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To: gpowell who wrote (13900)	9/24/2003 4:29:01 PM
From: Ali Chen	Read Replies (1) \| Respond to of 306849

Implied in your statements is a distrust of the free market. That government can spend money productively was never questioned - there are numerous examples. The point is that to the extent that wealth and decision making is concentrated the process of discovery is bounded. Over the long run, whenever wealth and power have been concentrated there results fewer innovations, lower wealth, and less technological density and advancement. Nothing of this sort is implied in my statements; all is your narrow interpretation. What is implied is that you are missing the fact that every historical society always was a mixture of free market and some centralized institutions, but in various proportions. Free markets did exist for millennia, yet all technological advances and related productivity increase came (from my weak recollection) from court (and church-sponsored) scientists, read: welfare for educated. In some sense there is no alternative for centralized welfare for intellectuals, IMO. You suggested that a decision to buy a doughnut is a waste of resources and that those resources would be more productively used by a central authority. Decisions made through a market process as opposed to the political process are superior in the long run because they convey a more distinct sense of constraints and trade-offs. Markets maximize information and transmit feedback thus enabling the correction of errors and adaptation to changing conditions. Feedback mechanisms are critical in maximizing efficiency because it is unlikely that any one individual will have enough knowledge to be consistently right the first time in his decisions. When decisions are concentrated, you effectively eliminate this feedback mechanism. You are mixing up mechanisms of commodity production, distribution, and mass consumption with innovative and unique ideas of few individuals. No one is questioning the high efficiency of commodity exchanges via free markets. However, all new ideas are usually highly concealed, there is no market mechanism for them. People were producing doughnuts and eating them for millennia, and this process did not produce lasers nor computers. This statement isn’t supportable by history or common sense. See above. Certainly some areas of research need massive funding and it isn’t improper for public goods to be used in such purposes – regardless of whether there is a positive return on investment. Just as it isn’t improper to provide some type of public assistance. But one should understand the tradeoff you are making when you decide to use public resources for public goods So we look like in agreement, again? The only question is where is the right balance. The concept of spontaneous order as applied to economics predates your education in nonlinear dynamics by about 70 years. The point is that a non-centralized government is an efficient innovation consistent with a capitalist system. First, it is not "education", it was _contribution_. There is a difference which you apparently has a difficulty to comprehend. The other difficulty of yours is that there is a difference between almost-religious observations of "invisible hand" in "spontaneous orders", and rigorous mathematical models for this behavior, and analytical understanding of underlying mechanisms (which didn't exists 25 years ago). BTW, your time-line also appears as highly distorted, since there are sources claiming that the theory of the general harmony of the market order appeared as early as in 1665 with the work of Francisco Centani... I can’t in one paragraph make up for your ignorance. Then better stop your patronizing and address the concrete issues people piling against you, but not in general slogans or "long-run experience", but in details.