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Central Planning vs. Local Knowledge
A Category Archive (127 entries)
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June 13, 2013
Central Planning vs. Local Knowledge
Art Carden
The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. - F.A. Hayek On May 29, I offered my proposal for how I would answer Bryan's "spend a... MORE
June 6, 2013
Cost-benefit Analysis
Art Carden
Five Points in Birmingham is a destination for an interesting combination of good food and crazy. There's a Chick-fil-A in Five Points, and I didn't realize until I read this article that said Chick-fil-A doesn't have a drive-thru. There was,... MORE
May 29, 2013
Central Planning vs. Local Knowledge
Art Carden
Bryan asked his PhD students how the government should spend $1 billion most efficiently (in the Kaldor-Hicks sense). He posted the best answers here. I agree generally that subsidizing decisions to have kids would be a good use of the... MORE
May 22, 2013
Central Planning vs. Local Knowledge
David Henderson
Private Sector, 1: FEMA, 0 Social media is [sic] often recognized narrowly as a way to connect with friends, or to share and read the news. Yesterday it was demonstrated that social media can serve as a medium of mobilization... MORE
May 15, 2013
Central Planning vs. Local Knowledge
Art Carden
One of my favorite essays in the social sciences is James Buchanan's very short "Order Defined in the Process of its Emergence." It probably has the highest ratio of insight-to-text of any article I've ever read, and I come back... MORE
May 9, 2013
Central Planning vs. Local Knowledge
David Henderson
Yesterday, as co-blogger Art Carden noted, was the late Friedrich Hayek's birthday. I want to honor him by pointing out his insight about medical marijuana. Really? Medical marijuana? But, you're probably saying, Hayek never discussed marijuana, medical or otherwise. That's... MORE
April 26, 2013
Behavioral Economics and Rationality
David Henderson
To move into Pismodise you must meet four conditions: Be 55 or older, keep your dog under 20 pounds, be present when guests stay at your home, and be comfortable with what most Americans consider a very small house. "If... MORE
April 21, 2013
Central Planning vs. Local Knowledge
David Henderson
The Massachusetts' governor's response to one murderer being at large was to shut down an entire large city--de facto, martial law. Various commenters have said that he "asked" people to stay in their homes. That might be literally true. But... MORE
April 14, 2013
Central Planning vs. Local Knowledge
David Henderson
There was some confusion a few days ago about whether certain kinds of licorice are legal in California. I had pointed out that an out-of-state firm was unwilling, because of Proposition 65, to ship its licorice to California. That does... MORE
March 13, 2013
Central Planning vs. Local Knowledge
David Henderson
Every once in a while, I depart from strictly economic education and information, the purpose of Econlog, to comment on important things that are happening in the political world. My latest article on antiwar.com discusses the Rand Paul filibuster. This... MORE
Economics of Health Care
David Henderson
The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation... MORE
February 23, 2013
Central Planning vs. Local Knowledge
David Henderson
A few minutes ago, I went to drop off my shirt and pants and pick up my dry cleaning. I gave Jennifer the slip for my pick-up items. It's pink and they've been using pink slips for some time. Then... MORE
November 1, 2012
Central Planning vs. Local Knowledge
David Henderson
The traffic in the blackout areas of Manhattan is lawless in the most literal sense: the traffic lights aren't working, so the law cannot be applied as usual. But "lawless" doesn't seem to be a fitting description; the driving seems... MORE
October 31, 2012
Central Planning vs. Local Knowledge
David Henderson
In a natural disaster like Hurricane Sandy, the only thing people should fear more than the storm is the government's response. Let us count the ways. Mandatory evacuations presume that politicians know the risks better than property owners themselves. That... MORE
September 2, 2012
Central Planning vs. Local Knowledge
David Henderson
One of the best books of the 1990s was Scott Shane's Dismantling Utopia: How Information Ended the Soviet Union. Shane, who was the Moscow Bureau Chief for the Baltimore Sun for the crucial years from 1988 to 1991, argued that... MORE
September 1, 2012
Regulation
David Henderson
