An Efficient Marketplace

This hit me right between the eyes:

I have a friend who is an attorney with a deep knowledge of the national economic crisis. He made two interesting comments:

He first said that “liquidity” is not the real problem in the market right now—it is that no one knows what anything is worth. So much stuff of questionable value is hidden on balance sheets that buyers no longer know if something is worth what it is trading for, less, or more. So no one really knows how bad things are and cannot put an efficient, valid price on things. In other words, blindness about value. That destroys the logic of the “free market” because efficiency is based on “transparency” of value.

Second, he said that as a result of the first problem of blindness about value, it is difficult to know if persons you are selling to can meet their commitments to you. In other words—blindness about the solvency of parties in the market. That also kills an “efficient” market because it destroys the needed trust that makes the market work.

In spiritual traditions of all kinds, blindness is an old theme—-people who corruptly set out to blind others end up blind themselves. We ignore that wisdom at our peril. Morality, once again, is proven to be fundamental to an efficient marketplace.

Source: N. Gordon Cosby, Conversation with a friend, September 28, 2008