Arnold Kling  

Knowledge-Power Discrepancy

PRINT
The Medicare Fraud in Our Futu... What I'm Reading: 1...

I discuss knowledge and power with Russ Roberts. The central theme of Unchecked and Unbalanced is that we live an a world with increasingly important dispersed knowledge and yet in a structural sense power is becoming more complicated. The result, I would argue, is a more brittle political system, more prone to major breakdowns. Let me know where my explanations work and where they do not. I will be doing some talks on the subject over the next few months.


Comments and Sharing





COMMENTS (6 to date)
david writes:

I can't download the mp3 so this is based off the transcript:

You need to argue the underlying assumption that the eventual stable equilibrium (in the dynamic sense, if neoclassical static equilibria are unappealing to you) in a decentralized market-disciplined framework is a desirable one - that systematically exploitable market failures can all be fixed via private institutions, that the people who suffer in the meanwhile can find some measure of justice, etc.

This assumption seems to be present throughout - e.g., the egg salmonella regulator, to pick an example. That consumers will even occasionally accurately identify private regulators of the thousands of components used to make up the stuff in households right now is even more implausible that even a mediocre unmotivated technocrat. You've said you believe in market failure but this doesn't seem to be the case at all.

Cultural norms and habits dominate formal contracting but unfortunately the contracting via the price mechanism functions by the latter. When's the last time you read an EULA?

Some of the examples are unfortunate, e.g., voluntary task forces for internet standards, esp. considering the damage done by the dominant market players. Javascript is standardized but the dominant player explicitly rejects adhering to it.

Agree on ratings regulation - requiring specific ratings was and is stupid; govts. have too much market power here to rely on the rest of the market to discipline ratings. Smaller countries can play this with the world market; US probably cannot.

Last section: class assumption of easy social mobility and ability to influence social environment very obvious here, I'm afraid. This is what people who complain that you write from a privileged perspective have in mind. "Getting people to think in those terms" is key, once that happens, lots of public services can be privately provided at high quality - Nordic fire services, etc. - but the required willing contribution of lots of effort by numerous private volunteers (e.g., in monitoring) assumes population with lots of free time and relatively stable income stream.

Noah writes:

Will you be announcing the talks on the blog? If not, is there some other place I can go to find out when and where these talks will be? I'm in College Park, MD, for what it's worth.

Chris Koresko writes:

@david: You need to argue the underlying assumption that the eventual stable equilibrium (in the dynamic sense, if neoclassical static equilibria are unappealing to you) in a decentralized market-disciplined framework is a desirable one - that systematically exploitable market failures can all be fixed via private institutions, that the people who suffer in the meanwhile can find some measure of justice, etc.

I think you're missing Arnold's point, which (if I understand him correctly) is that power is becoming more concentrated over time while knowledge is becoming less concentrated. This should result in a deterioration of the quality of decision-making. Arnold suggests (argues?) that an appropriate response to the diffusion and specialization of knowledge is greater reliance on free markets, which by their nature are good at processing diffuse knowledge. He is not claiming that markets would produce ideal solutions in every or even most cases; he's just arguing that they'll tend to do better than top-down decision-making.

david writes:

@Chris Koresko,

Yes, and the argument that they do tend to do better is not trivial and needs to be spelled out. It is by no means obvious; it is easy to consider perverse scenarios in which increasingly dispersed knowledge aggravates instead of alleviates existing market issues.

I read Kling as saying the same thing you identify him as saying, but the logic here has a "and then a miracle occurs" quality to it. When would an unregulated market manage dispersed information better than even imperfect, but competent regulation? Consider healthcare; Singapore forces hospitals to publish price lists. Would it be better off if it didn't?

agnostic writes:

Maybe it's just me, but I'd re-word the idea to say that knowledge is becoming more concentrated rather than more dispersed. I agree on your observations, but the phrasing is confusing.

Dispersion means something being more spread out, which is the opposite of specialization. A juicy rumor will become widely dispersed, but highly technical and specialized knowledge will remain concentrated in the minds of a few.

The "knowledge" you're referring to is "all the knowledge necessary to get some big project done," which is now housed in many people's minds rather than in one generalist's. The "knowledge" I'm referring to is a particular piece -- say how to fix a tire, or what the melting point of X is.

If you want to convey the greater sense of fragility of the system, I think it works better to focus on how knowledge is becoming concentrated into fewer minds, hence more susceptible to meltdowns when something goes wrong. Nassim Taleb talks a lot about this.

Martin writes:

Mr. Kling, on a somewhat unrelated note, but isn't the increase in college majors the result of an increase in the college population than anything else rather than an increase in knowledge?

It seems to me that the driving factor in that example is population growth. An increase in population makes an increase in the division of labour possible, which in turn leads to more knowledge.

Wouldn't a measure of college majors therefore not measure population size, rather than knowledge? If tomorrow half the population would be wiped out; the knowledge would still be there; many majors probably wouldn't. That or I emphasize knowledge in 'books' and you emphasize knowledge in people's heads.

Comments for this entry have been closed
Return to top