"Man is no Aristotelian god contemplating all of existence at one glance."


0. Preface
1. The Role of Knowledge
2. Decision-Making Processes
3. Economic Trade-Offs
4. Social Trade-Offs
5. Political Trade-Offs
6. An Overview
7. Historical Trends
8. Trends in Economics
9. Trends in Law
10. Trends in Politics


Perhaps the most important feature of the first half of 'Knowledge and Decisions' is simply its analysis of decision-making processes and institutions in terms of the characteristics and consequences of those processes themselves - irrespective of their goals. This approach rejects the common practice of characterizing processes by their hoped for results rather than their actual mechanics. 'Profit-making' businesses, 'drug prevention' programs are just some of the many things commonly defined by their hoped for results, rather than by... the incentives created by those processes.

In Germany a 1933 'Law for Removing the Distress of People and Reich' gave the chancellor dictatorial powers, which in turn allowed Adolf Hitler to start wars that brought unprecedented distress - indeed, devastation - to the German people and nation.

Among the ways in which various decision making processes differ is in the extent to which they are institutionally capable of making incremental trade-offs, rather than attempting categorical 'solutions'. Consumers continually make incremental trade-offs when deciding what to buy in supermarkets, but appellate courts may have only a stark choice to make between declaring a statute constitutional or unconstitutional.

Diminishing returns alone can make categorical decision-making counter productive in its impact, when the point is reached where trivial amounts of one thing are being gained at the cost of devastating losses of another.
Categorical decision-making means that the very benefit being sought in one form may be sacrificed in another form. One particular kind of safety, for example, may be achieved by creating vastly greater dangers of another kind, as when pesticides are banned to eliminate their residual dangers in the environment, at the cost of a thousand-fold increase in the incidence of deadly, insect-borne diseases, such as malaria.

Even within democratic nations, the locus of decision-making has drifted away from the individual, the family, and voluntary associations of various sorts, and toward government. And within government, it has moved from elected officials subject to voter feedback, and toward more insulated governmental institutions, such as bureaucracies and the appointed judiciary.

Much of the literature on racial or sexual prejudices and their discriminatory effects, for example, proceeds in utter disregard of knowledge-validation processes, such as competition in the marketplace. It has often been asserted that women receieve only about two thirds of what men recieve for doing the same work. The relevant analytical point here is that it treats employers' perceptions as if they were indepdendent of the validation processes of economic competition.
For women to be paid only two thirds of what men are paid for doing the same work with the same productivity would mean that an employer's labor costs would be 50% higher than is necessary with an all-male labor force.


"Everybody is ignorant, only on different subjects."
        - Will Rogers

Ideas are everywhere, but knowledge is rare. Even a so-called 'knowledgable' person usually has solid knowledge only within some special area, representing a tiny fraction of the whole spectrum of human concerns.

Physicists have determined that even the most solid and heavy mass of matter we see is mostly empty space. But at the submicroscopic level, specks of matter scattered through a vast emptiness have such incredible density and weight, and are linked to one another by such powerful forces, that together they produce all the properties of concrete, cast iron and solid rock. In much the same way, specks of knowledge are scattered through a vast emptiness of ignorance, and everything depends upon how solid the individual specks of knowledge are, and on how powerfully linked and coordinated they are with one another.

Ideas, as the raw material from which knowledge is produced, exist in superabundance, but that makes the production of knowledge more difficult rather than easier. Many ideas- probably most- will have to be discarded somewhere in the process of producing authenticated knowledge. Authentication is as important as the raw information itself, and the manner and speed of the authentication process can be crucial.

Various kinds of ideas can be classified by their relationship to the authentication process. There are ideas systematically prepared for authentication (theories), ideas not derived from any systematic process (visions), ideas which could not survive any reasonable authentication process (illusions), ideas which exempt themselves from any authentication process (myths), ideas which have already passed authentication processes (facts), as well as ideas known to have failed - or certain to fail - such processes (falsehoods - both mistakes and lies).

On the continuum of human thinking, at one end is pure science; at the other end pure myth. One is sustained entirely by systematic logical processes, the other by consensual verification by contemporaries. The crucial distinction is one of procedures, not of end results. Science is no more certain to be correct than is myth. Many scientific theories have been proven wrong by scientific methods.

What then is the intellectual advantage of civilization over primitive savagery? It is not necessarily that each civilized man has more knowledge but that he requires far less. Civilization is an enormous device for economizing on knowledge. The time and effort (including costly mistakes) necessary to acquire knowledge are minimized through specialization, which is to say through drastic limitations on the amount of duplication of knowledge among members of society. A relative handful of people know how to produce food, a different handful how to produce clothing, medicine etc.
The huge costs saved by not having to duplicate given knowledge and experience widely throughout the population makes possible the higher development of that knowledge among the various subsets of people in the respective specialities.

The civilized accountant need know little beyond his accounting. Food reaches his local supermarket through processes of which he is probably ignorant, if not misinformed. He lives in a home constructed by an involved process whose technical, economic, and political intricacies are barely suspected, much less known to him.

