WHY INDUSTRIAL ECONOMISTS WILL NEVER LACK FOR WORK. Michael Munger (via Knowledge Problem) makes an important point about collective action.

The boundary we fight over today divides what is decided collectively for all of us from what is decided by each of us. You might think of it as a property line, dividing what is mine from what is ours. And all along that property line is a contested frontier in a war of ideas and rhetoric.

For political decisions, "good" simply means what most people think is good, and everyone has to accept the same thing. In markets, the good is decided by individuals, and we each get what we choose. This matters more than you might think.

The bulk of the essay focuses on the workings of the median voter, as contrasted with the incentives confronting the marginal investor facing non-median preferences. (There are some nasty non-convexities that sometimes come into play.)

The thing to keep in mind is that market processes, working through diverse private choice and individual responsibility, are a social choice process at least as powerful as voting. And markets are often more accurate in delivering not just satisfaction, but safety. We simply don't recognize the power of the market's commands on our behalf. As Ludwig von Mises famously said, in Liberty and Property, "The market process is a daily repeated plebiscite, and it ejects inevitably from the ranks of profitable people those who do not employ their property according to the orders given by the public."

Sometimes, however, those orders run up against those non-convexities, which makes that contested frontier a bit more contested, as well as requiring the investor to identify enough of the "most of us" so as to be able to recover the investment.