Friday, June 17, 2005

The miracle of breakfast

There'll never be a perfect breakfast eaten until some man grows arms long enough to stretch down to New Orleans for his coffee and over to Norfolk for his rolls, and reaches up to Vermont and digs a slice of butter out of a spring-house, and then turns over a beehive close to a white clover patch out in Indiana for the rest. Then he'd come pretty close to making a meal on the amber that the gods eat on Mount Olympia.
- O. Henry
Of course, O. Henry wrote those words nearly a century ago.  And he wrote them with a wink.

We need neither long arms nor a big breakfast table to feast on this breakfast of the gods -- we enjoy it now, as O. Henry did then. All that's needed is the division of labour and the freedom to trade; the 'invisible hand' of the market does the rest. As Adam Smith said,
"It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own self-interest." 
The butcher, the brewer and the baker "direct [their] industry in such a manner as [their] produce may be of the greatest value," and we are the beneficiaries of their labours -- each "intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." 

There's nothing miraculous about Smith's 'invisible hand,' it is simply the recognition that when each producer trades the fruits of their labour, they each win by that trade.

In the words of the economists, when I trade my apples for my neighbour's oranges to the goods are moved from 'lower value' to a 'higher value'; that is, I value the oranges more than my apples, and my neighbour values my apples more than his oranges. The sum result of this and every voluntary trade is that both traders win - everyone kicks a goal! -- and from each trade new wealth is created thereby: the economy is greater for the sum of the higher values achieved, and my breakfast table is richer by some freshly squeezed orange juice.

The same is true when I pay for butter from Vermont (or the Waikato) to be brought to my breakfast table: the chain of trades necessarily increases the wealth of all involved. Frederic Bastiat identified the miracle himself when observing that sleeping Parisians worried not about their next breakfast:

On coming to Paris for a visit, I said to myself: Here are a million human beings who would all die in a few days if supplies of all sorts did not flow into this great metropolis. It staggers the imagination to try to comprehend the vast multiplicity of objects that must pass through its gates tomorrow, if its inhabitants are to be preserved from the horrors of famine, insurrection, and pillage. And yet all are sleeping peacefully at this moment, without being disturbed for a single instant by the idea of so frightful a prospect. On the other hand, eighty departments have worked today, without cooperative planning or mutual arrangements, to keep Paris supplied. How does each succeeding day manage to bring to this gigantic market just what is necessary - neither too much nor too little?
Paris gets fed. How?

Bastiat of course knew the answer to this seemingly complex puzzle: what ensures that Paris is fed is freedom. More specifically, an individual's freedom to think, choose, act, produce and to trade his produce with other individuals for his own reward.

By working to satisfy his own needs and wants, the free individual produces new values, and makes life (and breakfast) better for all of us who have ourselves produced something to trade with him. The 'miracle of breakfast' is that it is really no miracle at all. It is the fruit of freedom.

1 Comments:

Blogger Rick said...

When the statists proclaim they're going to eat the free market for breakfast that's not quite what they had in mind....

6/16/2005 06:59:00 pm  

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