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Walter E. simplifies things:
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Posted by: TEEBONE ®

11/08/2017, 18:10:38

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Individual ignorance vs. government stupidity


of the most challenging and important jobs for an economics professor
is to teach students how little we know and can possibly know. My
longtime friend and colleague Dr. Thomas Sowell says, “It takes
considerable knowledge just to realize the extent of your own
ignorance.” Nobel laureate Friedrich August von Hayek admonished, “The
curious task of economics is to demonstrate to men how little they
really know about what they imagine they can design.” The fact that we
have gross ignorance about how the world operates is ignored by the
know-it-all elites who seek to control our lives. Let’s look at a few
examples of the world’s complexity.

According to some estimates,
there are roughly 100 million traffic signals in the U.S. How many of us
would like the U.S. Congress, in the name of public health and safety,
to be in charge of their actual operation? Congress or a committee it
authorizes would determine the length of time traffic lights stay red,
yellow and green and what hours of the day and at what intersections
lights flash red or yellow. One can only imagine the mess Congress would
create in the 40,000 cities, towns and other incorporated places in the
U.S. But managing traffic lights – and getting good results – is a far
less complex task than managing the nation’s health-care system and
getting good results, which Congress tries to do.

Here’s another
task I’d ask whether you would like Congress to control. The average
well-stocked supermarket carries 60,000 to 65,000 different items.
Wal-Mart carries about 120,000 different items. Let’s suppose Congress
puts you in total control of getting just one item to a supermarket –
say apples. Let’s not make it easy by having the help of apple
wholesalers. Thus, you would have to figure out all of the inputs
necessary to get apples to your local supermarket. Let’s look at just a
few. You need crates to ship the apples. Count all the inputs necessary
to produce crates. There’s wood, but you need saws to cut down trees.
The saws are made of steel, so iron ore must be mined, and mining
equipment is needed. The workers must have shoes. The complete list of
inputs to get apples to the market comes to a very large, possibly an
unknowable, number. Forgetting any one of them, such as spark plugs,
would probably mean no apples at your supermarket.

The beauty of
market allocation of goods and services, compared with government fiat,
is no one person needs to know all that’s necessary to get apples to
your supermarket. Free markets, accompanied by free trade, including
international free trade, make us richer by economizing on the amount of
knowledge or information needed to produce things.

Think about
this morning’s breakfast. Let’s suppose you and your spouse each had
four slices of bacon and two eggs. You had coffee, and your spouse had
cocoa. The breakfast might have cost you $22. But what might it have
cost you if instead of being dependent upon others, you were independent
and produced your own breakfast? What do you know about raising pigs
and their subsequent slaughter? Do you know how to cure pork to make
bacon? Then there are the eggs, which require knowledge about the care
of chickens. What about getting pig and chicken feed? You’d have a big
problem with the coffee and cocoa. I doubt whether you could simulate
the growing conditions in Brazil and West Africa. One thing that’s
guaranteed is that your breakfast would be far costlier than in the case
where you depended upon the benefits of skills of others that emerge
from the division of labor and trade.

The bottom line is that each
of us is grossly ignorant about the world in which we live. Nothing’s
wrong with that ignorance, but we are stupid if we believe that a
politician can produce a better life than that which is obtained through
peaceable, voluntary exchange with our fellow man anywhere on earth.


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