Arnold Kling

Trial and Error or Planning

Arnold Kling, Great Questions of Economics
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Context Magazine has an interview with science fiction writers Bruce Sterling and David Brin. Brin, the deeply insightful author of The Transparent Society, tosses off this hypothesis.

Someone once said there are two ways of dealing with the future: anticipation and resiliency...

In the East, customers are mainly made up of government and commercial banks. Software companies must anticipate problems before they release a product because they don’t want ATMs spitting money out on the street. So they try to anticipate all the bugs before they ship software to their clients. The attitude in Silicon Valley, on the other hand, is, “What a cool idea! Let’s do an experiment and have customers tell us why it doesn’t work!” That’s the resiliency approach, which depends on a rapid and agile response to cope with disaster.

It turns out that any reasonable approach for dealing with the future needs generous dollops of both anticipation and resiliency.

Sterling's follow-up:
Given the events of the last few months, I expect we’ll see a change in how business thinks about the future. There was a long period during the 1990s when people almost deliberately stopped thinking about the long term. The sentiment was: “Just give me the demo.” Or “Build it and they will come.” I believe that epoch has ended.

We’re now in for an era of a global civil society, which will involve more anticipation and control. The idea of tossing out innovations and letting the devil take them where he may is probably gone. Because we do have a devil.

I tend to disagree with Sterling. I believe that trial-and-error learning still is faster and more effective than bureaucratic filtering. However, there a plenty of people in Sterling's camp, who believe that control is now "in." Apparently, the World Economic Forum (Davos) elite that attended the recent conference thinks that way. For example, Brad DeLong says that

It is more clear today than before that an undirected market cannot be expected to provide what Joseph Stiglitz calls "global public goods"--global environmental control, global macroeconomic stability, improvements in the world distribution of income, research into important but underfunded health issues like tropical diseases, and others that can only be provided not just by governments but by large coalitions of governments.

...During the next twenty years, as the pendulum will swing back to the "government" side, the principal task will be... to keep the expanding sizes and roles of government from creating too much red tape or causing too much bureaucratic inertia.

Again, I do not agree that because of September 11 and Enron we need to throw out trial-and-error learning and embrace planning and bureaucracy. But that point of view certainly is out there.

Discussion Question. Which responses to terrorism and which responses to Enron reflect resilience? Which responses represent attempts at planning and control?

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