Via Arthur Brooks.
I think the chart (and a lot of economists) left something important out. Specifically, “Is the market result reasonably tolerable in a just society?”
If you’ve done any work with dynamic mathematical systems, you know that there are a wide variety of stable points. Sometimes those stable points are “everybody dies.” The market is not a benevolent god. An optimally efficient market is a lot like an optimally efficient wood-chipper. It’s great at what it does—but you want to think carefully before sending your children through it.
A market can be a fantastic way to redistribute resources in accordance with the preferences of market participants. But no dynamic in the market system protects life, happiness, or dignity. The market could conclude that we have an over abundance of SUVs and we really need more light trucks. That’s a reasonable bit of data. But if the market concludes that we have an over abundance of people and we really need fewer mouths to feed? That’s not a tolerable conclusion. Markets are created to serve societal ends, not the other way around.