Stephen Monrad

My last couple of posts about the General Theory of the Second Best might leave you thinking that economics is simply too complex to manage. While I think this may indeed be the case with market economies, adding constraints of one sort or another might make economics much more controllable.

Think what happens when you send a bunch of 5 year olds out to play soccer for the first time. Everyone on the field chases the ball all the time. The result is chaos. The children chase the ball in a flock and nobody is really that effective.

The solution, of course, is to play positions. If some people play defense and others offense, the team is much more effective. A little bit of planning ahead of time makes everyone much more effective. The rules children follow when playing positions are quite simple, yet the improvements are large.

Most importantly, the rules don’t take all the fun out of soccer. There is still plenty of room for creativity and independent thought in the play of the game. In fact, positional play makes the game more interesting because when a player gets the ball, there are more things to do with it. It also matters more that players do the right thing when they have the ball.

I’m not saying that assigning people positions in the economy is a good idea. Soccer is only a weak analogy to the economy. The point of the analogy is just that order can sometimes be created from chaos with a few simple rules. Furthermore, if the rules are good, people can paradoxically end up with more choice and freedom rather than less.