John H. Cochrane of the University of Chicago has an excellent op/ed in today's Wall Street Journal, "The Federal Reserve: From Central Bank to Central Planner." [If you are blocked from the Journal, you can go to John's site and... MORE
August 8, 2012
Central Planning vs. Local Knowledge
David Henderson
The spontaneous reforms in agriculture meant that new supplies of food products needed markets and that markets needed infrastructure. Rural dwellers created a private trade network, and, within one year, most state food stores were out of business. Rural entrepreneurs... MORE
July 17, 2012
Central Planning vs. Local Knowledge
David Henderson
For example, Uwe Reinhardt, an economics professor and advocate of government-controlled medicine, writes, "In short, free markets are not an alternative to rationing. They are just one particular form of rationing. Ever since the Fall from Grace, human beings have... MORE
June 12, 2012
Central Planning vs. Local Knowledge
David Henderson
As many bloggers have noted, Elinor Ostrom, who co-won the Nobel Prize in economics, died today of cancer. Here's the post I wrote after she won the prize, along with Oliver Williamson. And here are two paragraphs from my Wall... MORE
May 28, 2012
Central Planning vs. Local Knowledge
David Henderson
Over at "Facts and Other Stubborn Things," Daniel Kuehn, a frequent commenter on this site, asks that we share thoughts of appreciation for veterans. Here is mine. It's for Richard Timberlake, a well-known monetary economist and student of Milton Friedman.... MORE
April 29, 2012
Central Planning vs. Local Knowledge
Arnold Kling
He is one of my favorite economists. He is only guest-blogging now, for Megan McArdle. I had stopped reading her blog while others were substituting, but Garett is a must-read. Still, his posts could use a bit of refinement, which... MORE
April 7, 2012
Central Planning vs. Local Knowledge
David Henderson
Like co-blogger Arnold, I'm a big fan of Lauren Hillenbrand's book, Unbroken. I highly recommend it. I was shocked and disappointed, though, by the following statement from Arnold: When the inevitable movie arrives, it will be interesting to see whether... MORE
April 5, 2012
Central Planning vs. Local Knowledge
David Henderson
As regular readers of my blog posts know, I'm a big fan of Friedrich Hayek's insight about "knowledge of the particular circumstances of time and place," or what more-modern economists, applying his insight, often call "local knowledge." The basic idea... MORE
March 10, 2012
Central Planning vs. Local Knowledge
David Henderson
Austin Keegan kneels on a tiny footbridge on Garrapata State Park's Rocky Ridge Trail and replaces a damaged plank with pre-cut lumber from home. "It's just basic maintenance," he says. "It needs to be done."
His pal David Thiermann, carrying... MORE
February 29, 2012
Austrian Economics
Arnold Kling
Gerald O'Driscoll talks about an important difference between planned systems and emergent orders. (It takes a while for him to get started, so you might skip through the first 8 minutes or so.) Planning works well for institutions with definite,... MORE
February 20, 2012
Information Goods, Intellectual Property
David Henderson
ABC calls it the Shark Tank...Sharks are evolutionarily ancient, the current versions not that much different from when our ancestors diverged from theirs 460 million years ago. They are highly evolved killing machines, programmed for nothing but predation, achieving little... MORE
February 17, 2012
Books: Reviews and Suggested Readings
Arnold Kling
Jason Collins reviews Tim Harford's Adapt. The concept of "normal accidents", taken from a book of that title by Charles Perrow, is compelling. If a system is complex, things will go wrong. Safety measures that increase complexity can increase the... MORE
February 6, 2012
Central Planning vs. Local Knowledge
David Henderson
An even more serious problem concerns the restructuring of the original Solyndra loan guarantee, a move that placed new, private investors at the front of the line in the event of a default. The result was that the government's (i.e.,... MORE
January 29, 2012
I recommend two new blogs that I've been reading in the past week. What they have in common, besides being good, is that both bloggers have been frequent commenters on Econlog. One is "PrometheeFeu's Blog." This recent post on tax... MORE
January 16, 2012
Central Planning vs. Local Knowledge
David Henderson
A popular slogan affirms that if we think less bureaucratically and more commercially in communal enterprises, they will work just as well as private enterprises. The leading positions must be occupied by merchants, and then income will grow apace. Unfortunately... MORE
January 13, 2012
