Friday, February 08, 2013

How To Spoil an Excellent Case For Markets

"Cartman Shrugged: The Invisible Gnomes and the Invisible Hand in South Park" by Paul Cantor (Excerpted from The Invisible Hand in Popular Culture: Liberty vs. Authority in American Film and TV) and reported in Lew Rockwell’s lively Blog) HERE 
"Gnomes" thus undermines any notion that Mr. Tweek is morally superior to the corporation he is fighting; in fact, the episode suggests that he may be a good deal worse. Going over the top as it always does, South Park reveals that the coffee shop owner has for years been overcaffeinating his son, Tweek (one of the regulars in the show), and is thus responsible for the boy’s hypernervousness. Moreover, when faced with the threat from Harbucks, Mr. Tweek seeks sympathy by declaring, "I may have to shut down and sell my son Tweek into slavery." It sounds as if his greed exceeds Harbucks’. But the worst thing about Mr. Tweek is that he is not content with using his slick advertising to compete with Harbucks in a free market. He also goes after Harbucks politically, trying to enlist the government on his side to prevent the national chain from coming to South Park. "Gnomes" thus portrays the campaign against large corporations as just one more sorry episode in the long history of businesses seeking economic protectionism – the kind of business-government alliance that Adam Smith criticized in The Wealth of Nations. Far from the standard Marxist portrayal of monopoly power as the inevitable result of free competition, South Park shows that it results only when one business gets the government to intervene on its behalf and restrict free entry into the marketplace. It is the same story we just saw played out between Pan Am and TWA in The Aviator. Like Scorsese’s film, South Park does not simply take the side of corporations. Rather, it distinguishes between those businesses that exploit government connections to stifle competition and those that succeed by competing honestly in the marketplace.
The Town of South Park versus Harbucks
Mr. Tweek gets his chance to enlist public opinion on his side when he finds out that his son and the other boys have been assigned to write a report on a current event. Offering to write the paper for the children, he inveigles them into a topic very much in his self-interest: "how large corporations take over little family-owned businesses," or, more pointedly, "how the corporate machine is ruining America." Kyle can barely get out the polysyllabic words when he delivers the ghostwritten report in class: "As the voluminous corporate automaton bulldozes its way. . . ." This language obviously parodies the exaggerated and overinflated anticapitalist rhetoric of the contemporary left. But the report is a big hit with local officials, and soon, much to Mr. Tweek’s delight, the mayor is sponsoring Proposition 10, an ordinance that will ban Harbucks from South Park.
In the ensuing controversy over Prop 10, "Gnomes" portrays the way the media are biased against capitalism and the way the public is manipulated into antibusiness attitudes. In a television debate, the boys are enlisted to argue for Prop 10 and the man from Harbucks to argue against it. The presentation is slanted from the beginning, when the moderator announces: "On my left, five innocent, starry-eyed boys from Middle America" and "On my right, a big, fat, smelly corporate guy from New York." Postem tries to make a rational argument, grounded in principle: "This country is founded on free enterprise." But the boys triumph in the debate with a somewhat less cogent argument, as Cartman sagely proclaims, "This guy sucks a--." The television commercial in favor of Prop 10 is no less fraudulent than the debate. Again, "Gnomes" points out that anticorporate advertising can be just as slick as pro-corporate advertising. In particular, the episode shows that people are willing to go to any length in their anticorporate crusade, exploiting children to tug at the heartstrings of their target audience. In a wonderful parody of a political commercial, the boys are paraded out in a patriotic scene featuring the American flag, while the "Battle Hymn of the Republic" plays softly in the background. Meanwhile the announcer solemnly intones, "Prop 10 is about children. Vote yes on Prop 10 or else you hate children." The ad is "paid for by Citizens for a Fair and Equal Way to Get Harbucks Out of Town Forever." South Park loves to expose the illogic of liberal and left-wing crusaders, and the anti-Harbucks campaign is filled with one non sequitur after another. Pushing the last of the liberal buttons, one woman challenges the Harbucks representative with the question "How many Native Americans did you slaughter to make that coffee?"
Prop 10 seems to be headed for an easy victory at the polls until the boys encounter some friendly gnomes, who give them a crash course on corporations. At the last minute, in one of the most didactic of the South Park concluding-message scenes, the boys announce to the puzzled townspeople that they have reversed their position on Prop 10. In the spirit of libertarianism, Kyle proclaims something rarely heard on television outside of a John Stossel report: "Big corporations are good. Because without big corporations we wouldn’t have things like cars and computers and canned soup." And Stan comes to the defense of the dreaded Harbucks: "Even Harbucks started off as a small, little business. But because it made such great coffee, and because they ran their business so well, they managed to grow until they became the corporate powerhouse it is today. And that is why we should all let Harbucks stay."
