It is a common knock against unfettered free markets that there are matters they don’t sufficiently address. Sometimes expressed as the problem of externalities, it’s considered by some as a fatal flaw in the free market principle. Market-based solutions to problems like pollution, resource depletion and the like are indeed less intuitive than the very simple idea that government legislation can overrule negative externalities, but in practice, the latter has a pretty lousy track record, and the former has managed some surprising successes.
Consider the tragedy of rhinoceros poaching. Rhinos are endangered and protected, yet hundreds are still killed every year to harvest their horns. The horns, considered a powerful cure for everything from cancer to hangovers by certain Asian cultures, can sell for $100,000 a pound. Since a typical horn can weigh up to three pounds, it’s no surprise that there is a massive financial incentive to slaughter these creatures, no matter what the law says or what the risks and penalties are. With the populations dwindling, it’s clear that the current efforts (bans, counter-poaching efforts, law enforcement efforts), aren’t working well enough.
What makes the case of the rhino even more tragic is that the purported curative effects of the horn are, by all rational accounts, voodoo and poppycock. They likely don’t even live up to the standards of snake oil, which at least in some cases contained laudanum (opium and alcohol) and might dull pain long enough for the snake oil salesman to leave town. Rhinos are being killed for a useless product.
Human innovation being what it is, some have seen market opportunity where most others have seen tragedy that can only be addressed through government. A biotech firm has synthetically engineered artificial rhino horn, genetically indistinguishable from the real thing. It has even figured out how to 3-D print the product into the shape of rhino horns, and it plans to flood the market with their product at 1/8th the current price. The Asians can get their voodoo powder, the poachers will lose financial incentive to poach, fewer rhinos will be killed, and a company with a good idea will profit from that idea. A win for all but the loathsome poachers, and an example of the free market solving a problem that governments have been unable to figure out. Is it perfect? Probably not. There will still be those who think the real thing will be better, but the existence of a far cheaper and more plentiful alternative will impact the market for the real thing. In short, it’s a great big step in the right direction, born of human innovation rather than via government’s guiding hand.
We can find a parallel example in the case of ivory poaching. Elephants suffer at the hands of poachers the way rhinos do, and decades of governmental efforts to curtail the illegal ivory trade haven’t solved this problem. A property-rights-based approach, on the other hand, has shown evidence of succeeding where government has failed. By engaging the selfish motives of local tribes (motives that we all share since they’re rooted in human nature) and enabling them to manage the elephants on communally owned lands (including for profit via tourism), a positive, market-based force is applied to a problem traditionally considered an externality.
People tend to apply different standards to market failures and government failures. The former are often considered inherent flaws, uncorrectable from within the basic tenets of free markets, while the latter are often considered mere failures of implementation. This not only holds markets to a far higher standard than governments, it flies in the face of history. When we witness markets solving problems that governments have failed to fully address, we should look to overcome our preconceptions and overrule our tendency to apply disparate standards.
Market forces (which is just another name for human nature) are as inexorable as water flowing downhill. Government prohibitions ignore this reality, which is why they fail. But, just as water flowing downhill can be channeled and exploited (think of a water wheel driving a millstone), market forces can be channeled and exploited. The latter is what happens every day, and bringing artificial rhino horn to market is today’s example. The former happens when government establishes protections for individual and property rights, and using property rights to address the elephant poaching problem is today’s other example.
Human innovation is nurtured by free markets, not government fiat, and it can better address so many of the problems we see in the world today than any pack of politicians and bureaucrats can ever hope to.
Loading ...
Active Comment Threads
Most Commented Posts
Universal Background Checks – A Back Door to Universal Registration
COVID Mask Follies
When Everything Is Illegal…
An Anti-Vax Inflection Point?
“Not In My Name”
The Great Social Media Crackup
War Comes Through The Overton Window
The First Rule of Italian Driving
Most Active Commenters