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Economy

Consumers’ Ignorance of Production Details a Blessing, Not a Curse

By Sarah Brodsky on Nov 25, 2009

One of the things I like best about production in a free economy is that consumers don’t have to think about it. If each of us had to pay attention to the details of how all our things are made — where the materials come from, what knowledge is needed to change or combine materials, how they’re transported to us — we wouldn’t have a moment to devote to our own lives. It would take all day to examine the intricate processes behind even the most ordinary household items. A caveman, on the other hand, had to know where his things came from, because he had to procure them all himself. The fact that we don’t think much about the production of the material goods we use is a sign of economic progress.

A Rhodes Scholarship recipient who plans to study food policy disagrees:

“I think the biggest problem with the U.S. food policy is that we don’t think about it,” Barmeier said. “We don’t have a single food policy strategy. We don’t think about how the food system from the farm to the table is all related […]”

It’s no coincidence that he also wants a single policy to direct food production. The alternative to the price system — in which all the relevant information for consumers is captured in a product’s price — is central planning.

We can’t all think deeply about food policy and coordinate our thoughts, so we’d have to designate one person to do the thinking for us. This economic system is vulnerable to the foibles and mistakes of the central planner. And it’s disastrous for individuals, because the planner’s errors are amplified throughout the economy and cause shortages and waiting lists. If an individual, not thinking particularly hard about where food comes from, goes to the store and buys too few pecans for a pie, he can always go back to the store for more. No one else loses out. But if a thoughtful planner underestimates how much food people in general need, everyone goes hungry.

When this student takes a break from writing Farm to School proposals (yes, he’s really done that) I hope he’ll read “The Use of Knowledge in Society,” or maybe “I, Pencil,” for a different perspective.

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Sarah Brodsky

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