Hayekians vs. Stiglitzians
By Arnold Kling
I contrast Hayek and Stiglitz on the importance of imperfect information.
Hayek would have the government tolerate messy competition. His point is that with the optimal outcome unknown, government resolution of issues shuts off the learning process that market competition provides.
Stiglitz sees the messiness in real-world economies, and he claims to have the right solution in every case. ..Stiglitz’s outlook is that markets are imperfect, but he is not. Where Marx offered dictatorship of the proletariat, Stiglitz would give us dictatorship of the Nobel Laureate. Between the two, we might be safer with Marx.
I argue that FCC Chairman Michael Powell is Hayekian, while most regulators are Stiglitzian.
A new book from the Cato Institute, The half-life of policy rationales, leads with a quote from Hayek.
New methods may be found for making a service saleable…and thus make the market method applicable to areas where before it could not be applied. Wireless broadcasting is an instance. [T]echnical advance might well open the possibility of confining reception to those using particular equipment…
For Discussion. How can the FCC effect a transition away from “command and control” regulation of spectrum?