10: The Problem of Distribution
Economists are often concerned about the distribution of wealth among markets, and seem to feel it should be a source of panic. Whether the goods produced domestically are carried away for foreign consumption, or when domestic consumers are purchasing goods from abroad rather than from domestic sources, it is always a calamity.
At the same time, they seem little concerned with the movement of wealth within the domestic market, and seem placated by the notion that the invisible hands of the marketplace will prevent anyone from amassing wealth at the expense of his neighbors. Meanwhile the people, forever covetous of one another's possessions, are constantly concerned that someone else might be taking a portion of their share. The notion of "fair" is ill-defined, or often defined without regard to actual fairness: what any item is worth and what a day of a man's time is worth is often assessed subjectively.
In a free market, competition determines what is fair, and competition drives the distribution of products, services, and wealth. The seller seeks to take as much money as he can for his goods and the buyer to pay as little money as he can to have the product of others; the employer seeks to pay as little as he can to his workers and his workers seek to have as much wages as they can from their employer.
Competition settles these disputes rather handily: the price of a good is fair to the buyer if it cannot be had cheaper elsewhere and fair to the seller if he could not make more by selling it to someone else. Likewise a wage is fair to the worker if he cannot make more elsewhere and fair to the seller if he cannot hire another worker for less.
This is objective because the value is not set by any single party in the market, but the aggregation of all negotiations for the same item. It is also fair because no party is compelled to deal with any other: the buyer and seller only transact if they both agree to the bargain, and are free to take their money and merchandise elsewhere.
The competition within a market is little different than competition of domestic goods against imported ones: the supplier cannot claim his price is fair if he can be underpriced (EN: and especially considering that the revenue of an imported good must cover not only manufacture but transportation, the domestic producer must be egregiously overpriced if imported goods are cheaper). The same notion applies to labor: the emigration of skilled workers from Europe to America is a reflection of the unfairness of wages paid. The compensation of workers in America is so much higher, the cost of the voyage will be recovered.
Walker dabbles in a few topics that address the attempts of government to interfere with trade on behalf of some party or another, which invariably becomes a cost paid by the market. He then picks apart some of the premises of the Manchester school of economists. His point is that competition, to be functional, must be completely unhindered, and suggestions to the contrary are invalid, and he provides a number of examples and illustrations in support of this point.
He also mentions the problem of economic policies enacted during times of disaster, as the unusual circumstances seem to require unusual measures: but the side-effects of the solution are often worse than the problem, and more flawed legislation is implemented to address the flaws in the original legislation. Also, these measures often continue even when the situation has recovered from disaster status, as they are very seldom withdrawn.
After a lengthy diversion, he stumbles back onto the topic: the seeming inequities in the distribution of wealth in society are entirely natural and inevitable. If one man applies himself to his work with greater industry and spends with greater frugality, he will amass more wealth than those who are less energetic and less thrifty than himself. If one man is more intelligent or brave than his peers, he will recognize and seize opportunities before them, and profit more greatly than those who follow the road he has laid. In a free market, no man is impeded from achieving as much as he is able.
At the same time, these considerations do not give Walker any doubts about the justification of restrictions such as real estate zoning, the limitation of trade in certain goods, the regulation of the labor of children, and so on. There are instances in which momentary profit can be made in a manner that is damaging to the broader or more long-range benefit - thought these are far fewer than some would claim. In those few instances, interference with competition is justified.