Stupid voters

This is a good column entitled "The 4 Boneheaded Biases of Stupid Voters", one of which he refers to as the anti-market bias:

I first learned about farm price supports in the produce section of the grocery store. I was in kindergarten. My mother explained that price supports seemed to make fruits and vegetables more expensive but assured me that this conclusion was simplistic. If the supports went away, so many farms would go out of business that prices would soon be higher than ever. I accepted what she told me and felt a lingering sense that price competition is bad for buyer and seller alike.

This was one of my first memorable encounters with anti-market bias, a tendency to underestimate the economic benefits of the market mechanism. The public has severe doubts about how much it can count on profit-seeking business to produce socially beneficial outcomes. People focus on the motives of business and neglect the discipline imposed by competition. While economists admit that profit maximization plus market imperfections can yield bad results, noneconomists tend to view successful greed as socially harmful per se.

This reminded me of an experience I had in middle school. My teacher mentioned being in the U.S. (I was living in Germany at the time) on vacation during the Iraqi invasion of Kuwait and seeing the price of gas increasing at the pump literally overnight. He cited the transparent greed of the oil companies and noted that he asked someone as the gas station how they could justify such an increase, pointing out that it was the exact same gas that was in their tanks the day before the invasion so they couldn't have suffered from a supply interruption.

In retrospect all my teacher did was reveal his ignorance and anti-market bias. The fact is, at the moment Saddam invaded Iraq the value of oil and gasoline increased because the market saw that supplies were about to diminish. Higher prices reflect the increased scarcity and promote more efficient use of the good. With prices higher maybe someone will decide against making that weekend trip to the beach, and as a result someone who really needs the gas more and is willing to pay a higher price for it will get to use it. Furthermore, the cost of extraction is irrelevant. Virtually any commodity will see its price fluctuate after it has been harvested, mined or similarly produced.

But too often we fail to see the inherent logic in the market and instead simplistically chalk it up to greed or other malevolent intentions.