Central Planning vs. Local Knowledge
David Henderson
Today there is a growing consensus that the contemporary Soviet economy serves the consumer very poorly (e.g., see Goldman 1983), but this criticism is often accompanied by a concession that the Stalinist model is suitable for rapid development and fails... MORE
January 11, 2012
Central Planning vs. Local Knowledge
David Henderson
The late Don Lavoie was one of the most informed and insightful modern economists on the ins and outs of the famous "socialist calculation debate." One socialist economist who thought he had solved the problem was Fred M. Taylor, who... MORE
December 8, 2011
Central Planning vs. Local Knowledge
Arnold Kling
My latest essay weaves together Daniel Kahneman and Jeffrey Friedman. Suppose you were to ask yourself how well you understand the world around you. How accurate is your map of reality? If you interrogate System Two, it might reply, "There... MORE
December 7, 2011
Austrian Economics
David Henderson
How important is the work of Friedrich Hayek in 20th-century economic thought? David Warsh has written an excessively nasty piece on that, which doesn't mean it contains no kernels of truth. Alex Tabarrok has written a defense of Hayek which... MORE
November 16, 2011
Regulation
David Henderson
As regular readers of my posts know (see here, here, here, and here, for example), I think the TSA is one of the most anti-liberty, intrusive government organizations in America. So I follow the culture to see what people are... MORE
November 15, 2011
Central Planning vs. Local Knowledge
David Henderson
One enterprising student, Scott Gibb, recorded all but the first two minutes of the talk I gave at Berkeley earlier this month. The sound quality is quite high. My talk is titled, "The Case For a Non-Interventionist Foreign Policy." It's... MORE
November 6, 2011
Central Planning vs. Local Knowledge
David Henderson
One of the things I find most fascinating is how various people came to their political views. Most people are not particular conscious of how, but some people are. I remember interviewing James Buchanan in 1997 and asking him if... MORE
September 28, 2011
Behavioral Economics and Rationality
Arnold Kling
Bruno S. Frey and Margit Osterloh give a number of reasons to question the effectiveness of performance-based compensation systems. One of the reasons should be familiar to readers of this blog. It would be naïve to assume that the persons... MORE
September 22, 2011
Central Planning vs. Local Knowledge
David Henderson
The abolition of consumers' choice in favor of universal rationing is a typical product of that onslaught, sometimes called Bolshevism. This was written by an economist in 1940 to oppose rationing during World War II. Who was the economist? You... MORE
September 16, 2011
International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
A Committee of economists proposes, the creation of an International Monetary Policy Committee composed of representatives of major central banks that will report regularly to world leaders on the aggregate consequences of individual central bank policies. In other words, more... MORE
September 1, 2011
Economic Education
Arnold Kling
I posted four new videos on the topic of outsourcing. They are numbers 9-12 in my AP Economics lecture series. Feedback on any of them would be appreciated. With number 12, I sort of dance around the idea of PSST.... MORE
August 30, 2011
Central Planning vs. Local Knowledge
Arnold Kling
Susan Hockfield writes, Rebuilding our manufacturing capacity requires the demolition of the idea that the United States can thrive on its service sector alone. We need to create at least 20 million jobs in the next decade to offset the... MORE
August 9, 2011
Central Planning vs. Local Knowledge
David Henderson
Another excerpt from Unbroken (I posted on this yesterday) that illustrates the relative importance of local knowledge, a la Hayek: Many other great runners also enlisted [in the U.S. military during World War II]. When Norman Bright tried to sign... MORE
August 8, 2011
Central Planning vs. Local Knowledge
David Henderson
I just finished reading Lauren Hillenbrand's Unbroken: A World War II Story of Survival, Resilience, and Redemption, on my vacation. I highly recommend it. One excerpt: He [Pete, Louie Zamperini's older brother] told the principal that Louie craved attention but... MORE
August 5, 2011
Central Planning vs. Local Knowledge
David Henderson
"The toughest job you'll ever love." Robert E. White, Peace Corps regional director for Latin America, told the Senate Foreign Relations Committee in 1970, "In the early days ... it was like a parachute drop. A Volunteer would be told,... MORE
