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GOVERNING_MARKET

                                             September 7, 2010

A "Kamal", nominally located in
San Francisco, CA, commented on
Paul Krugman's blog (September
7th, 2010):

   "So it seems you are correct that the stimulus
   is too small. Mises and Hayek would have told
   you that central planning of this sort was
   bound to fail because it is impossible to
   calculate the correct size of a stimulus
   package and also impossible to allocate it
   optimally. Econ 101 tells us that private
   companies have an easy way to tell if they are
   allocating resources correctly, namely they are
   making a profit on exchanges that are 100%
   voluntary. Government has no similar way to
   calculate that the money it spends is actually
   making people's lives better since people are
   forced to pay for it."

   "Anyone who tells you that government can
   efficiently allocate resources doesn't
   understand econ 101."


I responded:

   Using the internet to argue that government
   investment in infrastructure is always
   doomed is too dumb to glorify as "ironic".

   Simple, elegant pinciples that explain
   everything ala Mises and Hayek would
   certainly be nice to have, if only they
   really did explain everything.  Pretending
   that they do when they don't doesn't really
   help.  Whatever you may say about Krugman,
   he's trying to bring together both theory
   and observation.

   Whether the inherent waste in government
   spending due to the weak oversight of the
   political process exceeds the inherent
   waste due to ignorant consumers conned by
   advertising experts (consider the SUV)       The SUV was a hugely popular
   remains an open question.                    product without a reason for
                                                existance.  People bought
                                                them for the stated purpose
                                                of improving their own
                                                safety, despite the fact that
                                                this was demonstrably not so.
                                                They did however do a fine
                                                job of making everyone else
                                                less safe




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