From Roman Frydman and Michael Goldberg’s new book Beyond Rational Markets: Asset Price Swings, Risk, and the Role of the State:
The problem that haunts the Rational Expectations Hypothesis is the same one that doomed socialist planning: no fully predetermined mechanism that drives market outcomes can, in principle, be uncovered. Basing the explanation of market . . . → Read More: Frydman & Goldberg on Robert Lucas & F. A. Hayek
The self-beclowned Chicken Little of the environmental movement takes a break from soothsaying to wrestle with fact of distributed knowledge — Steven Hayward has the story:
I’ve debated Ehlich twice .. I once had a fairly serious argument with him about how Hayek’s concept of the “knowledge problem” made his schemes of human improvement both . . . → Read More: PAUL EHRLICH VS THE KNOWLEDGE PROBLEM
Sometime in the 1940s Hayek’ presented a popular version of the arguments found in his “Use of Knowledge in Society” and “Collectivist Economic Planning” essays to the Oxford University Liberal Club, which was published in the mimeographed “official organ” of that club called “The Liberal Review”.
The essay is six single-spaced pages of manual typewriter . . . → Read More: STUFF BY HAYEK YOU’VE NEVER READ — “THE ECONOMICS OF PLANNING”
In the modern corporatist state, regulations and their operationalization are far more complex than any mind can possibly understand — causing insuperable problems for the limited mind of your Congressman:
Economist Friedrich Hayek explained in 1945 why centrally controlled “command economies” were doomed to waste, inefficiency, and collapse: Insufficient knowledge. He won a Nobel Prize. . . . → Read More: Glenn Reynolds on The Legislator’s Knowledge Problem
Two more economists weigh in on the “what is wrong with macroeconomics” question:
The economics literature is full of different models, each one assuming that it adequately captures how all rational market participants make decisions. Although the free-market Chicago school, neo-Keynesianism, and behavioural finance are quite different in other respects, each assumes the same REH-based . . . → Read More: Frydman & Goldberg on Hayek & Rational Expectations
Jennifer Rubin discovers both Hayek’s knowledge problem and Hayek’s distributed knowledge and discovery procedure solution. Did she read John Stossel or The Constitution of Liberty?
John Stossel weighs in on the brain-dead arrogance of President Obama & the U.S. Congress:
focus on the spectacle of that handful of men and women daring to think they can design the medical marketplace. They would empower an even smaller group to determine — for millions of diverse Americans — which medical treatments are . . . → Read More: john stossel: The Medical Economy & The Knowledge Problem
Energy regulation economist Robert Murphy weighs in:
Fans of Austrian economist Friedrich Hayek — who warned against the “pretense of knowledge” — should be even more concerned about the sheer audacity of the field of climate economics. After all, it is rather absurd to argue about the impacts of present tax policies on global temperatures . . . → Read More: Hayek & the “Global Warming” Scare
Barack Obama and some on his economic team claim to be students of Hayek. But as Université du Québec economist Pierre Lemieux points out, Obama’s new plan to “regulate” the macroeconomy is premised on purely magical thinking where government bureaucrats have an impossible God-like knowledge of market relations, and where bureaucrats and politicians have a . . . → Read More: pierre lemieux: Obama As Student Of Hayek = FAIL