Arnold Kling  

Knowledge-Power Discrepancy

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Jeffrey Friedman writes,


What I am calling social democracy is, in its form, very different from socialism. Under social democracy, laws and regulations are issued piecemeal, as flexible responses to the side effects of progress -- social and economic problems -- as they arise, one by one. (Thus the official name: progressivism.) The case-by-case approach is supposed to be the height of pragmatism. But in substance, there is a striking similarity between social democracy and the most utopian socialism. Whether through piecemeal regulation or central planning, both systems share the conceit that modern societies are so legible that the causes of their problems yield easily to inspection. Social democracy rests on the premise that when something goes wrong, somebody -- whether the voter, the legislator, or the specialist regulator -- will know what to do about it. This is less ambitious than the premise that central planners will know what to do about everything all at once, but it is no different in principle.

The whole piece is very consistent with my views on the financial crisis, regulation, and the discrepancy between the knowledge that policy makers are implicitly assumed to hold and their actual level of ignorance.


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COMMENTS (5 to date)
david writes:

I've still haven't quite grasped how "I don't know what will happen if we do X, but I do know it'll be better than if we do some Y which we do know about" makes sense.

Chicago and MIT both claim they know what happens when we do X, but if this is denied, well...

I can only hope this is explained more clearly in FP2P than it ever has been on this blog, because I'm popping into the library tomorrow.

Doc Merlin writes:

"Social democracy rests on the premise that when something goes wrong, somebody -- whether the voter, the legislator, or the specialist regulator -- will know what to do about it. This is less ambitious than the premise that central planners will know what to do about everything all at once, but it is no different in principle"

Best line I have heard in a while, its something people don't realize... under a market system,when we have problems that no one knows the solution to, it is still people for them to be fixed.

Lord writes:

and the discrepancy between the knowledge that market makers were implicitly assumed to hold and their actual level of ignorance

Douglass Holmes writes:

Friedman presents few more pieces of the puzzle. Can anyone tell me what the Obama administration is doing to avoid another financial meltdown?

The President claims that he has brought us back from the brink of the abyss. It seems that we have just made a turn, and that we are still running along the edge of the abyss. And, one eye is closed.

John V writes:

Fatal Conceit-Redux

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