Essential Economics for Politicians

But was this conclusion about the lack of marginal lockdown harms justified? Economists were no doubt correct that movement and business activity would have changed even without any lockdowns. Vulnerable older people were wise to take some precautionary measures, the elderly in particular. The staggeringly steep age gradient in mortality risk from infection with novel coronavirus was already known by March 2020.

Nevertheless, the argument that people would have voluntarily locked down anyway even in the absence of a formal lockdown is spurious. First, suppose we take the argument that people rationally and voluntarily restricted their behavior in response to the threat of COVID as correct. One implication would be that formal lockdowns are unnecessary since people will voluntarily curtail activities without lockdown. If true, then why have a formal lockdown at all? A formal lockdown imposes the same restrictions on everyone, whether or not they are able to bear the harm. By contrast, public health advice to restrict activities voluntarily for a time would permit those—especially the poor and working-class—to avoid the worst lockdown-related harms. That some (though not all) people did curtail their behavior in response to the disease threat is thus not a sufficient argument to support a formal lockdown.
 
… is from pages 492-493 of the 2011 revised and enlarged edition of Thomas Sowell’s 2009 book Intellectuals and Society (footnote deleted; link added):

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The vast disparity in knowledge and understanding between intellectuals and the population at large assumed by the intelligentsia is crucial to the vision of the anointed, whether in discussions of law, economics, race, war or innumerable other issues. But, if the knowledge that is consequential includes a range of mundane information too vast to be known to any given individual – whether among the intellectuals or the masses – then top-down decision-making processes like economic central planning, directed by an intellectual elite, are less promising than market competition, where millions of individual decisions and mutual accommodations bring into play a vastly larger range of consequential knowledge, even if this knowledge is available to each individual in unimpressively small fragments of the total knowledge in society. As Robert L. Bartley of the Wall Street Journal expressed this point of view: “In general, ‘the market’ is smarter than the smartest of its individual participants.”
 
This is what the COVIDOCRACY misses.

is from pages 464 of F.A. Hayek’s profound and important 1964 article “Kinds of Order in Society” (available without charge on-line here) as it appears in Liberty Fund’s 1981 single-volume collection of New Individualist Review:

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I]f the overall character of an order is of the spontaneous kind, we cannot improve upon it by issuing to the elements of that order direct commands: because only these individuals and no central authority will know the circumstances which make them do what they do.
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DBx: Undeniably true.


The kind of knowledge to which Hayek here refers is what in 1945 he called “knowledge of the particular circumstances of time and place.” It is not scientific knowledge of the sort that scholars learn in school, teach to students, and sometimes – when they advance it – earns for them Nobel Prizes. It is not knowledge of statistical data, regardless of how thoroughly the statistics or econometrics are done. (Statistics, by its nature, aggregates measurements of individual, specific instances into larger lumps of data.) It is not even wisdom acquired through experience. Instead, it is knowledge (Hayek later said “information”), almost always new and surprising, of very precise, often fleeting details found in local circumstances – the discovery that a particular iron-ore mine contains more ore than previously thought; knowledge that a machine in a catfish-processing plant in Breaux Bridge, LA, has just broken down and can best be repaired by paying Gerry Dugas to do the job; a hunch that changing ever so slightly the way some fracking machines are used will increase the daily rate of extraction by about two percent; finding out that skilled labor in some town costs more than expected and experimenting on the spot with ways to minimize the impact on production costs; knowing what specific menu items, and prepared just so, are likely to work best at a Silvio’s Italian Kitchen in Westchester County, NY; discovering that the wall of a grain silo is weakening and how best to strengthen it; noticing at a Petco in Pueblo, CO, that buyers there have an unexpectedly high demand for a particular kind of cat-litter box.

Knowledge of scientific propositions – and, even more, experience – often prime the human mind to be better able to recognize particular facts such as these and to understand their potential significance. But scientific knowledge and experience alone are not the sources of the kind of knowledge that Hayek here has in mind.

