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January 27, 2010

Word To Your Motha

This is making the rounds today, but I saw it first at Attila's place.

Update: Interesting point from Sean Hackbarth:

I did find a tidbit at the end of the video that got me curious as someone who has read a lot of Hayek. This quote is delivered:
“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

It’s from Hayek’s The Fatal Conceit, his final book, published in 1988. That’s decades after the Keynes-Hayek debates. During those years Hayek moved away from technical economics to studying society generally, the philosophy of science, to even dipping into psychology. I wonder how much of the early Hayek devoted to studying prices and the capital structure would agree with that quote from his final book?

The Hayek quote touches on an idea Thomas Sowell explains particularly well: that liberals and academicians constantly overestimate both their ability to override human nature by means of abstruse and theoretical social programs, and also that the "smart crowd" are true believers in the idea that concentrating decision-making power in the hands of a few "smart" centralized planners is more efficient and results in better outcomes than allowing dumb/ignorant (because we don't agree with their value system) individuals to make "irrational" economic decisions based upon how much we value various alternatives.

This idea is flawed for two reasons:

1. Centralized planning attempts to force a uniform set of values upon what should be free men and women. Instead of my deciding what health care is worth to me and allocating my income accordingly, the government decides I "must" have it, and furthermore that regardless of the costs involved or my income, the price "must" be "affordable".

2. Given the literally millions of economic transactions that take place every day, it is nothing short of hubris to believe any centralized planner or plan can account for the myriad factors that influence prices and costs.

Individuals do this automatically by means of their individual value system. If a good becomes too expensive, some will divert funds from some other purchase to meet the increased price, some will look for substitutes (in the instance of health care, they might decide to exercise, diet or take supplements), and some will decide the good isn't that important to them relative to all the other goods/services out there. When all these individual value decisions are aggregated, we get upward or downward pressure on aggregate demand and - by extension - on prices as more or less is demanded of a particular good or service.

We're seeing a lot of this "I know what you need better than you do/I can do a better job of managing your money than you can." these days. But the problem is not that Obama has failed to explain his policies to America.

The problem is that American doesn't really believe Obama or his minions should be making these choices for us.

Posted by Cassandra at January 27, 2010 08:45 AM

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Comments

Yo Yo - The Austrian School smackdown!

Posted by: Boquisucio at January 27, 2010 09:58 AM

...liberals and academicians constantly overestimate both their ability to override human nature by means of abstruse and theoretical social programs, and also that the "smart crowd" are true believers in the idea that concentrating decision-making power in the hands of a few "smart" centralized planners is more efficient and results in better outcomes...

Which, in a nutshell, explains the Lib love of Socialism. What it *doesn't* explain is why Teh Reality-Based Community still believes, despite a century's worth of blatant evidence to the contrary, that the idea actually works.

Posted by: BillT at January 27, 2010 01:27 PM

It's all incorrect implementation, Bill :p

No matter how many times the idea fails, one can always blame poor execution. Add that to the fact that markets are subject to booms and busts, partly b/c individual decision makers are human beings with emotions, and you have their argument.

What they don't take into account is that their centralized planners are *also* human beings with their own blind spots and emotions.

Posted by: Cassandra at January 27, 2010 01:31 PM

"Individuals do this automatically by means of their individual value system. If a good becomes too expensive, some will divert funds from some other purchase to meet the increased price, some will look for substitutes (in the instance of health care, they might decide to exercise, diet or take supplements), and some will decide the good isn't that important to them relative to all the other goods/services out there. When all these individual value decisions are aggregated, we get upward or downward pressure on aggregate demand and - by extension - on prices as more or less is demanded of a particular good or service."

Bingo. I have an almost mystical faith in this process. I'm simply baffled by people who believe a centralized system will improve on it. How could it ever be appropriate for a free people? Don't people even want to be free? Don't they realize that making their own choices, and living with the consequences, is the essence of freedom and dignity?

Posted by: Texan99 at January 27, 2010 05:22 PM

But that's *hard* and you might not get it. It's much easier to blame The Man™ for all your problems.

You aren't in financial trouble because you borrowed more than you could pay, you just didn't win life's lottery and besides, those evil credit card companies tricked you into borrowing that money.

Posted by: Yu-Ain Gonnano at January 27, 2010 05:48 PM

I am continually amazed by the smartness of this crowd!! I had a really sharp and on-the-money comment, but you all beat me to it!! I am outta here!

