There Is No Correct Answer

On this Cafe Hayek post, commentor Chris Killingsworth asks:

What is the correct free market solution, then, for workers in towns around the country who are left jobless en masse when a major local employer packs up and moves overseas?  Go back to school with the money they have hopefully saved up, then move to ‘where the jobs are’?

This question represents a fundamental misunderstanding of what a free market (or market-based economy) is.  Free market is a term used to describe the voluntary interaction of peoples.  As such, each person, using his unique knowledge of time and place, will map out the best way for him/her to respond to different situations.  In short, there is no “correct free market solution,” for any given situation.  For any given situation, there can be millions or billions of “correct” solutions, each one just as valid as the next for differentiating individuals.

In short, Mr Killingsworth’s question is unanswerable because there is no one answer.  His second sentence may work for some, but not all.  Others may make different choices.  It is impossible to know, irresponsible to guess, and unbecoming as an economist to offer “one size fits all solutions.”

One thought on “There Is No Correct Answer

  1. Exactly! The “free market solution” is the best solution that each individual can figure out for him- or herself. The “government solution” is the one-size-fits-all solution that a government planner with insufficient information and incentive forces on everyone else. Naturally, the government planner exempts himself from the plan that he already knows is a bad solution.

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