I think Mr Mackey makes a good point early in this clip about what amounts to snobbery, in a word. (After the mid-point, he gets off onto other topics.)
A free market is the most reliable way to let the next mad genius succeed.
Glenn Reynolds had a good op-ed on a related topic this week.
Nassim Nicholas Taleb recently tweeted: “The free-market system lets you notice the flaws and hides its benefits. All other systems hide the flaws and show the benefits.”
This drew a response: “The most valuable property of the price mechanism is as a reliable mechanism for delivering bad news.” These two statements explain a lot about why socialist systems fail pretty much everywhere but get pretty good press, while capitalism has delivered truly astounding results but is constantly besieged by detractors.
It is simple really: When the “Great Leader” builds a new stadium, everyone sees the construction. Nobody sees the more worthwhile projects that didn’t get done instead because the capital was diverted, through taxation, from less visible but possibly more worthwhile ventures — a thousand tailor shops, bakeries or physician offices.
At the same time, markets deliver the bad news whether you want to hear it or not, but delivering the bad news is not a sign of failure, it is a characteristic of systems that work. When you stub your toe, the neurons in between your foot and your head don’t try to figure out ways not to send the news to your brain. If they did, you’d trip a lot more often. Likewise, in a market, bad decisions show up pretty rapidly: Build a car that nobody wants, and you’re stuck with a bunch of expensive unsold cars; invest in new technologies that don’t work, and you lose a lot of money and have nothing to show for it. These painful consequences mean that people are pretty careful in their investments, at least so long as they’re investing their own money. […]