US and Europe it seems to me sometimes are in places where you kind of have neither.

So the US neither has a government-controlled healthcare system nor a free market healthcare system. Do you see what I mean? You have neither a government-controlled housing which you have in like in weird places like Singapore nor a free market in housing. So you kind of break the free market. So you stop the price signaling. This is like the great insight of Hayek is that pricing is a signal. Pricing is an information system. It's telling people what's wanted. It's not, it's not just a signal of worth. It's a signal of demand.

There's a, a fascinating book I read a while ago called "Red Plenty," which is about Soviet central planning in the '60s, '70s, '80s and it's about sort of what happens when you have a central planning that just cannot cope with the level of complexity of a sophisticated economy in the '60s and '70s as opposed to let's make grain and tractors and locomotives in the '20s and '30s and steel which already kind of works. But once you actually have a sophisticated industrial economy, central planning can't handle the complexity. And so you try and create incentives and structures around that while not having pricing and that just doesn't work.

I suppose there's a sort of a generalized point which is like a market economy is a system and if you pull a lever here something will move there and you can't just pull a lever here and say, "Well, I don't want that to move because it's a democracy." It will move anyway and so you have to understand how the system works and understand what consequences you want from that and what your parameter, parameters are within this.