Monday, November 17, 2008


F.A. Hayek:
"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." [The Fatal Conceit, p. 76]
I guess few economists understand this. After all, the models economists rely on assuming complete knowledge. Even the "tools" they use, such a benefit cost analysis, presume that an economist, or perhaps two or three working together, can come to know enough to calculate the benefits and costs of public expenditures and public policy changes. Instead of attempting to "demonstrate" how little they know, they attempt to demonstrate how the complete knowledge models of a static world can help people and governments make better decisions in a real world of adaptation and evolution. Few economists seem to think the world they study is a world of adaptation and evolution.

1 comment:

Craig T Glackman said...

Ever since I read this, I have been trying to add up the number of times I hear on a daily basis some economist what I need to do. The tipping point occured yesterday when I heard an opinion abou the auto-bailout. It was as such: let the governemnt but stock in GM so "it" can sit on the board and make GM build more hybrid and green cars. I DON"T WANT A HYBRID CAR!!!!!!!! IF I DID, I WOULD GO TO MARKET AND SEEK ONE!!!!

Do the before mentioned economists feel an obligation to use their knowledge to tell me what is best for me? Maybe they feel that they need to validate the education they recieved?

As for me, the economic education I have recieved, I plan to try to pass on the gift of freedom and use the logic that was taught to me to understand why people make the choices do, but not to try to dictate what choice I think they should make.