Thursday, May 17, 2007

Quote of the Day

"On an ordinary day in New York City, Eleanor goes to her favorite specialty store to pick up a jar of pickled herring. She fully expects the herring to be there. Indeed, New Yorkers of all kinds consume vast stocks of foods of all kinds, with hardly a worry about continued supply.... What enables cities to retain their coherence despite continual disruptions and a lack of central planning?

From the point of view of physics, it is a miracle that 8 million New Yorkers are fed each day without any control mechanism other than sheer capitalism."

~John H. Holland of the University of Michigan's Center for the Study of Complex Systems, and Professor of Psychology, and Profesosr of Electrical Engineering and Computer Science, from his book "Hidden Order: How Adaptation Builds Complexity"

This relates to my posting below about complexity, central planning, and the fatal conceit.

In general, I think people in the general population systematically:

a) Underestimate the complexity of a market economy,

b) Underestimate and underapreciate the ability of a market economy to evolve and "self-organize" according to "spontaneous order" (they don't see the "hidden order"), and

c) Therefore overestimate the ability of central planners, politicians, zoning boards and bureaucrats to organize, plan and regulate the economy with a "top down" approach.

Result: We end up with more government regulation and legislation than is optimal for an infinitely complex, evolving, ever-changing economic system that has an amazing ability to "self-correct" and "self-adjust."

My experience has been that the one group outside of the economics profession that appreciates the market economy are computer scientists, like Professor Holland, a pioneer in complex systems and the recipient of the first computer science Ph.D. from the University of Michigan.


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