At this point the townspeople do something remarkable: they stop listening to all the political rhetoric and actually taste the rival coffees for themselves. And they discover that Mrs. Tweek (who has been disgusted by her husband’s devious tactics) is telling the truth when she says, "Harbucks Coffee got to where it is by being the best." As one of the townspeople observes, "It doesn’t have that bland, raw sewage taste that Tweek’s coffee has." "Gnomes" ends by suggesting that it is only fair that businesses battle it out not in the political arena, but in the marketplace, and let the best product win. Postem offers Mr. Tweek the job of running the local Harbucks franchise, and everybody is happy. Politics is a zero-sum, winner-take-all game in which one business triumphs only by using government power to eliminate a rival; but in the voluntary exchanges that a free market makes possible, all parties benefit from a transaction. Harbucks makes a profit, and Mr. Tweek can continue earning a living without selling his son into slavery. Above all, the people of South Park get to enjoy a better brand of coffee. Contrary to the anticorporate propaganda normally coming out of Hollywood, South Park argues that, in the absence of government intervention, corporations prosper by serving the public, not by exploiting it. As Ludwig von Mises makes the point: "The profit system makes those men prosper who have succeeded in filling the wants of the people in the best possible and cheapest way. Wealth can be acquired only by serving the consumers. The capitalists lose their funds as soon as they fail to invest them in those lines in which they satisfy best the demands of the public. In a daily repeated plebiscite in which every penny gives a right to vote the consumers determine who should own and run the plants, shops and farms."
You would have to read the whole piece to fully appreciate the plot upon which Paul Cantor extracts the economics threaded into the plot in the original Southpark children’s tv script and its plotline (follow the link).   But I was struck by it as an excellent introduction to the commercial market economy and an expose of the leftist critique of capitalism, complete with the usual ogres that abound in leftist propaganda against markets.
If only rightist writers would leave it there instead of linking markets to the mysticism of so-called “invisible hands” which have nothing to do markets whatsoever, especially when linked directly to the name of Adam Smith and “his famous notion of the invisible hand”. 
Paul Cantor adds:
“The Great Gnome Mystery Solved
But what about the gnomes, who, after all, give the episode its title? Where do they fit in? I never could understand how the subplot in "Gnomes" relates to the main plot until I was lecturing on the episode at a summer institute, and my colleague Michael Valdez Moses made a breakthrough that allowed us to put together the episode as a whole. In the subplot, Tweek complains to anybody who will listen that every night at 3:30 a.m. gnomes sneak into his bedroom and steal his underpants. Nobody else can see this remarkable phenomenon happening, not even when the other boys stay up late with Tweek to observe it, not even when the emboldened gnomes start robbing underpants in broad daylight in the mayor’s office. We know two things about these strange beings: (1) they are gnomes; (2) they are normally invisible. Both facts point in the direction of capitalism. As in the phrase "gnomes of Zurich," which refers to bankers, gnomes are often associated with the world of finance. In the first opera of Wagner’s Ring Cycle, Das Rheingold, the gnome Alberich serves as a symbol of the capitalist exploiter – and he forges the Tarnhelm, a cap of invisibility. The idea of invisibility calls to mind Adam Smith’s famous notion of the "invisible hand" that guides the free market.
This is an excellent piece by Paul Cantor.  However it is also truly disappointing in the second quotation.  For me Lew Rockwell’s otherwise excellent cases for markets in his Blog are usually compromised by the routine careless citing of the IH metaphor in pro-market cases.  This gives his biting critiques of Leftist cases against markets an aura of skepticism of how markets really work.  Markets always work by means of their very visible and quickly changing prices of goods and services made available for market exchanges.  There is nothing invisible in the functioning of prices in the market transactions that are completed in their billions hourly across the world.  No government bureaucrats, be they ever so intelligent or well informed (or even well-meaning), can hope to do as well as the world’s markets through visible prices.  Nobody can see into the minds of the billions of producers and the decisions they make to supply each other with what they buy and sell in complex supply chains, nor the billions of consumers who buy the final products and services in vast consumer markets. It just ain’t possible. 
We can predict with some degree of accuracy how atoms and their particles operate under specified conditions because they are subject to identical physical laws everywhere in the universe.  So how can anybody predict how every human will act?  No way! Hayek called this the "fatal conceit" and how right he was (Smith called it someone "being wise in his own conceit").  
Why can’t we just accept those facts about markets without turning their great efficiencies into fantasies about an invisible hand? If entrepreneurs get it wrong in any instance they lose their capital. Worse, why do Leftists mock or blame Adam Smith for rightist ideology which was no part of his thinking?  Why do Rightists ignore what Adam Smith actually wrote?
Human markets conduct their billions of transactions without central direction.  They are not “led by an invisible hand” that works mysteriously in the background.  There is no “invisible hand” of markets, and did Smith not say there was such an entity. Like the wind, an individual’s motives are not seen by others, but the consequences of their buy-sell decisions are felt across the ever sensitive prices that their motives may occasion.  Those who supply goods and services in markets in supply or demand chains do not need to know the motives of everybody else whom they transact with.  Apart from any other issue, motives across a population vary and often conflict. Entrepreneurs who get their prices right more often than they get them wrong make profits, those who don’t make losses.
Of course there is a role for governments in market economies in the effectiveness of the State’s justice system that sets the rules for the conduct of producers and the rights of their employees, and the rights of consumers.  Laws and regulations are inevitable in any well functioning market system. These regulations backed by laws have existed since markets came into being (I read recently of some very early regulations set in the 12th century; without doubt regulations existed in earlier Roman periods).  Rightly there is potential for much debate about the extent and purpose of any law or regulation, but that there are regulations is beyond dispute (short of anarcho-communism or anarcho- libertarianism, both equally utopian).


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