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Quotation of the Day…

… is from page 149 of Thomas Sowell’s 2008 volume, Economic Facts and Fallacies (original emphasis):

Claims by some that they cannot understand or justify large income differences (“disparities,” “inequities”) are another version of the presumption that third parties are the best judges – as if people’s incomes, like their housing arrangements, should be judged by what a tableau they present to outsiders, rather than how they reflect the choices and mutual accommodations of those directly involved.  Such third-party presumptions are often based on an awareness of being part of a more educated group having, on average, more general knowledge than most other people – and an unawareness that the total knowledge of all the others vastly exceeds theirs, as well as being more specific knowledge relevant to the decisions at hand.  No third parties can possibly know the values, preferences, priorities, potentialities, circumstances, and constraints of millions of individuals better than those individuals know themselves.

Sowell here highlights what Hayek called “the fatal conceit.”  This conceit is that of elites and of book-learned people that they, because they (usually) have more knowledge than do lower-status and less-educated people of abstract social and economic relationships (for example, more knowledge of the historical trend of the marriage rates of 16-24 year olds, or of the average inflation-adjusted hourly wage of production and nonsupervisory workers) – or because they’ve pondered some philosopher’s excogitations on the connection between camping trips and society – therefore possess enough knowledge and wisdom to override the choices of each of hundreds of millions of individuals in ways that will result in greater well-being for all.

Such an attitude is a kind of pretension to god-like knowledge and god-like entitlement to order the masses about – for the masses’ own good, of course (or so those with power tell themselves and others).

This sort of “Progressive” rule is often called, by both its friends and critics, “the rule of experts.”  But in fact such a system of state intervention is emphatically not the rule of experts.  It’s the opposite; it’s the rule of non-experts.  It’s the substitution of the commands of people who have less relevant information for the choices of people who have more relevant information.

For example, even the most Einstein-like physician does not know any other individual’s tolerance for risk as well as that individual knows his or her tolerance for risk.  And certainly this Einstein-like physician installed as head of the F.D.A. is not thereby invested with the miraculous ability to know the risk tolerance of each of the hundreds of millions of individuals who are affected by his administrative diktats.  Indeed, this Einstein-like physician cannot even know the average or modal risk tolerance of the mass of individuals over whom he has power.  (I add that this average or modal risk tolerance for ‘all’ Americans, even if it could be known, is irrelevant.  What’s relevant is only each individual’s risk tolerance.  And in the United States there are millions upon millions of these individual preferences.)

Likewise, no genius labor economist working for the state or occupying a well-endowed professorship at a prestigious university knows the details of each of millions of workers’ constraints, preferences, and alternatives.  This genius labor economist can gather aggregate statistics – for example, the percent of workers who earn the minimum wage, or the percent of workers who likely lost jobs as a result of the most-recent increase in the minimum wage – but even if these statistics are as unassailable as any such statistics can be, they are not information about each individual worker’s situation and desires.  How did Joe Smith’s job duties at Emma’s Diner change when the minimum wage rose?  Is Sally Jones currently choosing to remain out of the work force because she senses that she has no good prospects of landing a job at the higher minimum wage or because of some other reason?  What are the current and future consequences borne by Jenny Brown from her failure to find a job at the minimum wage, and how do these consequences compare to the current and future consequences enjoyed by Tommy White as a result of his pay being made artificially high by the minimum wage?

All of this detailed knowledge is relevant, but almost all of it is unknowable to even the most careful and caring of academics, statisticians, politicians, and bureaucrats.  In short, none of the so-called “experts” in most of the matters that government intrudes into are in fact experts at all.  They are all ignorant of most of the information that matters.  The real experts are each of the individuals.

I actually support the rule of experts – which means that I support the rule of each adult over himself, herself, and his or her family.  I oppose the rule of the ignorant and the uninformed – that is, I oppose the rule of Jones (who knows too little of Smith’s circumstances) over Smith, and I oppose the rule of Smith (who knows too little of Jones’s circumstances) over Jones.  And I oppose the rule of the majority comprised of Smith and Jones over Williams – for combining Smith’s ignorance of Williams’s circumstances with Jones’s ignorance of Williams’s circumstances does nothing to enhance Smith’s and Jones’s collective knowledge of Williams’s circumstances.