August 1, 2011
Central Planning vs. Local Knowledge
David Henderson
A much more accurate metaphor for the economy is an ecosystem. We are simultaneously independent and interdependent. We can no more fix an economy than we can fix a rainforest or a coral reef. At best, we can leave it... MORE
July 25, 2011
Economics of Crime
David Henderson
It's short and so I'll quote the whole thing: One doesn't want to lean too heavily on human tragedies to make political points, but since a lot of our politics rightly concerns itself with how to minimize the occurrence of... MORE
July 2, 2011
Regulation
David Henderson
I've posted before on the TSA (here, here, here, here, and here.) I had some hope for a little assertion of federalism from Texas. The Texas legislature, after the U.S. Attorney John E. Murphy threatened that the TSA would ban... MORE
June 18, 2011
Public Choice Theory
David Henderson
A Public Choice Moment Like many people in the last few weeks, I have given into the temptation to make jokes or listen to jokes about Anthony Weiner. He has the perfect name, and the perfect story, to give rise... MORE
May 3, 2011
Central Planning vs. Local Knowledge
David Henderson
Will Twitter Undercut Censorship? Although I know my vote doesn't matter and I agree with Bryan Caplan about most of his criticisms of democracy, I'm somewhat of a political junkie. So I've been on line all evening watching the highlights... MORE
April 29, 2011
Central Planning vs. Local Knowledge
David Henderson
I'll try to hit highlights that other people haven't mentioned (much) on the latest video by John Papola and Russ Roberts. Big picture, though: I think it's even better than the first one, both in content and in "production values."... MORE
April 16, 2011
Central Planning vs. Local Knowledge
David Henderson
President Obama recently complained about the technological backwardness of the White House. According to news reports, he said: "The Oval Office, I always thought I was going to have really cool phones and stuff. I'm like, c'mon guys, I'm the... MORE
April 2, 2011
Central Planning vs. Local Knowledge
David Henderson
"To rely upon a reserve requirement for the meeting of cash-withdrawal demands of banks' customers is analogous to trying to protect a community from fire by requiring that a large water tank be kept full at all times: the water... MORE
March 20, 2011
Income Distribution
David Henderson
I was gratified by the response--in quantity and quality--to my post yesterday, "How to Help Poor People in Poor Countries, Part 2." I promised to say what my colleagues wrote in response to my question. Before doing so, I'll point... MORE
March 14, 2011
Central Planning vs. Local Knowledge
David Henderson
President Obama has repeatedly given us his vision of how to lower the cost of health care and raise its quality: Find out what works; then get everyone else to copy it. Toward that end, the administration is making millions... MORE
March 11, 2011
Property Rights
David Henderson
As a specific instance, the fire-bomb raids on Hamburg in July and August 1943 were highly intense community-wide disasters. As normally occurs in such situations, people proved tougher than structures. The raids destroyed about 50 percent of the buildings in... MORE
February 25, 2011
Central Planning vs. Local Knowledge
Arnold Kling
Christopher Faris writes, it's easier to tell and believe narratives about heroic individual leaders than about complex self-reinforcing political and economic systems; Read the whole thing. It summarizes a talk by Bill Easterly. Pointer from...Easterly's co-blogger, Laura Freschi. It is... MORE
February 10, 2011
Central Planning vs. Local Knowledge
Arnold Kling
David Leonhardt writes, nonprofit groups like foundations pay the initial money for a new program and also oversee it, with government approval. The government will reimburse them several years later, possibly with a bonus -- but only if agreed-upon benchmarks... MORE
February 7, 2011
Central Planning vs. Local Knowledge
David Henderson
Are you tired of having naked pictures taken of you and/or being groped at the airport in this "land of the free," but still worried about a terrorist hijacking of the airplane you're on? Is there a way out of... MORE
January 20, 2011
Central Planning vs. Local Knowledge
David Henderson
On January 12, Congresswoman Nancy Pelosi stated the following about the Tucson shootings: Whether it's the people who responded immediately very courageously, whether it's the first responders who came to the scene in a matter of minutes, whether it's the... MORE
January 5, 2011
Finance: stocks, options, etc.
