Consumers’ Ignorance of Production Details a Blessing, Not a Curse
One of the things I like best about production in a free economy is that consumers don’t have to think about it. If each of us had to pay attention to the details of how all our things are made — where the materials come from, what knowledge is needed to change or combine materials, how they’re transported to us — we wouldn’t have a moment to devote to our own lives. It would take all day to examine the intricate processes behind even the most ordinary household items. A caveman, on the other hand, had to know where his things came from, because he had to procure them all himself. The fact that we don’t think much about the production of the material goods we use is a sign of economic progress.
A Rhodes Scholarship recipient who plans to study food policy disagrees:
“I think the biggest problem with the U.S. food policy is that we don’t think about it,” Barmeier said. “We don’t have a single food policy strategy. We don’t think about how the food system from the farm to the table is all related [...]“
It’s no coincidence that he also wants a single policy to direct food production. The alternative to the price system — in which all the relevant information for consumers is captured in a product’s price — is central planning.
We can’t all think deeply about food policy and coordinate our thoughts, so we’d have to designate one person to do the thinking for us. This economic system is vulnerable to the foibles and mistakes of the central planner. And it’s disastrous for individuals, because the planner’s errors are amplified throughout the economy and cause shortages and waiting lists. If an individual, not thinking particularly hard about where food comes from, goes to the store and buys too few pecans for a pie, he can always go back to the store for more. No one else loses out. But if a thoughtful planner underestimates how much food people in general need, everyone goes hungry.
When this student takes a break from writing Farm to School proposals (yes, he’s really done that) I hope he’ll read “The Use of Knowledge in Society,” or maybe “I, Pencil,” for a different perspective.
I have to disagree – albeit slightly – on this one.
Price alone does not always communicate certain information that some will find to be very important when deciding what items to purchase. The market’s allowing a good or service to be provided relatively cheaply does not necessarily disclose the quality of the good or risks (either to the purchaser or entailed in the production process) associated with its use. Some people would prefer not to buy certain cheap goods if they were to become aware of the conditions under which they were produced. For example, if people were to discover that a cheap product was made possible using slave labor (which still exists in many parts of the world), or that corporate farms are producing foods lower in nutrients than their smaller counterparts, they might quite reasonably choose to purchase only from producers willing to demonstrate that they rely on the preferred production methods. But the only way for consumers to know these things is for someone to generate information related to the supply system so that interested consumers may educate themselves.
Naturally, I agree with you that it is not the government’s responsibility to present this information – it should come from private watchdog groups – but I would also agree with the young scholar to the extent that it is important for us as consumers to think about where our goods (food and otherwise) are coming from.
Comment by Dave Roland — November 25, 2009 @ 10:51 a.m.
Thanks for your comment. I don’t think everyone needs to think about where stuff comes from, but I see your point that some people will want more information (which the market can provide as well).
Comment by Sarah Brodsky — November 25, 2009 @ 10:57 a.m.