I’ve been thinking about this for quite some time. The more I get to reading about fast food marketing, tobacco industry lobbying, or any other actions by a major corporation to obscure what many would consider the less than admirable aspects of their trade, the more I get to asking myself what those most adamant about defending capitalism have to say about education. It seems if the premise of your economic philosophy was that consumers drive innovation by making informed decisions, shouldn’t an extremely well-educated (and, thus, I assume, well-informed) populace be critical to your philosophy? Moreover, shouldn’t being a well-informed, critical consumer be a civic duty?
Then, a couple of months ago, I started thinking about it even more when Richard Posner mentioned in passing, on On Point, how important being informed was.
It seems to me that a valid argument could be made that the most prominent proponents of free-market capitalism place more importance on getting consumers to consumer than on establishing accountability and efficiency in the market via educating the populace.
My questions:
What did people from Adam Smith to Milton Friedman and Bill Buckley say about the importance of education, if anything, or at least the importance of making sure that the consumer is as informed as possible?
Shouldn’t capitalists be the most ardent advocates for a strong education system, even perhaps making an exception to their aversion to public institutions, knowing that the market cannot be efficiently guided by an unthinking, uninformed, apathetic population?
I realize that Adam Smith might not have necessarily been a capitalist. I don’t know. I do know that in most of my discussions with free-market advocates he is cited in the same way that most people cite the Founding Fathers for conservative purposes. In a sort of “this is what they said, we have no reason to question it” way.
I want to be clear, this is not a discussion on the merits of capitalism. I’m curious specifically about the relationship between free-market advocacy and a well-informed consumer base.
Also, please don’t read too much into my question. As tends to happen with this sort of question, it may seem that one could divine my personal beliefs, and thus my ulterior motives, by reading between the lines. I’m neither pro- or anti-capitalist.
Well yes, ideally having educated consumers can be beneficial but ultimately it doesn’t matter as money can be made off of idiots and smart people alike.
Capitalists generally ARE for a strong education system. Our education system is based around creating workers after all.
Libertarian types tend to be against compulsory schooling. I tend toward that end of the spectrum myself. Not a big fan of it.
Well, then, do you think I’m misinterpreting the premise of capitalism that free-markets will always produce the most efficient outcomes because consumers will choose what’s best? Or is it simply to make money?
My point isn’t they aren’t for a strong education system, it’s that insuring a well-informed, educated consumer base exists seems like it should be a fundamental principle of capitalism.
I think you may be conflating what is the “most efficient” with what is the “best” for society. A free market will be extremely efficient in getting things made and into the hands of the people who want them. Period. Whether or not those things are good for society in some social sense is another matter.
I also think you’re conflating “well-educated” with “well-informed”. The free market is best served by the latter, and is not very concerned with the former. The market is concerned with the manufacture and transfer of goods and services. It doesn’t matter what those goods and services are or if they are actually beneficial to society or individuals. So a market that can discern differences in offerings can better select goods and services based on their preferences.
A better educated populace might make wiser decisions, and be less susceptible to outlandish claims by those trying to sell those goods and services, but that’s more of a commentary on the type of society that will be produced than the efficiency of any market, which, again, is solely concerned with creating and dispersing those things efficiently.
Education can have an externality problem. The market works best when the people responsible for benefits and costs of a transaction are the only parties involved. Unfortunately for a first-pass, free market education system this is not the case. I benefit when you are educated, but I don’t pay for your education. This would imply that the first-pass, free market system for education would tend to undersupply it. So we should probably attempt to find a way to subsidize education: because society as a whole benefits some, it should also pay some of the cost. How much? I dunno. In most of the west I believe education is oversupplied, but how and how much to cut back? I dunno.
I’m not sure ardent capitalists think about such things because it implies that there is some “correct” pattern of consumption and that the current pattern doesn’t meet the ideal. For example, a society with large wealth inequalities may see increased demand for certain high-priced luxury goods, like yachts. You can look at that demand in one of two ways: either the free market is working fine because the demand for yachts is being fulfilled, or the increased demand for yachts shouldn’t exist in the first place but does because of the wealth inequality. Same thing with uneducated consumers. If consumers are wasting their money on a bunch of worthless crap, a capitalist making lots of money fulfilling the demand for this worthless crap might not see a problem.
Is that really as far as free-market advocates claim the system will go? Just efficiently get consumers what they want? While I don’t deny that that is integral, is not the benefit of the market also to advance society? Any debate I’ve ever had about health (fast food), climate change, etc., I’ve had at least one person say, “If _________ is better, the market would have already shifted to provide it for the consumers who would undoubtedly want it.” Which gets to back to my point of consumers having to be educated.
Here I have to make a clarifaction. When I say well-educated, I’m not referencing how many degrees someone might have, per se. Being an educated consumer, in this sense, would mean a consumer who knows more about what he’s buying than how much it costs compared to other products and what the specs. Being educated means learning about what goes into making the product, knowing the debates about what the possible repercussions could be in the long run for buying the product, etc.
I think there are a large number of free-market proponents who believe not only that the free-market is the best way to get products made and in the hands of the consumers, but also that advancement and betterment are results of the free-market system. Contrarily, they often seem to think that government regulation impedes the free market’s ability to perform as such.
As I’ve stated in other forums, subsidizing primary and secondary education in the United States for those who cannot afford it passes the ‘externality’ test in my opinion, since an uneducated underclass poses a threat to our national competitiveness and ultimately, our security. It’s in my interest and (I believe) my fellow citizen’s interest to provide resources for this, for those who cannot provide those resources for themselves.
I don’t believe the same holds for higher education. At least for the moment. I believe there is plenty of evidence to support the notion that enough of the reward for higher education accrues to the individual recipient that they should finance it themselves.
The question that we have addressed in other threads is how do you address that externality. In other words, what is the problem you are trying to solve and the best way to solve it?
Vouchers or straight cash to the needy, similar to the EITC, is my position. Along with abolishing the public school system, the Federal Department of Education, and returning the corresponding property and income tax dollars to the citizens.
Well if they’re going to harp on oversimplified-for-the-sake-of-parsimony theories, they should at least have the decency to let you know of some of the simplifying assumptions they make. or not.
Fraud is a violation of an agreed-to contract, which is addressable in a court of law. No free-marketeer or libertarian would ever argue otherwise.
If you’re going to go off on the Der Trihs-type strawman psychotic ramblings of free marketeers selling their children into slavery, burning their grandmothers at the stake, or encouraging lawn mowing companies to deliberately loosen their blades in an effort to kill people, please let us know in advance. It will give us time to configure our ‘ignore this poster’ filters accordingly.
no court of law in this country would agree with that definition of fraud in a million years. you defined fraud as a breach of contract which is way wrong.
but thanks for recognizing that the world isn’t as glib as your 3-point-plan-to-a-perfect-market would suggest.
I’d argue that in the absence of an educated consumer base, regulation can step up to fill in the gaps. The more educated your consumers are, the less of a need for regulation.
Yes but what you don’t get is that your simplifying assumptions of the world assume a whole heck of a lot of shit that isn’t accurate about the world. And then you preach it as gospel and expect everyone to get in line.