Bonus Quotation of the Day…

by Don Boudreaux on July 12, 2020

in Competition, Complexity & Emergence, Hayek, Seen and Unseen

… is from page 87 of my late Nobel-laureate colleague James M. Buchanan’s August 2001 lecture “The Hayek Difference,” as the text of this lecture appears in Buchanan’s 2005 collection, Why I, Too, Am Not a Conservative: The Normative Vision of Classical Liberalism (link added):

Interpreting the market order as a catallaxy almost necessarily focuses attention on the choices and actions of the separate participants and upon the knowledge that these participants bring to the exchange process. Hayek recognized that this knowledge was, indeed, unique to these participants, in their separately confronted choice settings, and that no other knowledge could possibly inform the ultimate outcomes produced. And because this knowledge was itself subjectively perceived by the participants, it could not be available, actually or potentially, to anyone outside or beyond the interaction process. It follows that the market alone can utilize this knowledge.

DBx: Competitive markets are institutions for eliciting detailed, local, often changing information and giving to those persons who acquire it incentives to act on this information in ways that are as useful as humanly possible to as many fellows human beings as possible. Tariffs, subsidies, and other interventions imposed in the name of “industrial policy” block or distort both the eliciting and the use of this information.

For a country to try to improve its economic performance by using industrial policy makes no more sense than a Formula 1 driver to try to improve his performance by using a blindfold.

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