Considering the enormous range of human knowledge, from intimate personal knowledge of specific individuals to the complexities of organizations and the subtleties of feelings, it is remarkable that one speck in this firmament should be the sole determinant of whether someone is considered knowledgeable or ignorant in general. Yet it is a fact of life that an unlettered person is considered ignorant, however much he may know about nature and man, and a Ph.D. is never considered ignorant, however barren his mind might be outside his narrow specialty and however little he grasps about human feeling or social complexities.

All things fall short of absolute certainty: life itself might be a dream and logic a delusion. Still, because we act, we must decide, and how decisively we can act depends on how well we know the consequences.
How much knowledge there is depends on where we draw the line on the spectrum of possiblities. The ratio of knowledge to belief may also vary enormously from one aspect of life to another. The specific nature of the aunthentication processes available in various aspects in human life then become crucial.

To say that a farm boy knows how to milk a cow is to say that we can send him out to the barn with an empty pail and expect him to return with milk. To say that a criminologist understands crime is not to say that we can send him out with a grant or a law and expect him to return with a lower crime rate. He is more likely to return with a report on why he has not succeeded yet, and including the inevitable need for more money, a larger staff, more sweeping powers. The degree of authenticationof knowledge may be lower in the 'higher' intellectual fields and much higher in those areas which intellectuals choose to regard as 'lower'.

A business which produces a product that the public will not buy in sufficient quantity to cover production costs will have its ideas validated - in this case invalidated - in a swift and painful process which muct be heeded quickly before bankruptcy sets in. The results cannot be talked away.
But in many intellectual areas, notably so-called 'social science', there is neither a swift nor a certain authentication process for ideas, and the only ultimate validation is whether the ideas sound plausible to enough people, or to the right people. The stricter standards and independent, often conclusive, evidence in the physical sciences cannot be generalized to intellectual activity as a whole, even though the aura of scientific processes and results is often appropriated by other intellectuals.

Science and technology lead to far more complexity in producing cameras today, but that growing complexity amond a handful of technicians permits far more simplicity (and ignorance) in the actual use of modern photographic equipment by a mass of people. The technology available required in the modern home reduces not only the time but the knowledge required by a modern homemaker.

The growing complexity of science, technology, and organization does not imply either a growing knowledge or a growing need for knowledge in the general population. On the contrary, the increasingly complex processes tend to lead to increasingly simple and easily understood products. The genius of mass production is precisely in its making more products more accessible, both economically and intellectually to more people.

Metaphors which suggest that 'society' is a decision-making unit can be very misleading... There is no one named 'society' who decides anything. Even in the most democratic nations few issues are ever decided by a specific nationwide referendum. And even if they were, who could say that a bare majority as of a given instant constitues the judgment of an organic society subsisting over the generations? Unless national laws are to vary literally from moment to moment, some decision-making units must make decisions which are binding on other units which either disagree or were not consulted.

One of the peculiarities of the American Revolution was that its leaders pinned their hopes on the organization of decision-making units, the structuring of their incentives, and the counterbalancing of the units against one another, rather than on the more usual (and more exciting) principle of substituting "the good guys" for "the bad guys."

Much discussion of the pros and cons of various issues overlooks the crucial fact that the most basic decision is who makes the decision, under what constraints, and subject to what feedback mechanisms.

A typical American lives in a family unit whose internal decisions are based on personal feelings, works in a hierarchially structured organization whose use of inputs and volume of output are determined in a spontaneously evolved market, is subject to laws established byt a government whose members are chosen and removable by the electorate and which conducts its relations with other governments in an atmosphere dominated by their respective capacities for armed combat or mutual annihilation.


Political knowledge is conveyed by articulation, and its accurate transmission through political competition depends upon the pre-existing stock of knowledge and understanding of the receiving citizen. Economic knowledge need not be articulated to the consumer, but it is conveyed - summarized - in the price and qualities of goods. The consumer may have no idea at all - or even a wrong idea - as to why one product costs less and serves his purposes better; all he needs is that end-result itself.
Someone must of course have the specific knowledge of how to achieve that result. What is crucial to economic competition is that better and more accurate knowledge on the part of the producer is a decisive competitive advantage, regardless of whether the consumer shares any part of that knowledge. In political competition, accurate knowledge has no such decisive competitive advantage, because what is being 'sold' is not and end-result but a plausible belief about a complex process.

Reductions on the future use of property is a reduction in its present value, since one component of its present value is its future saleability. In short, a reduction in property rights is a partial confiscation of property; to take away 10% of the value of land is economically no different from taking away 10% of the land itself.

Decision-making processes differ not only in the quantity, quality and cost of knowledge brought to bear initially, but also and perhaps still more so, in the feedback of knowledge and its effectiveness in modifying the intitial decision. This feedback is direct knowledge of particulars of time and place, as distinguished from the second-hand generalities known as 'expertise'.

The government is indeed an institution, but 'the market' is nothing more than an option for each individual to choose among numerous existing institutions, or to fashion new arrangements suited to his own situation and taste. The government establishes an army or a post office as the answer to a given problem. 'The market' is simply the freedom to choose among many existing or still-to-be-created possibilities. The need for housing can be met through 'the market' in a thousand different ways chosen by each person.
The advantages of market institutions over government institutions are not so much in their particular characteristics as institutions but in the fact that people can usually make a better choice out of numerous options than by following a single prescribed process.

