Knowing and Making

A very strong article here (by Claire Hill, law professor at University of Minnesota) focusing on two principles: how people see the world, and how they value things. Perhaps I like the article because these two points align closely with my model of beliefs and values. The article is one of a number of contributions to Truth on the Market's behavioural economics symposium , but most of the others are entirely different in character to Hill's. The symposium is dominated by strong skepticism about behavioural economics and particularly its application by governments. It's interesting to see the strong feelings that this subject arouses. Among the various contributors there's a mix between resistance to regulation in general, dislike of the assumption of irrationality, insistence that regulators are just as irrational as citizens, and the assertion that people know their own preferences better than any well-meaning nanny-state regulator possibly could. Richard Thaler ...

Matthias Wasser , in a response to Tyler Cowen's progressivism post , writes: In a large state true democratic governance is impossible, because unlike the market, a perfectly functioning democracy would require every voter to have perfect global knowledge. Is this true? Note that Matthias is not necessarily giving his own view here, but (as per Tyler's challenge) his characterisation of libertarian opinion. But it's an intriguing statement. Many people think the converse: that the efficient markets hypothesis requires all market participants to have perfect information, and the action of an informed and beneficent government is a way around this problem. He's correct to point out that this is not in fact a condition of the EMH. But surely it would be possible to design a democratic system where the same thing holds: where, somehow, distributed knowledge enables society to make the right collective choices. What are your ideas on this? Comments are invited.

Tyler Cowen challenged progressives to come up with an intelligent defence of libertarianism. While I might not be considered especially progressive by European standards, I probably am on the American spectrum. I thought that a view from a European might be interesting given that he makes several comparisons between the two continents in his list. Incidentally, I think his list is not a bad summary of the progressive position, though I'd disagree with 3 and the second part of 8. Maybe those points are where I am revealing my libertarian bits. Here's my attempt to return the favour: As a matter of principle, freedom is both a good in itself and a bulwark against damaging authoritarianism. In general, each individual knows more than anyone else about their own interests and the context they live in, and by making their own choices they are best able to maximise those interests. Indeed, the only way we can get any genuine insight into someone else’s interests is by observing the...