Arnold Kling
Scott Sumner writes, I define "finance" as the business of allocating capital, which is a bit different from how it shows up in the national accounts. For instance, I believe the CEOs of major non-financial companies are being paid (in... MORE
December 14, 2010
Central Planning vs. Local Knowledge
David Henderson
If I were being provocative, I would have titled this, "Does Bill Kristol Think the U.S. Government Should Murder Bob Woodward or Bill Keller?" My Hoover colleague, Jack Goldsmith, a Harvard Law professor, has written an excellent post on WikiLeaks.... MORE
December 13, 2010
Macroeconomics
Arnold Kling
I offer a new insight into the Recalculation Story. It is inspired by this quote from p.66 of Leuchtenberg's The FDR Years, the essay on the way that many policy makers and pundits were calling on the government to mobilize... MORE
December 11, 2010
Central Planning vs. Local Knowledge
Arnold Kling
The latest in a series of posts by Uwe Reinhardt. Surely there is something absurd when a nation pays a primary care physician poorly relative to other specialists and then wrings its hands over a shortage of primary care physicians.... MORE
November 30, 2010
Central Planning vs. Local Knowledge
David Henderson
I mentioned briefly in a comment on my own blog post a few weeks ago that there is a Hayekian approach to protecting ourselves from terrorists. I elaborated in an article yesterday that I'll quote from here: Friedrich Hayek's insights... MORE
November 16, 2010
Central Planning vs. Local Knowledge
Arnold Kling
Mike Konczal writes, The government's workforce is more educated than the private workforce. For instance, the government's "college plus" level is 54%, while all private workforce is 35%. "Some college" is 14% of government workers, 19% of the private workforce.... MORE
November 15, 2010
Central Planning vs. Local Knowledge
David Henderson
Art Carden has an excellent article on Forbes.com in which he advocates abolishing the TSA. I give a segment on this in my econ class when I discuss, at length, Hayek's "The Use of Knowledge in Society." How does Hayek's... MORE
November 4, 2010
Central Planning vs. Local Knowledge
David Henderson
Waking this morning and seeing co-blogger Bryan's excellent post on Warren Nutter led me to recall his importance in my intellectual life. In academic year 1970-71, I took a year off after graduating from college (in Canada, we said "graduating... MORE
October 11, 2010
Central Planning vs. Local Knowledge
David Henderson
In 9 of the last 14 years, I have written the Wall Street Journal article that appears the day after the Nobel prize in economics is awarded. I missed 1999, 2000, and 2002 because I was in Europe and not... MORE
September 19, 2010
Books: Reviews and Suggested Readings
Arnold Kling
Guinivere Liberty Nell and I discussed her book, Rediscovering Fire, at an event at Heritage last week. Here is the video. I start at about minute 26. Nell used a lot of cartoons in her talk, which may give the... MORE
September 15, 2010
Business Economics
David Henderson
I'm completing a study on how quickly the U.S. economy transitioned after WWII from a wartime economy with strong elements of central control to a relatively free-market economy. I've got all that. What I'm missing is stories such as, "The... MORE
September 11, 2010
Central Planning vs. Local Knowledge
Arnold Kling
I also have a new essay for Cato. Ironically, whenever government experts fail, their instinctive reaction is to ask for more power and more resources. Instead, we need to step back and recognize that what we are seeing is not... MORE
September 6, 2010
Central Planning vs. Local Knowledge
Arnold Kling
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,... MORE
August 23, 2010
Central Planning vs. Local Knowledge
Arnold Kling
Steven Landsburg writes, How many grapes were sacrificed by growing that California tomato in a place where there might have been a vineyard? How many morning commutes are increased, and by how much, because that New York greenhouse displaces a... MORE
August 8, 2010
Business Economics
David Henderson
I'm less impressed with Phelps's piece than Arnold is, to put it mildly. Take the following line from Phelps: Executives avoid farsighted projects, no matter how promising, out of a concern that lower short-term profits will cause share prices to... MORE
August 5, 2010
Books: Reviews and Suggested Readings
Arnold Kling
I have just started reading Alan Brinkley's The End of Reform, about the evolution of liberalism during the New Deal. Very strongly recommended. It does what Jonah Goldberg claims that the Left refuses to do, which is make a serious... MORE
Central Planning vs. Local Knowledge
Arnold Kling
I found the discussion in the comments on my earlier post interesting. I have a lot of follow-up, so I will put this below the fold.... MORE
August 4, 2010
Books: Reviews and Suggested Readings
Arnold Kling
Rediscovering Fire, by Guinivere Liberty Nell, has a basic premise: The Soviet Union was a genuine experiment in trying to fix market failures, and we might want to learn from it. On p. 30, The Bolshevik theory was that the... MORE
June 28, 2010
Monetary Policy
David Henderson
Russ Roberts has a nice op/ed on Hayek's main ideas in today's Wall Street Journal. He highlights four contributions of Hayek. I agree with all four, but he gave a poor example for one of them. The four are: 1.... MORE
June 23, 2010
Central Planning vs. Local Knowledge
Arnold Kling
Niklas Blanchard adds interesting comments. Charlton follows up:, The joke of the Texas Sharpshooter is that he fires his gun many times into a barn door, then draws a target over the bullet holes, with the bulls-eye over the closest... MORE
June 20, 2010
International Trade
David Henderson
It turns out that the people in red who were cheering for North Korea in their soccer game against Brazil weren't North Koreans at all, but Chinese actors. According to Hunter Stuart in the Huffington Post, the North Korean government... MORE
June 1, 2010
Central Planning vs. Local Knowledge
David Henderson
Yesterday I was reading excerpts from Hayek's Law, Legislation, and Liberty to prepare for a conference this coming weekend in Seattle. Here are some choice excerpts from Hayek's discussion of "social justice." For the same reason that the prices which... MORE
May 13, 2010
Central Planning vs. Local Knowledge
David Henderson
In a post a few days ago, I pointed out that many people on both sides of the new Arizona immigration law are being collectivists. A particularly flagrant example popped up in Highland Park, Illinois, where a school administrator cancelled... MORE
May 2, 2010
Income Distribution
Arnold Kling
I was invited to contribute to a British booklet called Small State, Big Society. Feeling contrarian, I refused to describe the U.S. as a small state. Instead, I wrote, The United States has a surprisingly large welfare state. The American... MORE
April 28, 2010
Finance: stocks, options, etc.
