It’s natural to assume that life needs to be planned – that without planning, we would have chaos. But there’s a difference between the plans individuals make for our own lives and central planning by government. In my column this week, I steal an idea from economist Dan Klein, and use the example of a skating rink:
You are our Ruler. An entrepreneur tells you he wants to create something he calls a "skating rink." Young and old will strap blades to their feet and speed through an oval arena, weaving patterns as moods strike them.
You'd probably say, "We need regulation — skating stoplights, speed limits, turn signals — and a rink director to police the skaters. You can't expect skaters to navigate the rink on their own." And yet they do. They spontaneously create their own order.
The free market is built on what Hayek called “spontaneous order.” People work together -- not because that’s what is best for society, but because it is what’s best for themselves.
Here’s another example from the column, an idea that I stole from Leonard Reed, who founded the Foundation for Economic Education:
"(N)o single person on the face of this earth knows how to make (a pencil)."
That sounds absurd — but think about it. No one person can make a pencil. Vast numbers of people participate in making the materials that become a pencil: the wood, the brass, the graphite, the rubber for the eraser, the paint and so on. Then go back another step, to the people who make the saws and machinery that are used to make the materials that go into a pencil. And before that, people mine iron to make the steel that makes the machines that make the materials that go into a pencil. It's all without central direction, without these people even knowing they are all working ultimately to make pencils. Thousands of people mining, melting, cutting, assembling, packing, selling, shipping — and yet you can buy pencils for a few pennies each.
Full column here. Spontaneous order is also the theme of my Fox Business show this week, which airs Thursday at 9pm ET and midnight.