Advertising the negative, hiding the positive

Glenn Reynolds writes that free markets automatically create and transmit negative information, while socialism hides it:

Nassim Nicholas Taleb recently tweeted: “The free-market system lets you notice the flaws and hides its benefits. All other systems hide the flaws and show the benefits.”

This drew a response: “The most valuable property of the price mechanism is as a reliable mechanism for delivering bad news.” These two statements explain a lot about why socialist systems fail pretty much everywhere but get pretty good press, while capitalism has delivered truly astounding results but is constantly besieged by detractors

(M)arkets deliver the bad news whether you want to hear it or not, but delivering the bad news is not a sign of failure, it is a characteristic of systems that work. When you stub your toe, the neurons in between your foot and your head don’t try to figure out ways not to send the news to your brain. If they did, you’d trip a lot more often. Likewise, in a market, bad decisions show up pretty rapidly: Build a car that nobody wants, and you’re stuck with a bunch of expensive unsold cars; invest in new technologies that don’t work, and you lose a lot of money and have nothing to show for it. These painful consequences mean that people are pretty careful in their investments, at least so long as they’re investing their own money.

Bureaucrats in government do  the opposite, trying to keep their bosses from discovering their mistakes.

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