It is not too much to say that the most under-appreciated fact about modernity is the market’s astonishing success at routinely, every moment of every day, prompting individuals in their unique circumstances to notice and act on local, detailed knowledge in ways that change prices and, in turn, cause millions of strangers each to change his or her actions as if each of these strangers were consciously informed of some detailed piece of knowledge from far away and then persuaded to react to this knowledge as if his or her goal were to serve humanity as best as possible.

No serious person argues that the results of the market process are perfect in comparison to what the human mind can imagine. But no truly informed person denies that the results are truly marvelous. The irony is that the market works so well and so consistently that we take its successes for granted and notice only its relatively rare ‘failures.’
 
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Happy Labor Day to all of you. This is Crush's Labor Day predictions for the future. Entertainment purposes only and please do your own research & predictions and add some personal dreams to it and share as well. One can only dream in these tough times and that's what I do all day:) I have visions of so much fun for all of us some day. The fact is, all of our ancestors ((working class)) worked their asses off to build this world and only a few got super duper rich off our great & great & great Grandpa's and Grandma's sufferings and sacrifices. If you add all the industrialized wars to make extra dollars off our kids lives, it makes one think deeply today. Plus all the abortions they want. Wait until you find out what these monsters do with fetus. It's truly insane to rationalize what these monsters are up to right now as we all rest on this Labor Day. It's time us workers taste some freedom and fun, just like all the Elitist have been enjoying since forever. America was started for this very reason. I can say without a doubt that their is plenty of food, land and resources for all of us to live freely. I mean super free. Like wake up tomorrow and if you dont want to get on the Hamster Wheel of life, then you dont have to. If you dont want to go to school tomorrow, you dont have to. Crazy to think about real freedom, right? If they ((the good guys)) take all the $$$ away from the cheaters & snakes, then we all can get $100,000 each to kick start the new life and then $2500 a month each for life. Inflation will come down. So if one wants to sit in his room all day playing video games, go ahead. That's freedom or addiction, but choice has to be made. We made these stupid video games and we have a generation of addicted and obese kids that just sit in their room all day and night playing video games. If one 18 year old really wants to travel around the world, then they can. It's called freedom. Others like me and my wife, we want to innovate with our ideas. I have so many ideas to help humanity. I want to build the first ever, "Open 24/7" Holistic Healing Urgent Care. No pills or thrills. No office, just Mother Nature and all she has to help us be healthy with our amazing bodies that were created to win. This has been going on for thousands of years until big farma took over and used Petroleum to treat our pain. If you want booster jabs forever, you can do that too. We will have two worlds to choose from very soon. The new world order or freedom. If you want big brother ((and your wife)) spanking your ass every morning to get on that damn wheel and telling you want you can and can;t do ((Espola and Dad types)) then you can have that as well. I'm going to build my own wheel with my wife. Peace to all!!!
 
The ultimate proof of the fallacy of mathematical projections comes from the Communist countries. No governmental system in the world has attempted to control all the financial aspects of an economy like the Communists. Yet every government that has pursued the “controlled economy” approach has either collapsed (Soviet Union), changed to limited capitalism (China), or become destitute (Cuba). According to the mathematical models the party leaders constructed, prosperity was supposed to be guaranteed. But it didn’t happen, because mathematical projections can’t account for outside variables. (By the way, considering the above examples, does anyone really believe the United States can have a balanced budget, when that conclusion is based on projected revenues and expenses?)
 
Interest rates are prices. They impart information. They tell a business person whether or not to undertake a certain capital investment. They measure financial risk. They translate the value of future cash flows into present-day dollars. Manipulate those prices — as central banks the world over compulsively do — and you distort information, therefore perception and judgment.

Interest rates ought to be discovered in the market, not administered from on high. They can’t do their essential work if someone, say a central bank, is muscling them around. Let’s get the central banks out of the business of using interest rates — and stock prices and exchange rates, too – as instruments of national policy. Today, investors live in a hall of mirrors: They don’t know which values are real and which are distorted by monetary manipulation. Market-determined rates will help restore clarity.--http://www.nationalreview.com/article/441128/james-grant-monetary-manipulation-must-end
 
Hmmm, seems CoreCivics may be a hot investment. Business may double. With all the potential detentions and arrests private prisons stock will be looking up! You’re welcome.
 
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