Why I Recommend Basic Economics From Sowell

Here is part of Sowell's Townhall post this morning.

One of the most widespread and dramatic examples of amateurs outperforming professionals has been in economies that have had central planning directed by highly educated people, advised by experts and having at their disposal vast amounts of statistical data, not available and probably not understandable, by ordinary citizens.

One easy to understand reason is that central planners in the days of the Soviet Union had to set over 24 million prices. Nobody is capable of setting and changing 24 million prices in a way that will direct resources and output in an efficient manner.

For that, each of the 24 million prices would have to be weighed and set against each of the other 24 million prices. in order to provide incentives for resources to go where they were most in demand by producers and output to go where it was most in demand by consumers.

In a market economy, however, nobody has to take on such an impossible task. Each producer and each consumer need only be concerned with the relatively few prices relevant to their own decisions, with coordination of the economy being left to supply and demand.

In short, amateurs were able to outperform professionals in the economy because the amateurs did not take on tasks beyond the capability of any human being or any manageable group of human beings.

Of course the entire column is worth reading.