Posted by: philip at January 27, 2010 05:52 PM

How could it ever be appropriate for a free people? Don't people even want to be free? Don't they realize that making their own choices, and living with the consequences, is the essence of freedom and dignity?

But that's the rub. Freedom brings dignity, but there's risk. Those in favor of the central control are risk averse. Either they do not want to take the risk themselves, or they do not want the possibility of others failing. It's an easy trap to fall into to believe the other side to be cowardly or too craven to want freedom. But I know more of the other type of 'liberal'.

It's not that they fear for themselves, they fear for others who try and fail. They see true freedom as cruel and heartless. They want an equality of outcome rather than an equality of opportunity. Better in their minds for everyone to make do with less than some to have none.

What they miss is that doing so takes choice away from everyone. They have no provisions for those of us who do not want equal misery. We would rather strive and fail than accept the loss of freedom. And the damnable hell of it is that there really is no middle ground left for all of us to occupy on this argument.

Posted by: MikeD at January 27, 2010 06:12 PM

Some middle ground might be provisions for those who try and fail, other than ever-growing government entitlements. Even the thickest-skinned among us don't like to see babies go hungry because Dad lost his job just as Mom went into the hospital. What strikes me as so odd is that so many people have concluded that (1) virtually all discomfort (not just dangerous material disaster) must be completely ameliorated and (2) this must be done by government fiat at the expense of a minority of taxpayers who can't even defend themselves at the ballot box, even if that means degrading the economy and increasing the overall sum of misery.

And I honestly don't know how to talk to them about it any more. The only answer I ever get is "you're cold" and "it's OK for you, you've obviously never been in need." Or, if you protest mildly that you and your family have in fact been grindingly poor and you are not speaking completely out of your butt, that it's sanctimonious or unrealistic to argue from your own experience or accomplishments. Or, increasingly, that you're hypocritical because you drive on highways, or call 911, or accept Social Security, while objecting to other specific crazy government programs -- as if opening the door to a single government function meant abandoning the private sector altogether.

Wouldn't it be nice if the vote on certain kinds of issues, such as public expenditures, were limited to people who paid more taxes than they received in direct government cash benefits? I know that would open a can of worms, as people started trying to quantify the value of each citizen's annual benefit from the highway system, the fire department, etc.

Posted by: Texan99 at January 27, 2010 06:54 PM

It's all incorrect implementation, Bill

Ackshully, they believe it hasn't ever worked because the *people* implementing it weren't, like, way smart enough to, y'know, make it *work*.

But the Libs believe *they* are.

One thing all Lefties I've ever met had in common was an ego the size of a spiral galaxy. And an exaggerated belief in the magnitude of their own intelligence.

Two. Two things all Lefties I've ever met had in common was an ego the size of a spiral galaxy and an exaggerated belief in the magnitude of their own intelligence. And an undeserved sense of

*whap*

Yes, dear.

Posted by: BillT at January 27, 2010 09:53 PM

"The problem is that American doesn't really believe Obama or his minions should be making these choices for us."

Too bad they were so effing stupid as to elect him in the first place...

Posted by: camojack at January 28, 2010 03:45 AM

"Too bad they were so effing stupid as to elect him in the first place..."
I read, just the other day, that the media was at fault for Teh WON's election and sterling year of...
*checks The WEEBLES Political NEW AGE Handbook of Obfuscation and Conjugation Confusion*
executiving due to their uncritical coverage of Teh WON. Ok, their uncritical coverage and their bias.

Their uncritical coverage, their bias, and their willing participation in off the record Kama Sutra lessons with Teh WON and the Democrats.

Nope, it can't be the fault of the effing stupid Mensa Mob®, they're too smart for such a grand FUBAR --see Bill's observation above.

Posted by: b_of_the_hanging-chad_hun at January 28, 2010 07:38 AM

It is hard to get away from the fact that a majority of those voting had to pull the lever for this guy, in order for him to be inflicted on us. True, the media failed to investigate him, but we knew that at the time, right? And a majority still voted for him. It's truly a lesson to take to heart for the future. It points up the danger of so many things: from voting for the unknown new guy out of a wild hope that he'll be "different," to staying home because none of the candidates were good enough.

Posted by: Texan99 at January 28, 2010 10:09 AM

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