We win with markets

Paul Rubin made a great point in his Wall Street Journal op-ed (thanks to Don Boudreaux, Cafe Hayek, for pointing to it).

Economists should point out that what makes markets thrive is cooperation, while competition plays a supporting role. This might help the perception of markets. As an example:

…we might say that a poor person has been outcompeted in the market. Or we might say that a poor person cannot successfully cooperate with others because he lacks valuable skills and has little to sell.

Again, the words matter because viewing the circumstance in terms of competition could lead to penalizing those who are viewed as outcompeting him, even though they did nothing wrong. It might even lead to banning certain terms in transactions—with minimum-wage laws, for instance—that make it even more difficult for the poor person to cooperate. The cooperative metaphor, by contrast, would suggest that the solution is increasing the skills of the poor person, giving him something to sell on the market.

Unfortunately, Rubin would still need to convince many other economists that minimum wage laws make it more difficult for the poor person to cooperate.

How bad are things?

As we face what seems to be an unending stream of bad economic news, I notice that the new trend in home improvements is outdoor living spaces.

Folks are upgrading their backyards from grassy patches used for playing catch and slip-n-slide with their kids into open-air living and entertainment spaces equipped with working kitchens, cozy furniture and mood landscaping inspired by pool decks of posh Miami resorts.

Another recent things-can’t-be-that-bad trend was furnishing in-home movie theaters complete with state-of-the-art viewing equipment, rows of leather-clad reclining seats and even theater-style popcorn machines.

These trends also offer a good lesson for effectiveness of “the market”.  Outdoor living spaces and in-home theaters have long been custom luxuries enjoyed by the wealthy.  As the trend has caught on, suppliers have responded by making the furnishings and equipment affordable to folks at all levels of income.