The diversity of tastes satisfied by a market may be its greatest economic achievement - but it is also its greatest political vulnerability. People who are convinced their values are best (not only for themselves but for others) must necessarily be offended by many things that happen in a market economy, whether those people's values are religious, communistic, white supremacist, or racially integrationist.

The most basic of all decisions is who shall decide. This is easily lost sight of in discussions that proceed directly to the merits of particular issues, as if they could be judged from a unitary, or God's eye, viewpoint...
The Godlike approach to social policy ignores both the diversity of values and cost of agreement among human beings... We easily provide ourselves with food and clothing precisely because there is no consensus needed as to what is the best food or the best clothing. If we had to reach an consensus first, we might destroy ourselves in the process of trying to meet simple basic needs.

Man's pervasive spiritual needs - whether met in religious or ideological ways - have often led to mutual destruction, ranging from persecution to wholesale slaughter, when particular religious or political creeds required consensus as part of their tenets. Individualism and pluralism in social, political and economic processes reduce the need for consensus. The Constitution of the United States implicitly recognizes the very high cost of consensus in some areas by flatly forbidding the government from even attempting to reach a consensus in religious matters.

One of the problems involved in understanding decision making through any kind of institutional process is that the cause of a decision must be distinguished from the mechanism that transmits it. The ancient practice of killing the messenger who brought bad news suggests that this separation of causal factors from transmitting mechanisms is especially difficult in emotion-laden areas.
Institutions frequently transmit unwelcome news - such as the unacceptability of one's performance in school or on the job, or the reduced availability of a desired commodity. The question then is whether the institution was itself responsible for this outcome, or was simply a messenger bringing bad news. Attempts to prevent institutions from conveying bad news - no fail grading, job security, price controls - raise the cost of transmitting knowledge and retard the adjustment to that knowledge.


An economic system is a system for the production and distribution of goods and services. If is a system for rationing goods and services that are inadequate to supply all that people want. This is true of any economic system, whether it is called capitalism, socialism, feudalism, or by any other name. The Garden of Eden was not an economic system. All economic systems have systematic procedures for preventing people from getting goods and services... All economic systems must use some method of denial.

There are inherent constraints, given the limitations of nature and the unlimited desires of man, and economic systems are simply artificial schemes for administering the inherent scarcities. The scarcities themselves exist independently of the particular economic systems, and would exist if there were no economic system at all and people simply fought over everything they wanted. Economic institutions exist to introduce elements of rationality or effeciency into the use of inputs and outputs.

The classic definition of economics is that it is the study of scarce resources that have alternative uses.

Some social commentators point to the existence of 'unmet needs' in society as evidence of the 'failure' of an economic system. But, in fact, because economic systems are essentially systems of rationing, any successfully functioning economic system would have 'unment needs' - everywhere...
The mundane fact of insufficiency must be insisted upon because so many discussions of 'unmet needs' proceed as if 'better' policies would solve the problem at hand without creating deficiencies elsewhere. Typical of this attitude is the comment that, 'If we can send a man to the moon, why can't we-" followed by whatever project the speaker favors. The fact that we sent a man to the moon is part of the reason why many other things could not be done.

For a nation as a whole, its wealth is its food, housing, transportation, medical care etc - not the green paper used to transfer this wealth around the population. A nation is wealthier, its standard of living is higher, when it has more of these real things, not when bigger number are printed on its currency.

Since an economy functions with scarce resources which have alternative resources, there must be some method of coordinating the rationing process and getting the most output from the available input. Caveman had the same natural resources at their disposal as we have today, and the difference between their standard of living and ours is a difference between the knowledge they could bring to bear on those resources and the knowledge used today.
Although we speak loosely of 'production', man neither creates nor destroys matter, but only transforms it. Even among contemporary nations, differences in their economic conditions are oftem far more related to differences in their technological and organizational knowledge than to their respective endowments in natural resources. Japan, for example, has achieved a relatively high level of prosperity while importing many of its inputs and exporting much of its output. What they are essentially doing is selling their knowledge and exporting much of its output.

Since man does not create physical matter, those who handle material objects in the production process are not producers in that sense. Economic benefits result from the transformation of matter in form, location, or availability (intellectually or temporally). It is these transformations that create economic benefits valued by consumers, and whoever arranges such transformations contributes to the value of things, whether his hands actually come into contact with physical objects or not.

More pervasively than is generally appreciated, economic transactions are purchases and sales of knowledge. Even the hiring of an 'unskilled' worker tp pump gas involves the purchase of a knowledge of the importance of dependability, punctuality, and an ability to get along with customers and co-workers, quite aside from the modest technological knowledge required to operate a gasoline pump.

In an economy, it is not the superficial possession of knowledge in the abstract that counts, but the effective application of it. The abstract existence of knowledge means nothing unless it is applied at the point of decision and action.

