Price Vs. Policy: A Tale of Two Markets

Wriston, Walter B.


The Market Works - DOE Doesn't


We must realize that and undertake the painful business of putting our own house in order instead of compounding our problems by still more bizarre efforts to substitute "policies" for prices.

There is no mystery about what to do. The Euromarket and the Department of Energy furnish two models- one that works and one that doesn't. The Euromarket works because thousands of participants vigorously pursue what they believe to be their own self- interest, and thus bargains are struck between buyers and sellers. The Department of Energy doesn't work because it attempts to substitute centralized policy judgment for the distributive wisdom of the marketplace. If all that did was to fail, the damage would be contained. As in most instances of this kind, however, the real casualty is individual liberty in America because it takes away a little bit of our freedom of choice. More than 40 years ago Walter Lippman put it this way:

The attempt to regulate deliberately the transactions of a people multiplies the number of separate, self-conscious appetites and resistances. To establish order among these highly energized fragments... a still more elaborate organization is required-but this more elaborate organization can be operated only if there is more intelligence, more insight, more discipline, more disinterestedness, than exist in any ordinary company of men. This is the sickness of an over-governed society, and at that point the people must seek relief through greater freedom if they are not to suffer greater disasters....