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Politics : View from the Center and Left

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To: TimF who wrote (103486)	2/9/2009 11:28:05 PM
From: Cogito	Read Replies (1) of 542011

>>Lectures on Macroeconomics, No. 14 Arnold Kling<< Tim - I think that much of what Kling says make sense. But I must take issue with one of the examples he uses to illustrate how markets solve information problems. He uses the example of grocery stores having as much milk as they need, but not too much. He speaks of how it used to be common for unwanted surpluses of inventory to build up at retail stores, and of how it would sometimes take months to unwind those surpluses. This, of course, was a problem for manufacturers, too. Now, such inventory problems are far less common, a fact for which Kling gives "the market" credit. But it isn't the market that solved the inventory problem. It's the rise of the use of computer-based inventory control systems that allow information about stock levels to flow freely between retail outlets, their suppliers, distributors, and manufacturers. So that problem was solved by IT, not by "the market." This doesn't completely invalidate all his arguments. But it does call an important one into question. - Allen

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