The advantages of decentralized knowledge over centralized knowledge: centralized knowledge is an impossible dream for overall economic development but decentralized knowledge can (but not always) work. Well functioning markets and democracy help aggregate decentralized knowledge.
Supply curve: if its very easy for producers to draw titanium out of the ground, when the price of titanium goes up by a little bit, producers will respond by trying to dig a lot of it up. But if its really hard to draw titanium out of the ground, the supply curve will be steeper.
Czar of titanium: needs to know a lot of stuff he wouldn’t know (and couldn’t possible know) in a million lifetimes. And even if you figure it out, it changes instantly.
Prices solve the problem that the czar would be tasked to solve.
If someone can change their behavior, the price goes up less, and the quantity supplied doesn't have to increase as much to solve the problem when demand is elastic.
The market solves the problem just the way the czar would have (if they could). It steers resources into titanium excivation, into the hands of engineers and out of the hands of club makers and surgeons by using the knowledge that existing demanders can find substitutes. Prices reveal that someone can do the adjusting.
-Rizzo
Daniel Gaona
No comments:
Post a Comment