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January 12, 2009



"Consumers and entrepreneurs have far better information about what allocation of new resources contributes the most value than does the government."

Though one could quibble with who really has better information, it's certainly true that consumers, entrepreneurs and other independent agents have much more effective utility-maximizing mechanisms. I actually think we have an astonishingly effective and wise government, given the dislocation between incentives and performance. I think it's just that so many public servants really do love their country and try to do the best they can, despite there being no real incentive to do so.


Good points, Nathain (using the dual-plural in Arabic).


I wish there was some way to close the loop. If a corporation was in charge of setting the various parameters of the economy over the long term and investors were paid in long-term residuals or something, I bet they would do a great job. It's unworkable, I think, but maybe someday someone will come up with a way to close some of the incentive loops in maximizing aggregate output over the long term.

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