Who Were the Sea Peoples?

Back to Kirzner, after knocking off two other reviews and an essay. He writes: "Since individuals obviously differ in their entrepreneurial alertness, it is clear that opportunities for social improvement will tend to be exploited most fruitfully if institutional arrangements can be patterned so as to translate such opportunities into opportunities that will be encountered by those whose entrepreneurial alertness is the most acute, the most sensitive, and the most accurate." ("Knowing about Knowledge," Competition, Economic Planning, and the Knowledge Problem , p. 216) But what entrepreneurial alertness is alert to , per Kirzner, is profit opportunities, not "opportunities for social improvement." Now, one could protest that those opportunities are the same thing, but then what about an entrepreneur who is alert to the fact that the Internet offers a "better" way to deliver rape-fantasy videos to those who are titillated by the idea of ra...

As mentioned in a previous post , Israel Kirzner distinguishes between Type A and Type B knowledge problems. To quote that post: Type A problems involve undue optimism, and are self-correcting: if I think I can sell my programming services for $1 million per hour, I surely will be disappointed, and, if wise, I will lower my price. My very attempt to act on my over-optimistic beliefs reveals their falsity. Type B problems, on the other hand, involve undue pessimism, and are  not  self-correcting. I may believe that my current boss, who is paying me $50 per hour, is the best employer I can find. But, unbeknownst to me, just down the block is someone who would happily pay me $100 per hour,  if he knew of my existence . And I would happily go work for him,  if I knew of his . For type B problems to be "corrected" requires entrepreneurial action, perhaps, say, a job placement firm that will alert both the potential new employer and me to each other's presence in t...

In "Knowledge Problems and Their Solutions," Kirzner makes the important distinction between type A and type B knowledge problems. Type A problems involve undue optimism, and are self-correcting: if I think I can sell my programming services for $1 million per hour, I surely will be disappointed, and, if wise, I will lower my price. My very attempt to act on my over-optimistic beliefs reveals their falsity. Type B problems, on the other hand, involve undue pessimism, and are not self-correcting. I may believe that my current boss, who is paying me $50 per hour, is the best employer I can find. But, unbeknownst to me, just down the block is someone who would happily pay me $100 per hour, if he knew of my existence . And I would happily go work for him, if I knew of his . For type B problems to be "corrected" requires entrepreneurial action, perhaps, say, a job placement firm that will alert both the potential new employer and me to each other's presence...

"The model cannot be used to 'explain' market prices; the model presumes that everyone has, somehow, correctly and self-fulfilling guessed what the market price is going to be. The circumstance that (quite apart from the assumed correctness of the anticipated price) the model treats each market participant as a price-taker further underscores the uselessness of the model as an explanation for the manner in which prices are adjusted. No one in the model ever does change his price bids or offers." -- Israel Kirzner, Competition, Economic Planning, and the Knowledge Problem , p. 52 As Bob Murphy once  told me once, in the model of perfect competition, it is as though the local grocer wakes up in the morning and is suddenly surprised to find that he is now offering milk at a new price.

Dan Klein asked me, in reference to this post , whether, for Oakeshott, "dropping anchor" was merely an interruption of the real quest, that of being "perpetually en voyage." As I began to compose my response to Dan, I realized it might be of general interest... well, of general interest to the sort of nerds who hang around here, anyway! So here goes: What Oakeshott is trying to get at in the passage I quoted is not so much that either dropping anchor or sailing on is the "real deal," but that there is a tension between that we should never completely dismiss from out awareness. Let us use an example from Klein's book itself to make this clearer. George Stigler is Klein's chief exemplar of "narrow neoclassicism." Stigler had at hand at a certain "equipment of theoretic hooks and nets," such as optimization within a given means-end framework, perfect knowledge of search costs, knowledge as information, and so on, and began u...

The other day, one of my kids -- who can tell them all apart, anyway? -- asked me, "Dad, who is the best person you know?" Interestingly, it took me about half a second to answer, "Israel Kirzner." (I think they meant "objectively best." Otherwise, the answer would have been tougher: "Hmm, well in the Nazi-socially-constructed morality, Hitler was pretty cool, and..." Just windin' ya up, Kuehn!) In other news, my iPhone bogging app (BlogPress) must be a cyber Hegel with its own Marx: it has just flipped itself upside down. When I hold my phone in the normal orientation, the keyboard, prompts, etc are all upside down. I have to flip the phone to use the app.