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Jack Falvey's Investor Education Briefs: Our economy has almost infinite brain power

March 11. 2018 8:53PM

In our economy, you can get the input of millions of smart people merely by allowing them to make their own best decisions. Collectively they gravitate to what is best for the most people by doing those things that seem best for them.

When you employ your best thinking and decide on a strategy or direction, you are doing the best you can with what you have. Getting input from others fine tunes the process as additional horsepower is brought to bear.

This is what advisers or boards of directors do. This is what a test market does in consumer goods.

The math indicates that millions with something to gain or lose will out-think those who think that they know how everyone should act.

The premise is that the command and control by a few will produce inferior results against the economic actions of the multitude. Mandates kill markets.

Millions of decisions eventually will adjust the supply to match demand far better and faster than the best thinking of a select few. When there is a lot of stuff, it costs less; and when there is less stuff, it will cost more.

That will also make it worthwhile for someone to make more stuff. The price dictates which way things move, and the price is set by millions figuring out if they will pay for what is offered.

All this works by itself with millions of goods and services, millions of times each day, because millions of smart people are making smart decisions. Millions more smart people serve these people with goods and services that they want at a price they will pay while doing so for more than what it costs them to do so.

The decisions you and your advisers make are made on millions of daily variables. You can observe your results and adjust accordingly each day, which will also contribute in some way to the results of millions of others.

This is called free market capitalism. It is the most efficient process known to man for creating wealth.

Living here is very smart. Good move.

Jack Falvey is a frequent contributor to the Union Leader, Barron’s and The Wall Street Journal. He can be contacted at


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