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Monday, Aug. 4, 2008
Keeping the global circus in business a matter of balance
By NORIKO HAMA
Does the presence of a safety net make people too reckless, lazy and dependent? Or does it allow people to experiment, develop skills in a secure environment and prevent the penalization of healthy high spirits.
This could be an argument about how to run a circus. A trapeze act is no fun if the safety net is pitched too close to the performers so that a fall becomes no fall at all. The performers' skills are honed by the awareness of danger. If all the danger they have to worry about is a mild graze or two on their knees, there is really very little incentive to train, sharpen their sense of balance or keep themselves physically fit.
On the other hand, if the safety net is pitched too low to serve its purpose, or indeed if it is not even there at all, the performers would simply be too petrified for too much of the time to perform all but the safest of acts on the menu. That too, would be no fun at all. Nobody would come to watch performers go through such a dull routine. Thus, both too much and too little safety end up having the same unfortunate effect: closure of the circus for lack of an audience.
Substitute the circus with a swimming school and you get a similar sort of discussion going. Do you throw people into the deep end with no support so they can get the hang of swimming on their own? Or do you provide them with floats to hang onto so they can go through the basic motions of getting about in the water without the persistent fear of drowning hanging over them?
Too much of either will tend to chase people away, because the former will only benefit those who really don't need coaching, and the latter won't really help those who genuinely want to learn how to keep afloat in the water.
All of the above could equally figure into the debate about how to conduct social policy and the extent to which market forces should be subject to management and controls. Do we need more intervention or more deregulation?
Both sides have their point. Of course the market should be allowed to function properly. But it is equally clear that it should not be allowed to run wild and lose its mind. That would actually be a dysfunctional market rather than a functional one. A market that allows none but the strongest to survive is ultimately self-destructive because at the end of the day there will be too few people in it to make the economy go round.
Of course, the weak have their place in the market. It should be remembered that the rule of the jungle is survival of the fittest, as opposed to survival of the strongest. Where would the strong be, without the presence of the weak, always ready to sacrifice themselves at the altar of the carnivores? Yet if the culture of dependence became all too pervasive, nobody would ever have the chance to discover whether they belong among the weak or the strong. Moral hazard and cowardly laziness would reign, leading to the destruction of the jungle in its entirety.
A circus needs to be fun. It needs to be safe as well. The balance is a difficult one to achieve at the best of times, but getting the balance right is what it is all about. For economics as well as circuses.
Noriko Hama is an economist and a professor at Doshisha University Graduate School of Business.