Rinkonomics

by Kerby Anderson, Contributing Author: In my Viewpoint commentary last week, I mentioned an article that profoundly influenced John Stossel. The title of the article was Rinkonomics: A window on Spontaneous Order by Daniel Klein. He used the idea of a skating rink to illustrate some important economic principles.

If we’d never seen a roller rink or skating rink, we would assume that you would need lots of organization. Imagine a 100 people skating around. It would seem that you would need smart leadership to keep skaters from injury. Of course, whenever you see a skating rink you don’t see that at all. There are some reasons for that.

An important quality governing possible collisions is “mutuality.” If I keep from colliding with you, you don’t collide with me. I promote my interest and your interest by avoiding a collision with you.

Another key concept is “coincidence of interest.” I don’t intend to promote your interest, but I end up doing so by promoting my own interest. Spontaneous order surfaces from seeking your self-interest.

It would seem that the only way to avoid collisions is to hire someone with a bullhorn to call out directions. As I mentioned in the commentary last week, John Stossel tried that. It actually made the circumstances worse.

Daniel Klein also points out that central planning gets harder the more complex the interactions. If you have 4 skaters, you could probably control all the actions with a bullhorn. But if you have 100 skaters, there is simply no way you could effectively and efficiently control all the actions.

There is a lesson here for bureaucrats and central planners. The thousands and millions of interactions in a market economy are too difficult to predict. In fact, many of the government restrictions are like a foolish central planner trying to impose restrictions on 100 skaters. It ends up interfering with the spontaneous order that naturally surfaces in skating or the economy.
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Kerby Anderson is a radio talk show host heard on numerous stations via the Point of View Network endorsed by Dr. Bill Smith, Editor, ARRA News Service

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