What if, for example, private entrepreneurs, upon noticing the widespread availability of a productive asset that they are certain is underpriced by at least 23 percent, proceeded to behave as do too many politicians, pundits, professors, PhD candidates, and preachers? Rather than profitably bid units of that asset away from their current uses and, hence, cause the price of that asset to rise, these “entrepreneurs” would write op-eds proclaiming the reality of widespread underpricing. They’d also lobby politicians to inform them about the widespread underpricing of the asset. They’d fulminate and fume on television, radio, and in blog-posts about this widespread underpricing. But never, ever would they take personal action to seize the profit opportunities that they insist exist.
The scene might play out as follows:
‘Entrepreneur’ A: “Look! Pork bellies are way underpriced!”
‘Entrepreneur’ B: “My gosh, man! You’re right! Those pork bellies are indeedway underpriced – underpriced by about 23 percent! And they’ve been underpriced for years!”
‘Entrepreneur’ A: “Wow. That’s intolerable. Pork-belly sellers are getting screwed by pork-belly buyers. Those buyers, year in and year out, are making unjust fortunes by buying pork bellies at below-market prices.”
‘Entrepreneur’ B: “What can we do?”
‘Entrepreneur’ A: “Beats me. [Pause] Oh, wait. I know! Let’s tell the general public about this underpricing. I’ll write an op-ed!!”
‘Entrepreneur’ B [smiling in wonder and with admiration at ‘entrepreneur’ A]: “You’re a true man of action! A courageous hero! I’ll join you by blogging on it! And also, I’ll visit my member of congress to tell her about the underpricing of pork bellies.”
‘Entrepreneur’ A: “Fantastic!” [Pause] “But can you think of anything else to do? Do you know of any other opportunities that these clearly underpriced pork bellies offer?”
‘Entrepreneur’ B: “Hmmmm……” [Pause] “Hmmmm…… No. No, actually, I don’t. I’ve thought about it and I can’t see any opportunities for action that these underpriced pork bellies offer to us, or to anyone else, beyond writing op-eds and telling politicians about it.”
‘Entrepreneur’ A: “Right you are! When underpriced assets exist, the only possible solution is for government to force up the price.’
‘Entrepreneur’ B: “Yep! Okay! I’m off to blog on the underpriced pork bellies! Good luck with your op-ed on this problem!”
‘Entrepreneur’ A: “Thanks! Isn’t it fulfilling to know that we serve the public welfare?!”
In short, if everyone thought and acted like the typical politician, pundit, or professor, all of humankind would still be sleeping on dirt and routinely starving to death.
The above originally appeared at Cafe Hayek.