How Little Policymakers Know About What They Imagine They Can Design

Key to understanding law and economics is mastering an appreciation for the idea that resources are scarce, that with every choice there is a cost (i.e. life is full of tradeoffs and opportunity costs), that market order emerges spontaneously through a complex system of human interactions made easier by specialization of labor and the coordinating function of the price system, and that failure to consider and account for all of these lessons risks policymakers making decisions that result in unintended, yet often serious and avoidable, consequences.
These ideas form the background of Friedrich A. Hayek’s warning about the “pretense of knowledge” and his conclusion in “The Fatal Conceit” (1988), that “The curious task of economics, is to demonstrate to men how little they really know about what they imagine they can design.” Hayek also explores the temptation for policymakers and the public to believe otherwise - that the world can be planned and designed for the public good. Similar insights emerge in Leonard Read’s famous essay, “I, Pencil,” in which he explains that no single person does or could ever know enough to design or produce even the simplest of items - a single lead pencil. Through the autobiography of a pencil, Read’s essay is intended to be a lesson in humility and an explanation of the role of trade and specialization of labor in producing everything we use or consume.
Our panelists, Professors Bruce Yandle and Don Boudreaux, are two of the most established researchers and highly respected scholars working in law and economics. They will explore these lessons from Hayek, Read, and related economic thinkers. They will also explain how these insights apply to modern day decisionmaking by legislators, regulators, and judges. And, the panelists will evaluate what can go wrong in every area of today’s policymaking or judicial consideration of legal standards when these lessons fail to be appreciated in the process.
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