Money Flows

Troy Camplin's post on "The Constructal Law" was fascinating.  I have never heard of the term, but the post was about branching patterns of rivers and chaos theory and evolution and economics were all about how things flow.  I think it's worth further exploration. This was my initial response:

My favorite imagery from reading Adam Smith is his recurrent use of flowing water. Whenever governments try to steer industry away from its natural channel, their purposes are thwarted by entrepreneurs in such a way that everyone is generally worse off than if the government had not acted at all. Water seeks its own level, and capital seeks profit opportunities. The power of water carves canyons and sculpts seashores. Governments try to dam the power of markets and command the tide not to rise, but price controls create scarcity instead of prosperity, and resulting black markets do not have the safeguards of legal property rights. 
My pet example is "campaign finance reform". The Hoover Dam is a remarkable feat of engineering. It was made from 4 million cubic yards of concrete and killed dozens of people during construction, not to mention the continuing environmental costs, but at least we can say that it does what we intended it to do: eliminate flooding, create electricity, and provide water for irrigation. On the other hand, the Colorado River that carved the Grand Canyon is not going to be stopped for long by whatever concrete we can throw at it. Every year the water seeps a little bit farther and faster through the rocks around the dam. In geologic time, the awesome Hoover Dam will be gone in an eye-blink. Compare this to campaign finance reform. Person A has influence to sell, person B wishes to buy. This is determined to be undesirable so we dam the transaction. Person A may not take person B's money, but he still has influence to sell and B still wishes to buy. Introduce the middleman. The middleman may take the form of soft money, 527's, PAC's, or hiring A's useless son for a sinecure; but the money will move from B to A because even the the most draconian legislation is much more pervious to individual relationships than concrete is to water. Money flows.