Arnold Kling
The New York Times hosts me and two other participants discussing the social value, or lack thereof, of financial innovation. I like what I wrote, although it was hard to fit what I wanted to say within the suggested length.... MORE
April 20, 2010
Central Planning vs. Local Knowledge
Arnold Kling
My talk, given at the U. of Tulsa. Perhaps a bit too wide-ranging, but you decide. The main theme is trial-and-error learning, as opposed to central planning. It was supposed to be a house concert, but the host was afraid... MORE
April 8, 2010
Institutional Economics
Arnold Kling
Clay Shirky writes, Complex societies collapse because, when some stress comes, those societies have become too inflexible to respond. In retrospect, this can seem mystifying. Why didn't these societies just re-tool in less complex ways? The answer Tainter gives is... MORE
April 5, 2010
Central Planning vs. Local Knowledge
Arnold Kling
My first thoughts were here. Below are some further thoughts.... MORE
Austrian Economics
Arnold Kling
Recently, I wrote about market socialism. Why don't individual firms use market socialism? That is, instead of managing through command and control, senior management could set shadow prices for various inputs and outputs, and then allow the managers of individual... MORE
Austrian Economics
Arnold Kling
I am reading a draft of The Clash of Economic Ideas, by Lawrence H. White. (Googling for it landed me here). One of its topics is the socialist calculation debate, which revolved around the idea of "market socialism," an idea... MORE
March 17, 2010
Central Planning vs. Local Knowledge
David Henderson
Commenters on my post last night pointed out something I had not been aware of: the special treatment local governments give Bass Pro Shops to set up. It turns out that the store I went to in Manteca last night... MORE
March 10, 2010
Central Planning vs. Local Knowledge
Bryan Caplan
The classic argument against socialism is that it gives people bad incentives. What's the point of working, conserving, saving, quality control, and/or taking out the garbage if they don't pay? The classic socialist reply is that capitalism creates the selfishness... MORE
February 14, 2010
Books: Reviews and Suggested Readings
David Henderson
My Hoover colleague, Thomas Sowell, has come out with yet another book. Titled Intellectuals and Society, it has been sitting on my pile for about two weeks. (His publisher sends me gratis copies because I review books in Regulation and... MORE
February 6, 2010
Central Planning vs. Local Knowledge
David Henderson
I just finished filling out my survey on my views of the Food and Drug Administration's monopoly on approvals of drugs and medical devices. I was one of 305 economists asked by Econ Journal Watch to do so. Most of... MORE
January 25, 2010
Politics and Economics
David Henderson
You can't make this stuff up. Apparently-serious people are suggesting that Bill Clinton be made the aid czar. Mary O'Grady of the Wall Street Journal says why this is a bad idea. An excerpt from her piece: According to sources... MORE
January 15, 2010
Central Planning vs. Local Knowledge
David Henderson
As I've posted about earlier, to understand why socialism must fail, you need to understand Hayek's argument (which he drew from Ludwig von Mises and elaborated on) that the information that's most valuable is information held in the hands of... MORE
January 12, 2010
Central Planning vs. Local Knowledge
David Henderson
Over the Christmas holiday, I was talking to a young man I know who works for Facebook. He said that he ultimately wanted to go to graduate school so that he could be of service to people. I told him... MORE
January 5, 2010
Books: Reviews and Suggested Readings
Arnold Kling
It seems to be the theme du jour. The interview with Thomas Sowell continues. At one point, Sowell notes that we cannot blame Larry Summers for policies, because politicians are selecting the policies. I think that Bryan Caplan would say... MORE
January 4, 2010
Books: Reviews and Suggested Readings
Arnold Kling
Unchecked and Unbalanced is about the discrepancy between knowledge and power. Thomas Sowell's latest book, Intellectuals and Society, is about the same phenomenon. (Guess which one is selling better on Amazon.) If my many blog posts on the problem of... MORE
January 1, 2010
