This is where Nobel laureate economist Friedrich Hayek (1899-1992) comes in. Hayek explained that the problem is not merely that the relevant knowledge is decentralized — spread out across millions of individuals — but that it is often tacit. Local shopkeepers’ understanding of their customers’ buying habits cannot be translated into one data point to feed into an AI or any other kind of model. Nor can we predict the emergence of an entrepreneur dreaming up a product that did not exist before.
Most important of all is the phenomenon of prices — indispensable signals that guide our decision making. Prices are neither set in stone nor arbitrarily fixed. Instead, they emerge from real exchanges. When the price of wheat rises, it is because buyers and sellers are competing for a limited supply. This price increase signals something about relative scarcity. It also provides an incentive to adjust consumption and conserve the resource, to look for a substitute, to increase production and to innovate.
In short, prices are not lying around in the wild, waiting to be harvested and fed into an algorithm. Rather, they are the result of constantly evolving discovery. Without this process of discovery, the knowledge embedded in a price simply doesn’t come into existence.
Hayek called the price system, with its ability to generate knowledge in the market, a “marvel.” He described competition as a “discovery procedure” that does much more than allocate resources. When entrepreneurs bring new products to market, for instance, they are making informed bets. If they’re wrong, they bear the cost. If they’re right, they reap the rewards. Through this process, we all learn a little more about what is possible, what is valued and what works.
Liya Palagashvili applauds “the rise of portable benefits.”
Then there’s Federal Trade Commission Chair Andrew Ferguson, who is defending his Biden predecessor Lina Khan’s overreaches in court. On Thursday he struck out at the Fifth Circuit Court of Appeals.
Mr. Ferguson, a Trump appointee, has for unclear reasons defended Ms. Khan’s magnum-opus rule that sought to suffocate mergers with red tape. Last month federal Judge Jeremy Kernodle blocked the rule on grounds that the agency’s cost-benefit analysis was sloppy. The FTC’s claimed benefits “are illusory or, at least, unsubstantiated,” he wrote.
The Chair asked the Fifth Circuit to stay the decision to let the Khan rule stay in effect. A three-judge panel on Thursday rejected the request in a pithy unsigned order. That suggests the panel agreed with Judge Kernodle’s reasoning for the most part. The panel notably included appointees of Donald Trump, Barack Obama and Joe Biden.
Rivian’s struggles offer a cautionary tale to investors. A company that structures its business around generous government handouts is like a house built on sand — with just one political wave, its foundation could disappear.
Eric Boehm blames U.S. regulations for China’s dominance in rare-earth minerals. A slice:
In an attempt to break China’s hold on the global market for this vital resource, the Trump administration is now spending millions to spur the development of new rare-earth processing facilities in Texas and California, and is also seeking partnerships with Australian mines.
That response flows from the widespread belief that Chinese dominance of rare-earth minerals is the result of a market failure.
“The market fundamentalists argue that government should not be picking which industries to support,” Marco Rubio, now the secretary of state, explained in a 2019 speech. “But what happens when an industry is critical to our national interest, yet the market determines it is more efficient for China to dominate it? The best example of this is rare-earth minerals.”
That view ignores the government’s own role in sabotaging America’s production of rare-earth metals—a market that the United States dominated until the 1980s.
Permitting is a major problem. It takes seven to 10 years for a new mine to obtain the necessary permits in the United States, compared to an average of two years in Canada and Australia, according to the Essential Minerals Association (EMA), an industry group. An S&P Global study published in 2024 found that it took American mines an average of 29 years to go from discovery to production—the second-longest period in the world behind Zambia.
Those delays often stem from the fact that a single mine requires approval from multiple federal and state agencies with overlapping and duplicative regulatory requirements. The EMA estimates that permitting delays add more than $1 billion to the development of major mining projects.
In a world of finite oil supplies, easing pressure at any particular point will raise it elsewhere. Only the worst ideas remain. Capping energy prices would result in shortages. Banning petroleum exports would backfire on America by further disrupting established trade patterns. A windfall profits tax on oil companies would discourage domestic production.
