What do competitive markets have to do with truth? Ask a philosopher and you might get one answer. Ask an economist and you will get another. Ask an economist with a philosophical grounding, and you get Art Carden’s fantastic piece, The Misuse of Knowledge in Society: Intervention Means Prices are Lying.
Carden is a senior fellow with the American Institute for Economic Research and a research fellow at the Independent Institute. He joined the show to discuss the article that caught my eye on AIER.org, which is one of the best explanations I’ve ever read of the price mechanism of free markets.
What happens when we stop the price system of competitive markets from working? In a word, untruth. It’s why price-gouging laws always fail, and increase human misery. A price control, Carden says, is a kind of institutionalized lie. Just because the government says it’s so, doesn’t mean that the underlying scarcity of the good has been altered.
You don’t have to be either a philosopher or an economist to understand the importance of having reliable information when making decisions. Hear Carden’s accessible explanation of the complex topic of price theory only on the Show of Ideas, not attitude.
Art Carden is a Senior Fellow at the American Institute for Economic Research. He is also an Associate Professor of Economics at Samford University in Birmingham, Alabama and a Research Fellow at the Independent Institute.
The Misuse of Knowledge in Society: Intervention Means Prices are...
In his excellent book The Undercover Economist , Tim Harford referred to a competitive market as a "world of truth." The free market's invisible hand leads us to produce the right things the right way in the right proportions and for the right people.
I, Pencil by Leonard E. Read | Leonard E. Read
I am a lead pencil-the ordinary wooden pencil familiar to all boys and girls and adults who can read and write. Writing is both my vocation and my avocation; that's all I do. You may wonder why I should write a genealogy. Well, to begin with, my story is interesting.
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