Central Planning vs. Local Knowledge
Arnold Kling
David Brooks writes, For better or worse, over the past 50 years we have concentrated authority in centralized agencies and reduced the role of decentralized citizen action. We've done this in many spheres of life. Maybe that's wise, maybe it's... MORE
December 31, 2009
Central Planning vs. Local Knowledge
Bryan Caplan
Back in the sixties, Galbraith famously argued that East and West were converging. The East had government central planning. The West had corporate central planning. Same difference, right? In his interview with Arnold and Nick, Bill Easterly begs to differ:[T]he... MORE
December 27, 2009
Central Planning vs. Local Knowledge
David Henderson
When I teach my Ten Pillars of Economic Wisdom, I tell a story to illustrate part of Pillar Five, "Information is valuable and costly, and is inherently decentralized." The part this illustrates is the "inherently decentralized" part, which I owe... MORE
December 19, 2009
Central Planning vs. Local Knowledge
David Henderson
I don't want to weigh in comprehensively on co-blogger Bryan's claims about Hayek. What I will say is that it's important to distinguish between three claims: (1) the claim that many modern libertarians and economists overrate Hayek (a claim with... MORE
December 14, 2009
Business Economics
Arnold Kling
In a comment from a troll Bryan Caplan entry, I find, I've long since lost all patience with Hayek. His original, true ideas could have been five good blog posts Personally, I think that the concept of spontaneous order takes... MORE
December 7, 2009
Institutional Economics
Arnold Kling
Paul Gregory writes, China and russia in the 1980s offer a unique case study in why some reforms work and others do not. The contrast refutes the notion that a strong, perhaps totalitarian state, is required for successful reform. In... MORE
October 14, 2009
Central Planning vs. Local Knowledge
Arnold Kling
Biofuels digest reports, In Washington, the US Secretary of Energy, Dr. Steven Chu, broke with Obama administration renewable energy policy, telling stunned alternative energy developers at a recent meeting on alternative fuels that "if it were up to me, I... MORE
October 5, 2009
Central Planning vs. Local Knowledge
David Henderson
Poor Rio, Lucky Chicago Not everyone, however, is convinced that preparing for a 17-day sports event is the best way to undertake socially responsible urban planning. Mr. Garvin himself invokes "the inherent conflicts between great urbanism and a functional Olympic... MORE
September 30, 2009
Central Planning vs. Local Knowledge
David Henderson
I mentioned in Tuesday's post that one of my favorite passages from Scott Shane's Dismantling Utopia is the passage about shoes. Commenter Bill asked me for the passage. Here it is: My informal survey suggested that some of the longest... MORE
August 21, 2009
Central Planning vs. Local Knowledge
Arnold Kling
Today, generally, Adam Smith is claimed by the Right, Darwin by the Left. In the American South and Midwest, where Smith's individualist, libertarian, small-government philosophy is all the rage, Darwin is reviled for his contradiction of creation. Yet if... MORE
July 23, 2009
Economics of Health Care
David Henderson
Somehow I missed this when it came out Monday. Here's what James C. Capretta reported about Obama's amazing power grab: Today, the Obama administration delivered one of the more remarkable presidential power grabs seen in recent memory (the transmittal letter... MORE
July 20, 2009
Central Planning vs. Local Knowledge
David Henderson
My all-time favorite article by Hayek is his 1945 classic, "The Use of Knowledge in Society." Although he doesn't mention the term "local knowledge" in that article, that is the term we Hayekians have adopted to refer to his "knowledge... MORE
June 28, 2009
Central Planning vs. Local Knowledge
David Henderson
New York Times Article Shows Pitfalls of Central Planning The weather in Grand Cayman is so-so, which is why I'm blogging today. "Grant System Leads Cancer Researchers to Play it Safe," reads the title of a news story in today's... MORE
June 23, 2009
Central Planning vs. Local Knowledge
David Henderson
Bizarre Headline in Wall Street Journal "Governor's Trip Confuses South Carolina." So reads the headline of the on-line version of a news story in today's Wall Street Journal. The hard-copy version of the headline is even more dramatic: "State of... MORE
