Friday, March 27, 2009

Free Markets As A House

This gets to the heart of the issue why the free market did not fail.

[. . .]Here’s an analogy that illustrates what happened.

In April, 2001, Private Sector Architects draws up plans for a three-story house. The prospective owner hires Capitalism Builders to construct it. The Free Market Sawmill is chosen to supply the lumber. The project is scheduled to take eight years. Construction begins.

Every night, men from the U.S. Bureau of Standards sneak into the Free Market Sawmill and the offices of Capitalism Builders and replace all of the rulers and tape measures. Some days the inches get longer, but most days they get shorter. By March, 2008, the inch is only 25% of what it was seven years before.

As a result, the two-by-fours being produced by the Free Market Sawmill in 2008 have only one-sixteenth the load-bearing capacity of 2001 lumber. Some workers express concern because the latest two-by-fours are looking pretty flimsy. However, when checked, the boards still measure two inches by four inches.

In September, 2008, a group of school children is taken on a tour of the just-completed third floor of the house. The building collapses, causing many injuries. The Krugman Blame Bureau surveys the wreckage and declares that Capitalism and the Free Market have failed.

Read the entire post. Thanks to Jim for the link.

Cross posted at the Richmond Tea Party: The Blog.

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