26 September 2008

Fumdamentalist marketeers

Dr Grumble knows a bit about markets. We all do. We use them practically every day. Dr Grumble has read books on markets. He has even read the Best Book on the Market. All the books Dr Grumble has read on the topic extol the virtues of markets. The authors of these books have a blind faith in markets. Their fervour for markets is almost religious. And when you have a religious fervour you tend to stop thinking. Unless, of course, your religion is Church of England in which case your fervour may be so damped down that some thinking is preserved. Today's Anglican leaders do think. They even tell jokes. Here's one. It's not particularly funny but it says something important. It's a joke with a message.

Q. How many economists does it take to change a light bulb?
A. None. The market will sort it out.

The Best Book on the Market is well written. It's good read. And it's short. So if you want to reinforce your faith in markets give it a read. But Dr Grumble suggests that you make it an Anglican-style faith; remain critical and remember the light bulb joke and it's message.

It's couple of months since Dr Grumble read the Best Book on the Market but as far as he recalls it is full of rather good anecdotes about markets. The underlying message is that markets have been around for ever, are everywhere and work. It's all very convincing. It's convincing because it is essentially true. Just as the essential truth of a religion can spawn religious fundamentalism, the essential truth of the value of markets has spawned a market fundamentalism. Governments in the hands of religious fundamentalists are not good. Nor are governments in the hands of market fundamentalists.

So what is wrong with markets? Are they all wonderful? Are they they only way? If you are are marketeer don't at this point get too worried. Dr Grumble is not a communist. Communism might be a nice idea but plainly it does not work. Markets are a nice idea. They may work and they may not. Where they work we need to capitalise on them. Where they don't we need to recognise that and find some other way. But we must not take a mindless fundamentalist approach.

Dr Grumble does not want particularly to point out the weaknesses of markets. He has no wish to knock a man when he is down. But there is no doubt that the human greed that brings so much good from the market can also bring a lot of bad. Long before our latest economic woes Dr Grumble used to ponder over the wisdom that enabled some of his patients to earn really enormous city bonuses but apparently to be protected from losing anything. It was bonus versus no bonus. Not bonus versus annihilation. So it is hardly surprising that with everybody being paid in a way which might enable them to make a small fortune but would allow them to lose nothing risk taking was the norm. And this money was all made from other people. It cannot have come from nowhere. It was not victimless. Yet much of the work was essentially unproductive. It was no more productive than a visit to the betting shop. And on this background of greed and bonuses when those in charge could win but not lose banks keen to get on the back of the housing boom lent money to those who could not afford to pay it back. All the traditional safeguards to prevent this were thrown out of the window for the sake of personal greed. And the banks that led the way were the first to fall. The bank depositors' money was at risk but was the bank manager going to lose the shirt from his back? Of course not. The one person who would not lose his home would be the manager of the bank which caused all the misery. The borrowers might lose their homes but not the lenders. But who was culpable? That's enough to make the Grumble point.

So if, dear reader, you now agree with Dr Grumble that markets don't necessarily work in places like banks and the City where capitalists thrive will you please just consider that markets may not work too well in healthcare either?

So from Archbishop Sentamu's joke about the light bulb here's a serious question:

Q. Which of the following patients can the market deal with well: Mr Smith with a sudden severe heart attack, elderly immobile Mrs Jones confined to her house with varicose ulcers, blind Mr Patel (who doesn't speak English) and has diabetes complicated by endstage renal failure and Mr Worried-Well City Slicker who is just worried?

A. Mr Worried-Well City Slicker.

So how has the market performed in the health service when it was asked to change a light bulb. That's a difficult one. Dr Grumble has no data. But the market was asked to put in some new sockets. You can see how well the market operated here. New sockets are the least of our problems in providing health care. If we can't get that right what hope is there for Mr Smith, Mrs Jones and Mr Patel?

This post is far too serious. We are in serious times. To cheer ourselves up let's finish with an apposite joke from none less than the Archbishop of York:

You will well know the story of the surgeon, the vet and the economist who were arguing that theirs was the world's oldest profession.

"Just look at the first chapter of Genesis," said the Surgeon.

"God created male and female in his image, there is no doubt that anyone who could put the human body together like that must be surgeon !"

"Not so fast," said the Vet. "Before he got round to making humans, God made the animals, everything that flies in the air and swims in the sea. So it stands to reason that God was a Vet."

"Nonsense" said the economist. "before he made man or the animals, God made the world out of chaos."

"So what ?" asked the surgeon and the vet.

"Well, who do you think made the Chaos ?" replied the economist.

Many thanks to Archbishop Sentamu for the jokes. He has a few more here hidden in amongst some important messages.

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