How to explain free market externalities to your toddler

24 Jul

Growing up in a modern market democracy can be tough. While children assume Adam Smith’s invisible hand will always be there to care for them, it’s not. It sometimes curls into a fist and strikes at those most vulnerable to the vagaries of supply-side economics.

For example, my 17-month-old had a sense of this the other day in the grocery store as she cried out in a plaintive lament, “I wanna ball! I wanna ball!”

I explained to her that goods and services unaccounted for in the market are known as externalities, and anything without a price didn’t get sold. Her happiness as a child didn’t have a price and therefore could not be understood by the store, the government, or suppliers in general.

She thought for a moment and in a true, Keynesian fury threw an entire box of animal crackers over her head and onto the floor.

As we turned onto the cereal aisle I commented that her lowered utility and subjective displeasure was simply a result of advertising, the “institutionalization of envy,” as Daniel Bell says.

She seemed to agree, kicking her legs and grasping at a box of highly sweetened Crunchy Munchies, a dancing frog on the front.

“Your mother won’t let you have those,” I said. What followed was a high, piercing cry that could be heard throughout the store. I picked her up. She twisted in my arms and slapped at my face.

“The Nobel committee in Oslo won’t appreciate this kind of behavior,” I said, stabbing her back into the cart.

“If providers have no way of monetizing the benefit I receive from this cereal,” she sobbed, “then less of this good will be produced for society as a whole! How is utility optimized in this case, daddy? Tell me, daddy, how?”

She didn’t actually say that.

By the time we got to the checkout her entire world-view had been shattered. It wasn’t the free market that had failed her, I think, but the lack of virtue in humanity itself. How could a progressive society that valued liberty above all else be so ambivalent to her needs?

“Oh, what a sad little girl!” the checkout lady said, cheerfully. “Is daddy being mean to you?”

“She’s just had a few crushing existential epiphanies regarding some of capitalism’s more egregious errors,” I said, smiling back. “I think her little soul is broken, poor thing. She has some new teeth coming in, too.”

At the Starbucks on the way out I bought her a double no-foam latte and a piece of banana bread. She took one bite of the banana bread and ripped it in half and threw the halves on the parking lot.

I can’t say I blame her. Every time I hear of corporate malfeasance or another oil spill I “throw my banana bread,” too. We all throw our banana bread. We throw and throw and throw, until there isn’t enough banana bread to go around, and then what? I’ll tell you: we throw our spoon. We throw our spoon and we burst into tears and we shit our pants and we still don’t get what we want.

That’s just how the market works. God bless America.


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