It has been said that no one person knows how to make even a simple lead pencil. That is, there is no single person who knows how to mine the graphite, grow the wood, produce the rubber, process the metal, and handle all the financial complications of running a successful business. In short, we are all in the business of selling and buying knowledge from one another, because we are so profoundly ignorant of what it takes to complete the whole process of which we are a part.

The cost of any good is the cost its ingredients, and their cost, in turn, is whatever alternative good had to be foregone in order to use them where they are used.

Value being ultimately subjective, it varies not only from person to person but from time to time with the same person, and varies also according to how much of the given good he already has. Obviously a man in the desert dying of thirst would sacrifice much more for a glass of water than he would in his home, with water available form his faucet. In short, even for the same individual, the value of water can vary from virtually everything he has down to zero - or even below zero, since he would pay to have water taken away if his basement were flooded.

The knowledge of these changing values may be transmitted by price fluctuations in a market economy, or by voting changes in a politically controlled (planned) economy, or by direct orders in a non-democratic, politically controlled economy (communism, fascism, etc).

Efficiency in turning inputs into outputs can be measured only after specifying the subjective values involved. The objective 'efficiency' of an automobile engine can be determined only after specifying the subjectively determined gal as the forward movement of the automobile. Otherwise, every engine is 100% efficient in the sense that all energy input is used.

Many of the products which create a modern standard of living are only the physical incorporations of ideas - not only the ideas of an Edison or a Ford but the ideas of innumerable anonymous people who figure out the design of supermarkets, the location of gasoline stations, and the million mundane things on which our material well-being depends. Societies which have more people carrying out physical acts and fewer people supplying ideas do not have higher standards of living. Quite the contrary.


Trade-offs may be easier to visualize in economic terms, but they are no less pervasive and no less important in social processes. Political and judicial institutions, the family, and voluntary associations of various sorts must also balance opposing effects under inherent constraints - must seek an optimum rather than a maximum. The most basic inherent constraint is that neither time nor wisdom are free goods available in unlimited quantity. This means that in social processes, as in economic processes, it is not only impossible to attain perfection but irrational to seek perfection - or even to seek the "best possible" result in each separate instance.
Courts which devote the time and effort required to reach the highest possible standard of judicial decisions in minor cases can develop a backlog of cases that means dangerous criminals are walking the streets while awaiting trial. Lofty intellectual standards, rigidly adhered to, may mean rejection of evidence and methods of analysis which would give us valuable clues to complex social phenomena - leaving us instead to make policy decisions in ignorance or by guess or emotion. Unbending moral standards may dichotomize the human race in such a way that virtually everyone is lumped together as sinners, losing all moral distinction between honorable, imperfect people and unprincipled perpetrators of moral horrors. In the early days of the Civil War, some leading abolitionists condemned Abraham Lincoln as being no better than a slaveholder, and no more a defender of the Union than Jefferson Davis. Their twentieth-century counterparts have morally lumped together the wrongs in democratic countries with mass murder and terror under totalitarianism.

Social values in general are incrementally variable: neither safety, diversity, rational articulation, nor morality is categorically a "good thing" to have more of, without limits. All are subject to diminishing returns, and ultimately negative returns. People can be too moral.

Experts who loftily dismiss the public's method of choice in many areas often fail to consider the cost of knowledge.

Every item has both a money price and a time price, and it is the combination of the two that is its full cost.
The 'same' merchandise generally sells for a higher price in stores with a more varied stock (of brands and sizes), more (or better) salespeople, and more numerous cash registers, with correspondingly shorter lines at each - all of which save time. It is not really the same merchandise because what is being purchased is not simply the physical item but also the associated services required for its discovery and use.

Charles Darwin was a landmark, not only in the history of biology, but in the history of intellectual development in general. He showed how, with sufficient time, nonpurposeful activity could lead to nonrandom results: he divorced order from 'design'.

In Friedrich Hayek's words, 'mankind has achieved things which have not been designed or understood by any individual', though their value has been retrospectively authenticated by millions who could judge the results without being able to judge - much less design - the process.

Cultures reward with honor as well as with money.


"We all declare for liberty; but in using the same word, we do not mean the same thing."
        - Abraham Lincoln

The government as a decision-maker is often regarded as simply the institutional personification of 'society'. But the diversities, conflicts and disparate incentives and constraints which make 'society' a meaningless abstraction as a decision-making unit also make government a fragmentary aggregation of decision makers.

Executive agencies of the US government have not only followed policies at cross purposes with one another; they have even sued each other in court.

To include freedom in the very definition of democracy is to define a process not by its actual characteristics but by its hoped for results.

A lynch mob may be a more accurate expression of the majority will than a court of law - especially an appellate court of appointed judges - and yet lynch mobs are condemned and 'law and order' upheld because certain freedoms are deemed more important than democracy.

'What freedom does a starving man have?' The answer is that starvation is a tragic human condition - perhaps more tragic than the loss of freedon. That does not prevent these from being two different things.
The mere fact that something may outrank freedom does not make that something become freedom.

A socialist government also owns property. If socialism meant literally the abolition of property rights, rather than their reassignment, than any individual citizen would free to biuld a house, ride a horse or play baseball on land that the government had set aside for growing food, and life would become impossible in such a society. In reality, whether under capitalism or socialism, property rights are basically rights to exclude.

