Knowledge and Decisions
Encyclopedia
Knowledge and Decisions is a non-fiction book by American economist Thomas Sowell
. Sowell explicates social and economic knowledge and how it is transmitted through the many facets of society, and how that transmission affects decisions made. The book's central theme is drawn from F.A. Hayek's article "The Use of Knowledge in Society
."
Emphatically, Sowell repeatedly rejects the popular tendency to put economic and political decisions and their results in moral terms. Doing so, he argues, ignores the trade-offs and limitations inherent in every economic system and society. Consistent with his established Laissez-faire
viewpoints, Sowell also indicts price controls such as rent control
, minimum wage
, price fixing, and subsidies as interfering in the implicit communication between consumers and producers necessary to optimize the choices of each. That some industries or government agencies seem particularly incompetent or corrupt over many turnovers of their staff, he argues, cannot be explained in terms of "bad" people performing those duties, but rather rational people acting in their own interests responding to whatever incentives have been established in the system.
The last section of the book deals with intellectuals, those whose profession is the distribution of ideas. Sowell questions the popular unwavering faith in the expert intellectual and "articulated rationality" for "solutions" to economic or political problems. He explains that through intellectuals government agencies such as the EPA
and NIH
have become more numerous and more powerful. Sowell explains that agencies make more laws than Congress does, only the agencies are insulated from any sort of consequences of their decisions because the officials aren't even elected. This has the effect of creating a larger divide between people who make decisions and those who experience the consequences.
Sowell also dwells on the recurrent unintended consequences of many intellectual decisions. Consequently, Sowell advocates a decentralizing of the decisions by allowing people to make economic choices for themselves, rather than assume non-elected intellectuals at centralized planning agencies will make better decisions.
Thomas Sowell
Thomas Sowell is an American economist, social theorist, political philosopher, and author. A National Humanities Medal winner, he advocates laissez-faire economics and writes from a libertarian perspective...
. Sowell explicates social and economic knowledge and how it is transmitted through the many facets of society, and how that transmission affects decisions made. The book's central theme is drawn from F.A. Hayek's article "The Use of Knowledge in Society
The Use of Knowledge in Society
"The Use of Knowledge in Society" is a scholarly article written by economist Friedrich Hayek, first published in the September 1945 issue of The American Economic Review Written as a rebuttal to fellow economist Oskar R...
."
Emphatically, Sowell repeatedly rejects the popular tendency to put economic and political decisions and their results in moral terms. Doing so, he argues, ignores the trade-offs and limitations inherent in every economic system and society. Consistent with his established Laissez-faire
Laissez-faire
In economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....
viewpoints, Sowell also indicts price controls such as rent control
Rent control
Rent control refers to laws or ordinances that set price controls on the renting of residential housing. It functions as a price ceiling.Rent control exists in approximately 40 countries around the world...
, minimum wage
Minimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
, price fixing, and subsidies as interfering in the implicit communication between consumers and producers necessary to optimize the choices of each. That some industries or government agencies seem particularly incompetent or corrupt over many turnovers of their staff, he argues, cannot be explained in terms of "bad" people performing those duties, but rather rational people acting in their own interests responding to whatever incentives have been established in the system.
The last section of the book deals with intellectuals, those whose profession is the distribution of ideas. Sowell questions the popular unwavering faith in the expert intellectual and "articulated rationality" for "solutions" to economic or political problems. He explains that through intellectuals government agencies such as the EPA
United States Environmental Protection Agency
The U.S. Environmental Protection Agency is an agency of the federal government of the United States charged with protecting human health and the environment, by writing and enforcing regulations based on laws passed by Congress...
and NIH
National Institutes of Health
The National Institutes of Health are an agency of the United States Department of Health and Human Services and are the primary agency of the United States government responsible for biomedical and health-related research. Its science and engineering counterpart is the National Science Foundation...
have become more numerous and more powerful. Sowell explains that agencies make more laws than Congress does, only the agencies are insulated from any sort of consequences of their decisions because the officials aren't even elected. This has the effect of creating a larger divide between people who make decisions and those who experience the consequences.
Sowell also dwells on the recurrent unintended consequences of many intellectual decisions. Consequently, Sowell advocates a decentralizing of the decisions by allowing people to make economic choices for themselves, rather than assume non-elected intellectuals at centralized planning agencies will make better decisions.
See also
- Laissez-faireLaissez-faireIn economics, laissez-faire describes an environment in which transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs and enforced monopolies....
- Rent controlRent controlRent control refers to laws or ordinances that set price controls on the renting of residential housing. It functions as a price ceiling.Rent control exists in approximately 40 countries around the world...
- Minimum wageMinimum wageA minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
- Free marketFree marketA free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
- Adam SmithAdam SmithAdam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
- Government agencyGovernment agencyA government or state agency is a permanent or semi-permanent organization in the machinery of government that is responsible for the oversight and administration of specific functions, such as an intelligence agency. There is a notable variety of agency types...
- Supply and demandSupply and demandSupply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...
- Expert