Tyler Cowen: evaluation

Transcript context

…Yeah. The reason it’s interesting to think about this is because his whole argument about the price system is that you can have a single dial that aggregates so much information, but it’s precisely for this, and for that reason, it’s so useful to somebody who’s trying to know based on that information. But it’s precisely for this reason that it’s so aggregated that it’s hard to learn about any one particular input to that dial. But I would stress it’s not a single dial. And whether Hayek thought it was a single dial, I think you can argue that either way. So people in markets, they also observe quantities, they observe reaction speeds. There’s a lot of dimensions to prices other than just, oh, this newspaper costs $4, the terms on which it’s advertised. So markets work so well because people are solving this complex multidimensional problem and the price really is not a sufficient statistic the way it is in an Arrow-Debreu. And I think at times Hayek understood that and at other times he writes as if he doesn’t understand it. But it’s an important point. Somewhat related question what does it tell us about the difficulty of preserving good institutions, good people, that the median age of a corporation is 18 years and they don’t get better over time, right? Decade after decade, what corporation? There’s a racial corporations that continue improving in that way?…

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