People tend to believe what they want to believe. And people tend to believe they’re too smart to make that mistake.

There’s also a sort of Uncertainty Principle at work. Prior or inside knowledge of certain events allows you to manipulate or predict them to your benefit. But if that knowledge is widespread, if many people share it, that advantage is dissipated.

So for example, if you know a horse race is fixed, that knowledge may allow you to make a killing. But if everyone knows its fixed, then no one has an advantage.

But most important, (and this is the point that Picketty’s “Capital in the 21st Century” makes) is that markets don’t have built-in mechanisms that guarantee stability. True, there are forces that tend to maintain equilibrium, feedbacks and counter-pressures which tend to stabilize complex, multi-parameter dynamic systems. But there are also conditions that tend to lead to unexpected, runaway collapses–just like in climate.

You find the same situation in stellar evolution. Stars are remarkably stable throughout most of their lifetimes, shining at a constant rate for long periods of time without changing, or changing very gradually. But under certain circumstances, they can become unstable, and the instabilities can be cyclical (as in variable stars that pulsate with a certain regularity, or they can lead to runaway conditions, all the way to supernova explosions.

As a matter of policy, it would be best if we relied on “natural”
forces, and competitive economic processes to maintain stability and efficiency. But when you throw human agents into the system, they will be doing everything they can to find workarounds to those processes, to beat them. That is, after all, their job!

Economies also react in unanticipated ways to social conditions that change unexpectedly. Although it stands to reason that we are just as likely to cause a problem as we are to fix one when we interfere with a market, we must also beware of the temptation of thinking that if we just “leave the market alone” it will tend towards stability. People who tell you that usually know something you don’t, and they’re not taking their own advice.

Iron ships float, and sailboats can go into the wind.

US production

Impossible to argue against that without being ridiculous.

Is it not a world market?
Is there a monopoly of wheat farmers?