Most of the People, Most of the Time
By Amy Willis
Do you consider yourself to be “free market”? If so, what does that mean? Can you be a fan of the free market, but not necessarily its results? Maybe sometimes you feel like arguing for free markets is like choosing the prettiest pig. Perhaps you’ve always been uneasy with the idea of free markets. Do you know why? In this episode, EconTalk host Russ Roberts welcomes back Mike Munger to work through these questions.
For Munger, the argument for for markets is not about their perfection. ‘No; it is that division of labor is a way of fostering specialization. “The argument for free markets is that you can break out of the small command economy into a system where I don’t need to know the person that I’m buying things from.” In the words of Munger’s mentor, Douglass North, markets are for reducing the transaction costs of exchange.
Now we’d like to hear what you took away from this episode. Have you become a greater or lesser fan of free markets? Has the way you define free markets changed at all after this episode? Share your thoughts in the comments, or use the prompts below to start your own conversation offline. As always, we’re eager to continue the conversation.
1- Compare Roberts’ and Munger’s definitions of the free market. How do they differ, and what prompts Munger to quip, “economists are always talking about economic freedom as if it were freedom,” and what might it mean to advocate for a “presumption in favor of liberty” instead?
2- Munger makes the perhaps surprising claim that comparative advantage is an idea whose time has passed. Roberts says that David Ricardo‘s contribution has overshadowed Adam Smith‘s more important one. Explain what each means, and the extent to which you agree.
3- Why does Munger argue we should distinguish between moral communities and moral orders? How does it follow from this that socialism should be considered a moral anarchy? How could rule-based utilitarianism (as opposed to discretion) be better employed to solve conflicts in markets and politics? (Hint: remember the Munger-ism, Every flaw in consumer is worse in voters.)
4- Roberts asks Munger if he believes in any agencies that restrict markets and trade, as Roberts does. (Roberts admits he favors pollution regulations from the EPA, while also admitting he believes the current iterations to be poorly designed.) How does Munger respond? What does Munger mean when he says perhaps the greatest problem with bureaucracy is not corruption in the public choice sense, but a certain kind of self-interest?
5- Munger insists that many people think markets are what happen when the state does nothing. That’s not right, he says. Markets are what happens when the state does the right kind of nothing. What does he mean by this, and how does he answer Roberts’ question with regard to the dominance of Big Tech firms such as Google and Facebook?