Quotation of the Day…

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… is from page 144 of Thomas Sowell’s magnificent 1980 book, Knowledge and Decisions:

The programs of government officials or political candidates tend to be expressed in categorical rather than incremental terms. The lifeblood of politics is popular emotion, and categorical declarations capture that emotion. No one is going to man the barricades for a little more of A and a little less of B. Nor are they even likely to ring door bells on cold election nights for such incremental considerations. Therefore political activity – whatever its substantive or ideological content – has built-in incentives for categorical presentation of alternatives. The competition among political groups does not therefore bring to bear more accurate knowledge, as in economic competition, but promotes exaggerated hopes and fears – and sometimes deeds. Nor is this a transient pre-election phenomenon. Once such categorical exaggerations have been set in motion, they become incentives and constraints on subsequent policy making, in even the most totalitarian regimes.

DBx: This important insight is largely ignored. It’s certainly ignored by the many economists (and fellow-travelers) who think themselves as doing value-free, objective, true, unbiased, and correct science when, spying what they perceive to be market failures, insist that economic science counsels that, if we wish to achieve optimal economic outcomes, power to correct these failures must be given to government officials. Government officials are tend to push for corner solutions – that is, in terms of the above graph, to at a point on either the X axis or Y axis.