Dorothy Parker knew how to give credit where due — in verse, no less: “If, with the literate, I am / Impelled to try an epigram / I never seek to take the credit; / We all assume that Oscar said it.” Hillary Clinton, being Hillary Clinton, once stole a perfectly good line from Oscar Wilde, and, being Hillary Clinton, messed it up: “The market knows the price of everything but the value of nothing.” Wilde’s formulation, in Lady Windermere’s Fan, did not describe “the market” but “a cynic.” No doubt Mrs. Clinton believes the market to be cynical, or the product of cynicism.
The belief that markets are cold and inhumane is one of the great errors of our time, and it leads to a great deal of public stupidity, from British unionist Len McCluskey’s declaration that “there are some things too important to be left to the market” to endless Democratic demands that we put “people over profits.” Mitt Romney was mocked for maintaining that “corporations are people,” but that mockery is only one more piece of evidence that Mr. Romney is a good deal more intelligent than his critics: Of course corporations are people. That is what the word “corporation” means — a group of people acting as one body (corpus) toward some shared end. “Corporation” assumes “people” the way “hive” assumes “bees.” Profits accrue to people. Scratch an evil corporation and a retired teacher bleeds: Government pension and benefits funds such as CalPERS are among the largest shareholders in the United States, and the world. Two-thirds of Chevron shares are held by mutual funds, which are in turn held by what Mr. Romney recognizes, seemingly alone, as people.
Markets are people, too. Prices are not economic abstractions; rather, they are the expressions of real preferences belonging to real people. They are a snapshot of reality at a given moment. Far from being disconnected from human concerns, they are the means by which a great many human concerns are quantified and negotiated. They may not seem rational to some people, but they are. They are the consequence of how people go about rationally pursuing the things that seem good to them. When somebody says that a market is not rational, what he really means is that people are making choices other than the ones he would make for them. It is not irrational that the market for reality television programming is many, many times the size of the market for productions of Shakespeare plays — people prefer Duck Dynasty
. If the purpose of an economy is to help people get what they want, then the economics of reality television are not irrational. They’re only irrational if you believe that the purpose of an economy is to help people get what you think they should want.
Markets may seem to us sometimes inexplicable — and people’s desires may in fact be irrational — but they are not arbitrary. They are connected with real people, with real lives, real problems, and real needs. “Scarcity” is the word economists use to describe the fundamental reality of material life, which is that it is impossible for everybody’s desires to be satisfied perfectly. Scarcity is reality, and reality is not optional; consequently, every market will leave some parties imperfectly satisfied. The political entrepreneur who promises to apply a “rational” model to that situation and eliminate the problems associated with scarcity is promising to make reality other than what it is. He is a snake-oil salesman.
Unlike markets, politicians are arbitrary, as is being demonstrated in spectacular fashion by President Barack Obama’s latest on-the-fly amendments to the Affordable Care Act, through which he is handing out exemptions from the individual mandate — a pillar of the program — to those who have had their insurance policies canceled because of the Affordable Care Act. Which is to say: The president has amended the law in order to prevent the law from being a law that legally does precisely the thing the law was designed by lawmakers to do. This has even the most hard-believing initiates in the presidential cult experiencing a crisis of faith. Imagine the dark night of Ezra Klein’s soul! And it’s even money as to whether Jay Carney ends up in a hairshirt or a straightjacket when he finally cracks. He increasingly has that “he-did-what?” look on his face, with the slightly dilated eyes, that we remember so fondly from Dee Dee Myers, who so often seemed to spend her press conferences learning about presidential misadventures rather than explaining them.
The president has grown unpredictable, predictably.