Markets. What else would warm the cockles of an economist’s heart? I was talking with someone the other day and let slip that I was trained as an economist. “Are you a Keynesian?” he asked. I laughed and replied that I could probably be accused of being so, as far as big issues go. Enigmatic? A bit like markets can be. Keynes famously said “Markets can remain irrational longer than you can remain solvent.” Many will now say “Amen!” Think about your NCAA brackets to get an idea about how predictable markets can be. Did I hear someone say “Harvard!” That’s how markets can be: shocking.
But, let’s not get panicky because of recent experience. Markets can be warm and fuzzy places. Without much training, people quickly get to understand what markets are supposed to do. “I’ll let you have three of my jelly beans for one of your chocolates,” you may hear a child say to a friend. “I’ll be your friend if you tell me what you got for Christmas,” they may say to each other later. Trading is underway. Will they agree on an exchange? Time will tell. Price. Quantity. Equilibrium.
My daughter was waiting for a plate of sushi last night when she took a swig of some Japanese soda. “The most expensive part of that drink is probably the bottle,” her mother said. Her mother is an economist, too. This will be interesting, I thought to myself. “If I have my way, I will make these drinks free, when I am president,” my daughter added. We talked about what ‘free’ meant and that someone has to pay. My wife then went into a little discourse about taxation and paying for government services. My daughter assumed the position of the listener looking for the remote: “Can we play a game now?” 🙂 Price. Quantity. Equanimity?
Economist or not, seeing markets at work often gets us excited. Markets can be frenzied in pace and activity, and taxing of emotions. Watch people at auctions. Watch trading rooms. Watch people when they feel they are about to get a bargain. Watch home buyers. Watch car buyers. People don’t necessarily want to go rummaging in yard sales to see if they can come up with an unrecognized painting by a famous artist. Everyone likes a ‘fair price’. Watch how nations and their populations dissolve into frenzied talk when ‘the market’ tells them that they are rapidly becoming worthless. I think of Cyprus, which will always remain important to me because of the Greek-Turkish dispute and the name of their one-time leader, Rauf Dentash–one of those names that just rolled off the tongue. Well, they will be rushing to make deals, and Russians will be hoping they rush to make deals that keep their deposits whole. Haircut, anyone? I once lived in an area full of Cypriot immigrants, who’d fled the political problems and ran many of the stalls in a market I used to frequent. What price those peaches?
My father loved to walk to market every day on his rounds to take exercise. He’d return with his backpack and bags full of fruit, vegetable and meats, and his head full of stories he’d heard or had to tell about what he’d done in the hour or so he spent cruising the produce. “Mango price gawn up again!”…”A head o’ yam fi dat dey price? No sah?”
I love the press of bodies in a market. But, I also love the sense of relief, when I get to the end of the stalls and can breathe again.
They say that markets will find their true levels. Are you sure? Try negotiating for something today, anything. See how much the price shifts. In some countries, true enough, you can affect prices and get goods or services to people with a lot of self-control. But, that is a rarity for many if not most cases, and if the exchanges are filled with irrationality, is it worth the effort?
I was about to write that somethings you cannot buy or sell, but I need to think about whether or not I really believe that. “Everything has I price, whether it’s explicit or implicit,” I often say.