It is precisely those things which belong to "the people" which have historically been despoiled - wild creatures, the air, and waterways being notable examples. This goes to the heart of why property rights are socially important in the first place. Property rights mean self-interested monitors. No owned creatures are in danger of extinction. No owned forests are in danger of being leveled. No one kills the goose that lays the golden egg when it is his goose.

Equality as a legal or political principle does not depend upon a belief in empirical quality of any sort. Quite the contrary. If it were literally true that 'all men are created equal' there would be no case for equal protection of the law, or perhaps even for laws at all. If every person had exactly the same intelligence, strength, organizing ability etc here would be no need for the law to protect one from another, because one would never be in a position to successfully take advantage of the other.

The more special rights are created for any particular groups, the higher the transaction costs of dealing with that group and the fewer transactions that group will be able to consummate. Special health and safety legislation for youths or women make them less desirable employees than others and thereby reduces their employability. This is not a phenomenon of private capitalist employers only - Soviet managers have avoided hiring younger workers whenever possible for the same reason.

Consumer rights raise the price paid for products and services, since higher quality, or greater product liability, both have costs. The question is whether the amount by which the price is raised is more or less than the increased value created by the rights.

One large historical instance of imposed product quality 'improvment' occured when the British Parliament in the 19th century imposed higher health and comfort standards on ships carrying Irish emigrants. In view of the foul and disgusting state of the ships at that time, it might seem a foregone conclusion that this was a net benefit. Yet the records show that the Irish rushed to get on ships heading out before the law became effective - and the outflow of emigrants slackened immediately thereafter.

Municipal bus lines can continue to operate without adding to taxpayer's burdens, as long as the fares cover the short run costs, such as the gasoline and the bus drivers' pay. For the longer run, however, the fares would also need to cover the fixed costs of replacing the buses as they wear out. At a given point in time, the need to raise bus fares to cover both kinds of costs can be politically denied without fear of feedback within the elected officials' time horizon.


Where intention does exist among the individuals involved in a systemic process, that does not mean that their intentions determine the outcome.

The postulated 'power' of private organizations frequently boils down to nothing more than an ability to offer more options, or more preferred options, than their competitors, thereby gaining more voluntary transactions.


Economic systems have been seen as institutional processes for weighing costs and benefits. Costs in turn are foregone alternative benefits. Costs and benefits are ultimately subjective, but that does not mean that they vary arbitrarily or that one way of weighing them is as rational as the next. How much someone wants a ditch dug is subjective to him, but is objective data to anyone else considering doing such work.

Prices convey the experience and subjective feelings of some as effective knowledge to others; it is implicit knowledge in the form of an explicit inducement. Price fluctuations convey knowledge of changing trade-offs among changing options as people weigh costs and benefits differently over time, with changes in tastes or technology. The totality of knowledge conveyed by the innumerable prices and their widely varying rates of change vastly exceeds what any individual can know or needs to know for his own purposes.
How accurately these prices convey knowledge depends on how freely they fluctuate. The use of force to limit those fluctuations or to change the relationship of one price to another means that knowledge is distorted to represent not the terms of cooperation possible between A and B, but the force exerted by C. Looked at another way, the array of options people are willing to offer each other are reduced when force is applied to limit the level or the  fluctuation of prices, and the array can shrink all the way to the vanishing point when the price is specified by a third party, if his specification does not happen to coincide with trade-offs mutually acceptable to entities contemplating transactions.

There is no inherent reason why low-skill or high-risk employees are any less employable than high-skill, low-risk employees. Someone who is five times as valuable to an employer is no more or less employable than someone else who is one-fifth as valuable, when the pay differences reflect their differences in benefits to the employer.
Historically, lower skill levels did not prevent blacks from having labor force participation rates higher than that of what males for every US Census from 1890 through 1930. Since then, the general growth of wage fixing arrangements - minimum wage laws, labor unions, civil service pay scales ets - has reversed that and made more and more blacks 'unemployable'.
In short, no one is employable or unemployable absolutely, but only relative to a given pay scale. Increasingly, blacks have been priced out of the market.

While time and complexity insulate many political decisions from effective feedback from the general electorate, some offsetting knowledge is furnished by groups with lower knowledge costs because they are more obviously affected. In general, special interests have not only lower costs of knowledge of their own interests, but an incentive to invest in discovering how other groups' interests are similarly affected, so as to acquire political allies.

The huge volume of mail between New York and Chicago tends to make the cost per letter very low, while the low volume of mail to remote villages makes their cost per letter much higher. In a government market, however, all the costs are lumped together and all the users pay the same postage without regard to how much each contributed to those costs.
To the extent that other government controlled prices similarly distort the cost of delivering electricity, water, and other services to rural locations, the whole cost of living in isolated towns or villages is understated to those who are deciding where to locate.

The rush-hour traffic congestion caused by thousands of people going to work separately in individual automobiles has been denounced by social critics as 'irrational' and explained by some mysterious psychological attraction of Americans to automobiles. It is, however, a perfectly rational response to the incentives and constraints conveyed.

