Selfishness, Greed and Capitalism

Selfishness, Greed and CapitalismThe problem with delegating power from the individualto the state in the way Chang and Ariely propose is thatthe government is made up of the same flawed men andwomen who are supposedly so irrational in the marketplace.It is far from clear that we can expect the governmentto be ‘reasonable and thoughtful’ and there are few,if any, historical precedents for the state setting ‘optimalmarket prices’. Furthermore, if consumers suffer from systematicbias, so do voters. Can we expect irrational politicianselected by irrational voters to be more rational thanthe average Joe? In a famous rhetorical question posed inhis first inaugural address in 1801, Thomas Jefferson (2001:5) suggested that we could not:Sometimes it is said that man cannot be trusted with thegovernment of himself. Can he then be trusted with thegovernment of others? Or have we found angels, in theform of kings, to govern him?If buyers, sellers and politicians were all equally irrational,it might make little difference who makes decisionsin an economy, but there are reasons to think that politicians’decisions will often be worse. Their incentives toseek the best outcomes for the electorate are weaker thanthe incentives individuals have to advance their own intereststhemselves. They are surrounded by vested intereststrying to persuade them to pass laws that will benefit aminority at the expense of the majority. And even if thepolitician can gather together an elite team of wiser personswho are objectively more rational than the man on30