From Thomas Sowell’s Intellectuals and Society
“In short, many things that the Federal Reserve, Congress and the two Presidents did (during the market crash of 1929) were counterproductive. Given these multiple failures of government policy, it is by no means clear that it was the market economy which failed. There is of course no way to re-run the stock market crash of 1929 and have the federal government let the market adjust on its own to see how that experiment would turn out. The closest thing to such an experiment was the 1987 stock market crash, similar in size but not in duration to the 1929 collapse. The Reagan administration did nothing, despite outrage in the media at the government’s failure to act.”
“What will it take to wake up the White House?” the New York Times asked, declaring that ‘the President abdicates leadership and courts disaster.” Washington Post columnist Mary McGrory said that Reagan “has been singularly indifferent” to the country’s “current pain and confusion.” The Financial Times of London said that President Reagan “appears to lack the capacity to handle adversity” and “nobody seems to be in charge.” A former official of the Carter administration criticized President Reagan’s “silence and inaction” following the 1987 stock market crash and compare him unfavorably to President Franklin D. Roosevelt, whose “personal style and bold commands would be a tonic” in the current crisis.”
“The irony in this was that FDR presided over an economy with seven consecutive years of double-digit unemployment, while Regan’s policy of letting the market recover on its own, far from leading to another Great Depression, led instead to one of the country’s longest periods of sustained economic growth, low unemployment and low inflation, lasting twenty years.”
From Thomas Sowell’s Intellectuals and Society
“Although such discussions have been phrased in terms of people, the actual empirical evidence cited has been about what has been happening over time to statistical categories – and that turns out to be the direct opposite of what has happened over time to flesh-and-blood human beings, most of whom move from one category to another over time. In terms of statistical categories, it is indeed true that both the amount of income and the proportion of all income received by those in the top 20 percent bracket have risen over the years, widening the gap between the top and bottom quintiles. But U.S. Treasury Department data, following specific individuals over time from their tax returns to the Internal Revenue Service show that in terms of people, the income in 1996 rose 91 percent by 2005, while the incomes of those particular taxpayers who were in the top 20 percent in 1996 rose by only 10 percent by 2005 – and those in the top 5 percent and top one percent actually declined.”
“While it might seem as if both these radically different sets of statistics cannot be true at the same time, what makes them mutually compatible is that flesh-and-blood human beings move from one statistical category to another over time. When those taxpayers who were initially in the lowest income bracket had their incomes nearly double in a decade, that moved many of them up and out of the bottom quintile – and when those in the top one percent had their incomes cut by about one-fourth, that may have well dropped them out of the top one percent. Internal Revenue Service data can follow particular individuals over theme from their tax returns, which have individual Social Security numbers as identification, while data from the Census Bureau and most other sources follow what happens to statistical categories over time, even though it is not the same individuals in the same categories over the years.”
From Thomas Sowell’s Intellectuals and Society
“Central planning is just one of a more general class of social decision-making processes dependent on the underlying assumption that people with more per capita knowledge (in the special sense) should be guiding their societies. Other forms of this general notion include judicial activism, urban planning, and other institutional expressions of the belief that social decisions cannot be left to be determined by the actions and values of the less knowledgeable population at large. But if no one has even one percent of all the knowledge in a society – in the larger sense in which many different kinds of knowledge are consequential – then it is crucial that the other 99 percent of knowledge, scattered in small and individually unimpressive amounts among the population at large, be allowed the freedom to be used in working out mutual accommodations among the people themselves. These innumerable interactions and mutual accommodations are what bring the other 99 percent of knowledge into play – and generate new knowledge in the process of back and forth bids, reflecting changes in supply and demand.”
“That is why free markets, judicial restraint, and reliance on decisions and traditions growing out of the experiences of the many – rather than the presumptions of an elite few – are so important to those who do not share the social vision prevalent among intellectual elites. In short, ideological fault lines divide those who have different conceptions of the meaning of knowledge, and who consequently see knowledge as being concentrated or dispersed. “In general, ‘the market’ is smarter than the smartest of its individual participants,” is the way the late Robert L. Bartley, editor of the Wall Street Journal, expressed his belief that the systemic process can bring into play more knowledge for decision-making purposes, through the interactions and mutual accommodations of many individuals, than any one of those individuals possesses.”
“In other words, experts are often called in, not to provide factual information or dispassionate analysis for the purpose of decision-making by responsible officials, but to give political cover for decisions already made and based on other consideration entirely. The shifting of socially consequential decisions from systematic processes, involving millions of people making mutual accommodations- at their own costs and risks- to experts imposing a master plan on all would be problematic even if the experts were free to render their own best judgment. In situations where experts are simply part of the window dressing concealing arbitrary and even corrupt decisions by others, reliance on what “all the experts” say about a given issue is extremely risky. Even when the experts are untrammeled, what “all the experts” are most likely to agree on is the need for using expertise to deal with the problem.”
“Experts have their place and can be extremely valuable in those places, this no doubt being one reason for the old expression, “Experts should be on tap, not on top.”
From Intellectuals and Society by Thomas Sowell
“People on both sides of the ideological fault line may believe that those with the most knowledge should have the most weight in making decisions that impact society, but they have radically different conceptions of just where in society there is in fact the most knowledge. If knowledge is defined expansively, including such mundane knowledge whose presence or absence is consequential and often crucial, then individuals with Ph.D.’s are as grossly ignorant of most consequential things as other individuals are, since no one can be truly knowledgeable, at a level required for consequential decision-making for a whole society, except within a narrow band our of the vast spectrum of human concerns.”
“The ignorance, prejudices, and groupthink of an educated elite are still ignorance, prejudice and groupthink- and for those with one percent of the knowledge in a society to be guiding or controlling those with the other 99 percent is as perilous as it is absurd. The difference between special knowledge and mundane knowledge is not simply incidental or semantic. Its social implications are very consequential. For example, it is far easier to concentrate power than to concentrate knowledge. That is why so much social engineering backfires and why so many despots have led their countries into disasters.”
From Intellectuals and Society by Thomas Sowell
