Friday, January 15, 2010

They Will Kill All The Trees In The Name Of The Forest

This phrase encapsulates the fear I have for Haitians.

It is also exactly what happens when, for instance, the government decides to do something for the economy. They think of designing markets and systems of control, but the plain reality is that they are looking at various numbers aggregated from individual transactions. So, in the name of the economy they do things which drastically reduce the number and nature of transactions.

And then they seem quite confused when it becomes obvious there has been a severe reduction in the economy. If you want a forest, let the trees grow. Stop pushing transaction costs up and making valuation impossible.

Chaos is undesirable, but order arises out of natural processes. An order imposed finds the underlying natural processes working against it. The artificial system constantly erodes, and people with power burn through vast resources to keep it in place- until they run out and then the system collapses.

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