Around 1914-15, the mass production of the automobile led to the rise of owner-operated bus or taxi services costinf 5 cents and therefore called 'jitneys', the current slang for nickels. The jitneys were put down in every American city to protect the street railways. As a result, the public moved to automobiles as private rather than common carriers.

Central to the decision-making in this area has been the maintenance of incumbent transportation entities, which often implies the maintenance of incumbent technologies - ie subsidized obsolescence. It is not even a pro-industry position, but a pro-incumbent position, since there might well be a far more profitable industry (consisting of new firms) as well as one better serving the public, in the absence of such regulation. To be pro-industry would be an ideological position; to be pro-incumbent is a practical political position, since the incumbents are either organized or easily organizable into effective special interest groups.

Innumerable economists have complained that the administrative agencies and the courts have protected competitors instead of protecting competition.

This in in keeping with the legislative history of the Robson-Patman Act, whose philosophy Congressman Patman expressed as one of 'live and let live' and 'everybody is entitled to a living' - presumably at the  consumer's expense.

When Soviet nail factories had their output measured by weight, they tended to make big, heavy nails, even if many of these big nails sat unsold on the shelves while the country was 'crying for small nails'.

These are not peculiarities of Russians or of the Soviet economic or political system. They reflect inherent limitations of articulation. The American political demand for more high school graduates - in the academic paradigm, a solution to the 'dropout' problem - led to more of that product being produced, by whatever lowering of standards was necessary.


"The best test of truth is the power of the thought to get itself accepted in the competition of the market, and that truth is the only ground upon which their wishes safely can be carried out. That at any rate is the theory of our Constitution. It is an experiment, as all life is an experiment. While that experiment is part of our system I think we should be eternally vigilant against to check the expression of opinions that we loathe and believe to be fraught with death, unless they so imminently threaten  immediate interference with the lawful and pressing purposes of the law that an immediate check if required to save the country."
        - Justice Oliver Wendell Holmes

Along with historic changes within the law has come an enormous explanation of the sheer numbers of lawyers, judges and cases. The number of lawyers and judges per capita increased by 50% from 1970 to 1977. California alone has a larger judicial system than any nation beside the United States.

Costs transmit inherent limitations of resources compared to the desires for them, but do not create this fundamental disproportionality. All costs are prohibitive to some degree, and virtually no costs are prohibitive absolutely.
'Free speech' in the sense of speech free of governmental control does not imply inexpensive message transmission, any more than the right of privacy implies subsidized window shades.


'Representation' based on population disregards huge differences in age distribution among American ethnic groups, due to differences in the number of children per family. Half of all Hispanics in the US are either infants, children or teenagers. Their median age is about a decade younger than that of the US population as a whole, two decades youngers than the Irish or Italians, and about a quarter of a century younger than the Jews.

These differences affect everything from incomes and occupations to unemployment rates, fertility rates, crime rates and death rates.

Given the size and regional diversity of the United States, the geographic distribution of ethnic groups affects the statistical averages that are often blithely quotes, with as little regard for geographic as for demographic differences.

Some indication of the combined influence of age and location is that young black working couples living outside the South had by 1971 achieved the same income as their white counterparts in the same region.

If the purpose is to compensate the pain and suffering of slavery, those most deserving of such compensation are long dead. If the purpose is to restore their descendants to the position the latter would occuy 'but for' the enslavement of their ancestors, is that position the average income, status and general well-being of other Americans or the average income, status and general well-being in their countries of origin?

The South was poorer than the North even before the Civil War, and those parts of the South in which slaves were most heavily concentrated have long been the poorest parts of the South, for whites as well as blacks. Compensation based on the economic contribution of slavery could turn out to be negative.

About 70% of black Americans have some Caucasion ancestor(s), and a leading social historian estimates the number of whites with some black ancestors in the tens of millions. Trying to undo history in this population is like trying to unscramble an egg. Doing justice to individuals in our own time may be more than enough challenge.


Crime rates per 100,000 persons more than doubled during the decade of the 1960s - whether measured by total crime, violent crime, or property crime. How much of this represents an actual rise in crime, and how much an increased reporting of crime, remains a matter of controversy. However, there is general agreement among people who agree on little else, that murder has generally been accurately reported, since it is hard to ignore a corpse or someone's sudden disappearance. Murder rates in large cities doubled in less than a decade between 1963 and 1971. The probability that someone living his whole life in a large city today will be murdered is greater than the probability of an American soldier on World War II being killed in combat.

Crime rates in general are only moderately higher in the United States than in Europe, but it is violent crimes that the difference between the US and other countries is greatest.

Crime has been blamed on 'poverty, racism and discrimination' and on 'the inhumanity of our prisons'. As already noted, poverty and racial discrimination (whether measured in incomes, education or segregation laws) were greater in the past.

One of the basic questions about criminal law procedure is simply how much of it there is, in purely quantitative terms. In England, the longest criminal trial on record lasted 48 days. In the US, there have been criminal trials in which the selection of a jury alone has taken months.

Delays in American courts did not just happen. A procedural revolution in criminal law was created by the Supreme Court in the 1960s - the decade when crime rates more than doubled.