June 14, 2009
Central Planning vs. Local Knowledge
David Henderson
Bankruptcy Judge Actually Understands Law How did I miss this? Judge Robert Drain ordered Delphi to hold an auction and allow bids to challenge the government-brokered sale to Platinum Equity. "What's so special about Platinum?" asked Judge Drain. "They're just... MORE
June 10, 2009
Central Planning vs. Local Knowledge
David Henderson
In a December post, I wrote about the aristocracy of pull, that beautifully descriptive phrase that Ayn Rand used in her classic novel, Atlas Shrugged. It refers to the use of government power to allocate resources. Today, my fellow blogger... MORE
May 6, 2009
Central Planning vs. Local Knowledge
David Henderson
In 2004, the Chicago Skyway was leased to a private company for 99 years for more than $1.8 billion. The company has the right to toll and concession revenue and the responsibility to maintain the road. In 2006, the same... MORE
April 5, 2009
Central Planning vs. Local Knowledge
David Henderson
It isn't that common any more to find evidence of one of the bailed-out banks making a good decision with its money in the face of government pressure. But the weekend Wall Street Journal reported on such a case. J.P.... MORE
March 30, 2009
Central Planning vs. Local Knowledge
David Henderson
No, not that one; I wish. President Obama has done something far more serious. He has already, in less than 100 days, moved the U.S. economy further towards fascism. Sean Hannity and other critics keep criticizing Obama for his socialist... MORE
March 27, 2009
Monetary Policy
David Henderson
In today's Wall Street Journal is a round-up of views on whether Alan Greenspan caused the housing boom. The lead piece, by me, says that he didn't, for reasons that will be familiar to regular readers of this blog. My... MORE
February 27, 2009
Central Planning vs. Local Knowledge
David Henderson
Lew Rockwell has an interesting article today on Adolf Hitler's economic policies. His bottom line: Adolf Hitler was a Keynesian. Two highlights: What were those economic policies? He suspended the gold standard, embarked on huge public works programs like Autobahns,... MORE
February 10, 2009
Central Planning vs. Local Knowledge
Arnold Kling
I outsource my comments to Tyler Cowen.... MORE
February 3, 2009
Fiscal Policy
David Henderson
In yesterday's Boston Globe, GMU economist Russ Roberts has an excellent piece on the proposed "stimulus" package. The article is directed against the huge spending and tax rebate bill working its way through Congress. Roberts recognizes upfront that even Nobel... MORE
January 26, 2009
Monetary Policy
David Henderson
Monetary economist Jeff Hummel has posted today a detailed exposition of recent Fed policy. The two most interesting things to me are: (1) The money supply is increasing. This fact undercuts one part of the "monetary policy is impotent" view... MORE
January 11, 2009
Central Planning vs. Local Knowledge
David Henderson
In coastal California, where I live, various cities have weekly publications that are distributed at a zero price, have a cutting-edge, vaguely (sometimes explicitly) leftist slant, and almost always are uncritically "environmentalist." They rarely take on any policy that most... MORE
December 15, 2008
Central Planning vs. Local Knowledge
David Henderson
This morning's Wall Street Journal quotes a 1999 paper by Ben Bernanke as follows: Roosevelt's specific actions were, I think, less important than his willingness to be aggressive and to experiment -- in short, to do whatever was necessary to... MORE
December 3, 2008
Central Planning vs. Local Knowledge
David Henderson
A news story in today's Boston Globe titled, "Auditors Fault Treasury Policing of Bailout Funds," cites a report by federal government auditors at the Government Accountability [sic] Office. The GAO criticized the Treasury for not making sure banks comply with... MORE
November 12, 2008
Central Planning vs. Local Knowledge
David Henderson
In my Veteans Day tribute to economist Richard Timberlake yesterday, I highlighted his experiences in World War II as a pilot of a B-17 bomber. I didn't mention his economic insights in his book, They Never Saw Me Then, because... MORE
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