Monday, January 01, 2018

TIM WORSTALL AND GOOD SENSE ON MARKETS

Tim Worstall posts (1 January, 2018) on Adam Smith Institute HERE https://www.adamsmith.org/blog/?author=56f9031a356fb09629e92dbd
The reason being that markets and the economy are complex things. It is impossible to calculate the effects through multiple iterations and third and fourth level effects. Thus, if intervention there is going to be that intervention has to be a simple one, a change to the price system. So that we can then use the price system and those markets as our great calculating engine. …
… What did they do instead? They tried to be clever, tried and failed to navigate and calculate through the effects. Thus we end up with something entirely counterproductive, something both more expensive and also with higher carbon emissions. Not the point at all. …
…And all the result of the fools thinking that we can plan something as complex as an economy. It really isn't just a failure of this particular plan, it's a failure of the very concept of detailed planning in the first place. 
COMMENT
I have found over recent years that Tim Worstall of the Adam Smith Institute, of which he is a Senior Felllow, writes more good sense as an economist than most others whom I read in Blog Land.
His New Year day’s piece (extracts above) is masterly and typical of his good sense as an economist.

Disclosure: I am a Fellow of the Adam Smith Society…

1 Comments:

Blogger Alan said...

Yes, but this leaves so much unsaid. We can agree about the central planning but the proposed alternative, 'the market', is also nonsense: "Thus, if intervention there is going to be that intervention has to be a simple one, a change to the price system. So that we can then use the price system and those markets as our great calculating engine."

For an interesting comment on planning from an economist see: https://rwer.wordpress.com/2017/12/30/1937/. But this does not go anyway near far enough. Economics isn't a world unto itself in the way economists imagine. For discussion see http://www.journals.uchicago.edu/doi/full/10.14318/hau3.2.010

This is also nonsense (because it likewise ignores the social/cultural context and institutions that make a 'free market' possible):
"Smith had a radical, fresh understanding of how human societies actually work. He realised that social harmony would emerge naturally as human beings struggled to find ways to live and work with each other. Freedom and self-interest need not produce chaos, but – as if guided by an ‘invisible hand’ – order and concord. And as people struck bargains with each other, the nation’s resources would be drawn automatically to the ends and purposes that people valued most highly. So a prospering social order did not need to be controlled by kings and ministers. It would grow, organically, as a product of human nature. It would grow best in an open, competitive marketplace, with free exchange and without coercion."
https://www.adamsmith.org/about-adam-smith/

11:25 pm  

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