The usually presumed social 'causes' of crime - poverty, unemployment and broken homes - are wholly uncorrelated with the rise of crime in Britain. There has been no increase in poverty or broken homes there, and there has been a reduction of income inequality and a 'virtually nonexistent' unemployment rate in Britain during the period of rapidly increasing crime rates. The criminal justice system has simply become slower and more uncertain.
By contrast, the only major nation in which crime rates have been going down over the past generation is Japan, where more than 90% of all violent crimes lead to arrest and 98% of all defendants are found guilty. The sentences are no greater in Japan, but the chance of getting away scotfree are loess. Various supposed causes of crime - television violence, urbanization, crowding - are at least as prevalent in Japan as in the US.

In recent years criminal law procedures have often been viewed, not as social institutions for transmitting knowledge about guilt or innocence, but as arenas for contests between combatants (prosection and defendants) whose prospects must to some degree be equalized.

Minimizing the costs to criminals is not minimizing social costs but only externalizing more costs to victims.

Over the past generation, punishments for convicted criminals have become less common, less severs, and less honestly reported to the public. In the American legal system, punishment is less common than in the British legal system from which it evolved. California alone has six times as many robbers as England, but more people were in prison for robbery in England than in California.

Less severe penalties - that are actually enforced - have produced a long term reduction of serious crime in Japan, over the same decades during which American crime rates have been soaring.

The immorality of execution is based on a parallel between the first-degree murderer's premeditated killing of his victim and the law's subsequent premeditated killing murderer. In this view, we must 'put behind the notion that the second wrong makes a right'. The two events are certainly parallel as physical actions, but if that principle determines morality, it would be equally immoral to take back by force from a robber what he had taken by force in the first place. It would be equally immoral to imprison someone who had imprisoned someone else.

The irrevocable error of executing the wrong person is a horror to anyone. The killing of innocent people by released or escaped murderers is no less a horror, and certainly no less common. The recidivism rate among murderers has never been zero, nor can the human error in capital cases ever be reduced to zero. Innocent people will die either way.

More black people are murdered than whites - that is, there are more black victims in absolute numbers than white murder victims, even though blacks are only about 12% of the population. Moreover, murder is usually not across racial lines, involving as it often does family members and friends. Against that background, the statistic that blacks are overrepresented among those executed assumes a different dimension, since blacks are also grossly overrepresented among the victims.

We do not play God when we act - as we must - within our limitations. We play God when we pretend to an omniscience and a range of options we do not in fact possess.

There is no degree of precision - in words or numbers - that cannot be considered inadequate by simply demanding a higher degree of precision.
On a spectrum where one color gradually blends into another, you cannot draw a line at all - but that in no way prevents us from telling red from blue (in the center of their respective regions).
A border dispute between Greece and Yugoslavia does not prevent us from knowing that Athens is in one country and Belgrade in another.


"All through the state, all for the state, nothing against the state, and nothing outside the state."
        - Benito Mussolini

Among the prominent political currents of the twentieth century are (1) a worldwide growth in the size and scope of government, (2) the rise of ideological politics, and (3) the growing political role of intellectuals. In addition, it has been an "American century" in terms of the growing role of the United States on the world stage, particularly during two world wars and in the nuclear age. This does not imply that international events have followed an American blueprint or have even been favorable on the whole to American interests or desires. It does imply that the fate of the United States has become of world historic, rather than purely national, significance.

Totalitarian governments reach into every nook and cranny of private life, among the masses as well as the elite. Children are indoctrinated with the official ideology, taught to betray even their parents to the state, and as adults live in an atmosphere in which even the most intimate relationships are subject to state scrutiny. History, science and the arts are all made subject to political direction. It is not the source of the ruthlessness of power alone which defines totalitarianism, but the unprecedented scope of the activities subjected to political control.

A concentration camp is the ultimate in totalitarianism, with political decisions determining such routine things as eating and sleeping, as well as personal relations and death.

Courts are preferred to lynch mobs even when it is known to a certainty in the particular case that the accused is guilty, and even if the lynch mob inflicts exactly the same punishment that the court would have inflicted. The philosophic principle that we 'should not take the law into our own hands' can be viewed instrumentally as the statement that, however great our certainty in the particular case, we cannot supplant legal institutions as cost-saving devices because we cannot assume equal certainty in future cases.

Most of the personal rights which are loosely referred to as 'democratic' rights were pioneered in England under governments that were democratically elected only within the past century - the popular franchise being a consequence rather than the cause of these developments, which go back to the Magna Carta. In short, despite a general, historical association of freedom and democracy, they can be independent of each other in theory, and have at times been so in practice. Indeed, Hitler came to power through democratic and constitutional processes.

The democratic process is a mode of political decision making. Freedom may occur under this or other modes. The more autocratic the government however, the more freedom depends on the benevolence, indifference or inefficiency of the authorities.

It is easy to give up freedom and hard to get it back.

In the perspective of world history, constitutional democracy is a very late arrival.

