The Laissez-Faire Garden

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I have a friend who is very good at gardening. In the summer he brings me some of the biggest, freshest tomatoes I have ever had the pleasure of eating. And his cucumbers are so nice and crispy you can put a little salt on them and eat them raw. He’s always working in his garden. Getting the soil right, tilling, trimming, getting rid of weeds, using just the right amount of fertilizer, and making sure there’s enough water for his crops to grow. It’s hard work, very time consuming, but the results are some of the best vegetables ever.
I myself have tried gardening. My gardens however never turned out well. I tend to use the “deregulatory” approach, ie throw some seeds out there and let nature take its course. It’s amazing how many weeds can grow up and kill off your to mention insects and animals. The laissez-faire approach to gardening doesn’t seem to yield optimum results.
Laissez-faire, or “leave it alone” was an economic theory that played heavily in Adam Smith’s (the father of modern economics) “Wealth of Nations.” And Adam Smith was a brilliant man. At the time, most trade was heavily regulated by government, and Smith was quick to point out this burden that added layers of taxation and inefficiencies. Yet Smith recognized the need for oversight in the markets. Herbert Stein wrote: He viewed government intervention in the market with great skepticism.
He regarded his exposition of the virtues of the free market as his main contribution to policy, and the purpose for which his economic analysis was developed. Yet he was prepared to accept or propose qualifications to that policy in the specific cases where he judged that their net effect would be beneficial and would not undermine the basically free character of the system,” wrote Stein. “He did not wear the Adam Smith necktie.” In Stein’s reading, The Wealth of Nations could justify the Food and Drug Administration, The Consumer Product Safety Commission, mandatory employer health benefits, environmentalism, and “discriminatory taxation to deter improper or luxurious behavior.”
Ronald Reagan was a big proponent of deregulation. His “Reaganomics” relied heavily on the theory of laissez-faire. Who can forget his words “The government is not the solution to the problem, the government is the problem.”
There seems to be some notion that the free market seeks some type of equilibrium much like the laws of thermodynamics. Just leave it alone and everything will eventually work out to the best of all possible worlds. The problem is, like my garden, markets will often go in a direction that does not benefit us. The current banking crisis for example…loans made without credit worthiness, margins of 30-1 (imagine using your house to get 30 mortgages!), and basic human greed. During the last few decades we have seen a push toward deregulation. Conservative politicians have used this as a rallying cry for the the cause of reducing the size of government, while politicians both liberal and conservative have gone about adding layer and layer of ineffective Bureaucracies. Our leaders are good at spending our money, but we need someone to look after our financial garden.
We can go too far with the laissez-faire approach. I want my doctors to have government oversight. And I certainly want the banking system regulated by the government.
We’ve seen the results of letting industry regulate itself. Isn’t it time for a little prudent gardening?

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