[T]here is no way for government macroeconomic policy to correct an incorrect perception of how [savings/consumption] plans have changed. There is no way for government to acquire the knowledge necessary to be able to coordinate individual plans. Such information simply does not exist. If it is going to ever exist it will be generated by the market process as the results of plan changes and the individual responses they provoke unfold. Any attempt by government to manipulate things will almost certainly make them worse because it is based on woefully incomplete information. It is not that the market prevents any disappointment or even crises. The market is not Utopia. The market works through feedbacks from mistakes as well as feedback from successes. it is just that the market is the best mechanism we have for resolving conflicting or miscommunicated plans. Keynes asked the right questions, but he gave the wrong answers and in the process sent economics off on a very costly detour.
–Peter Lewin, “Commentary,” Austrian Economics: Perspectives on the Past and Prospects for the Future (1991, Richard M. Ebeling, ed.)
Cross-posted at Anything Peaceful.
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