The percentage of the aggregate American income earned by the top fifth, bottom fifth etc has remained almost unchanged for decades while governmental powers and welfare state expenditures have expanded enormously. There has been less a redistribution of free income from the richer to the poorer, as we imagined, than a redistribution of power from the individual to the State.

Intellectuals' promotion of despotism has not been confined to situations, like those in the Roman or Chinese empires, where they themselves were directly involved in wielding power or instigating violence.

The despotisms in question were seen as vehicles for the imposition of intellectuals' design on society at large.

In the 19th century free nations as well, as John Stuart Mill observed, 'impatient reformers, thinking it easier to get possession of the government than of the intellects amd dispositions of the people', proposed to expand 'the power of government'.

An ideological vision is more than belief in a principle. It is a belief that that principle is crucial or overriding, so that other principles or even empirical facts must give way when in conflict with it. The Inquisition had to reject Galileo's astronomical findings in the interets of a higher vision, as the Nazis had to reject Einstein in spite of any evidence about his theories or his individual abilities.

Antitrust laws, school busing, rent control, and minimum wage laws are all based on their consonance with a general vision of the social process, rather than on empirical tests of their positive and negative effects.

Sex education in the public schools was another part of the same social vision, and was promoted as a means of reducing teenage pregnancy and venereal disease - but no reconsideration of its wisdom or effectiveness has been made in the light of the steep increases in both.

If lowpaid workers were exploited, we might expect to find their employers unusually prosperous rather than finding, as we generally do, high rates of bankruptcy among low-wage firms.

The education of black youngsters was initially almost solely non-governmental (or even anti-governmental, in defiance of laws against their education in the antebellum South), and it was 1916 before the number of black youngsters educated in public high schools equalled the number educated privately.

It is not so much the bias of 'expert' intellectuals that is crucial, but the difference between their perceived 'objective' expertise and the reality which makes the political process vulnerable to their influence. When an academic intellectual appears as an 'expert' witness before a congressional committee, no one ever asks if he has been a recipient of large research grants or lucrative consulting fees from the very agency whose programs he is about to 'objectively' assess in terms of the public interest.

Nowhere is the meaning of 'public' representation better illustrated than in so-called 'public' television, where the tastes actually served as not those of the public but of atypical elites.

To claim, as Ralph Nader does, that 25 landowners own more than 61% of California's private land is completely misleading. Not only do state and national government own a substansial part of California, it is also important to realize that the so-called 25 'landowners' include thousands or millions of people, because of organizational ownership by corporations with vast numbers of stockholders.


The American occupation army that entered Japan in 1945 was ordered neither to take nor buy food from the Japanese, as that would reduce food badly needed by the Japanese civilian population. For what may have been the first time in history, a conquering army was put on short rations until food arrived from their homeland, so that a conquered people would not be deprived.

In 1952 military expenditures were 66% of the US federal budget, but this declined to 24% by 1977. Inflationary dollar figures maintain the political illusion that defence spending is rising, but in constant purchasing power terms military expenditures in the US declined not only relatively but absolutely. Moreover, much of today's military spending represents simply higher pay for military personnel, rather than for weapons. More than half of all current American military expenditures are for personnel costs.

It was precisely at the leading British universities that young men took the 'Oxford Pledge' in the 1930s never to defend their own country in warfare. Such pacifist reaction to the carnage of World War I may have been understandable, however, such attitudes were a crucial element in the Western powers' appeasement of Hitler at a time when they had superior military force but were politically incapable of using it. By the time Hitler's rearmament policy, annexations, and conquests had changed Britain's attitude, he now had superior military force. When the young men who took the 'Oxford Pledge' saw Hitler's armies marching and the bombs falling on their own homes, they vindicated themselves in the skies over Britain and later on the beaches at Normady. But it was still a desperately close brush with subjugation by one of the greatest barbarians in human history. Hitler's outrages put a pacifict intellectual like Einstein in the ironic position of initiating the development of the most destructive military weapon ever used.
But now that the nuclear age is here, such changes of mind as a result of crisis experience may no longer be possible - or at least, not in time to change policy and change history. The timetable of a nuclear war - or nuclear blackmail - may not permit second thoughts about what should have been done when we had the chance.


"A system built on sin is built on very solid foundations indeed."
        - Michael Novak

The question facing the founders of the American government was not how to give expression to the ideas of those presumed to be morally or intellectually superior, but how to guard freedom from the inherent weaknesses and destructive charteristics of men in general. Their answer was a series of checks and balances in which ambition would counter ambition and power counter power. They did not trust anyone.

Historically, freedom is a rare and fragile thing. It has emerged out of the stalemates of would-be oppressors. Freedom has cost the blood of millions in obscure places and in historic sites ranging from Gettysburg to the Gulag Archipelago. A frontal assault on freedom is still impossible in America and in most of Western civilization. Perhaps nowhere in the world is anyone frankly against it, though everywhere there are those prepared to scrap it for other things that shine more brightly for the moment. That something that cost so much in human lives should be surrendered piecemeal in exchange for visions or rhetoric seems grotesque. Freedom is not simply the right of intellectuals to circulate their merchandise. It is, above all, the right of ordinary people to find elbow room for themselves and a refuge from the rampaging presumptions of their 'betters.'


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