Tuesday, April 23, 2013

An Economic Lesson from the Boston Marathon Bombing

Looking at the events in Boston, between the bombing and the capture of the second suspect, an interesting economic analogy can be made and a lesson learned:  The free market triumphed where socialism would have failed.

In every case, the key intelligence that ID'd the suspects, led to them, and eventually got them, came not from elite crime experts at the top, but rather from average people functioning in a free market of observations and feedback.  Those that solved this crime were not endowed with special training or powers.  They had no advanced degrees in criminology.  They were simply closest to the action and in the largest possible numbers.  

To review:  A victim named Jeff Bauman woke-up minus two legs and the first thing he did was describe the bomber.  Armed with that information, the investigation proceeded to the video cameras of Lord & Taylor, where the described suspects were clearly visible.  Next the public was recruited to find them, and this paid off when a 7-11 clerk reported a robbery.  Finally, a boat owner stepped outside for a smoke, noticed something amiss with his boat, and climbed up a ladder to take a peek.  There he saw the semi-concious wounded bomber and alerted officials.

To draw an economic lesson from this, free market intelligence signals succeeded where a top-down socialist style intelligence model could not.  The point is, as in socialism where there are impediments to economic market signals, the FBI could not have succeeded if they had shut out the public from this manhunt.  In fact, the government was warned about these two terrorists by a foreign nation, and completely dropped the ball.

This is not to downplay the role of the FBI and local law enforcement in fighting crime.  The armed guys and the intelligence guys who pulled all the threads together were essential to the eventual resolution.  Just as in any functioning market economy, the government is essential to performing functions of law and order.

But under socialism, the government is not limited to roles of law and order.  They either own or control a majority of the economic activity too.  The socialists try to tweak their managed economy according to market signals, but they can never do so as efficiently, quickly, or accurately as a free market economy.  All those non-experts, close to the action, making second-to-second decisions will outperform the elite experts trying to do so every time.  That's what happened in Boston.