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Today I learned that my friend ( @tyler_m_john) with many economist friends had not encountered Hayek's argument about prices as information before.
Econs, we gotta get the word out!
Non-econs: prices are a really good way for people to tell each other what they want!
Econs, we gotta get the word out!
Non-econs: prices are a really good way for people to tell each other what they want!
1) We generally buy something if it's worth more than the price to us.
2) Businesses generally sell things if they get more than they cost.
3) This means we generally end up with businesses selling things that are worth more than they cost to make.
2) Businesses generally sell things if they get more than they cost.
3) This means we generally end up with businesses selling things that are worth more than they cost to make.
Generally people propose as an alternative some system where someone (e.g. a government) decides what to produce. This person has to figure out this information in some way. This is information for a lot of people and a lot of items!
The theory can get more complicated than this, and there are lots of reasons why this does not always happen—note the generally.
One reason why this is probably not communicated publicly as much as it should, at least on the left, is because economists who lean toward the left spend a lot of our time showing why in some cases this does not work.
It's important to note again that sometimes this does not work: people make mistakes or lack info, businesses have other motives, or the decision affects somebody other than the business or the customer (such as businesses torturing animals for profit).
Prices also do not do much to ensure the total stuff each person gets is fair. (e.g. I want much more wealth equality, especially across race.) But prices do help make sure that the stuff a person gets is the stuff they want. But it's generally a very good way of doing that.
There aren't many better ways of ensuring the stuff people have and make is stuff people want than prices.
Thanks for coming to my (within-economics cliché) TED Talk.
#EconTwitter #Politics #economics
Thanks for coming to my (within-economics cliché) TED Talk.
#EconTwitter #Politics #economics
