Thursday, September 22, 2005
O'Reilly's Price Setting Genius
From O'Reilly's Talking Points last night:
My question for you is: How would you explain to someone listening to or reading O'Reilly's analysis that he's got things all wrong? I suggest that you should consider 2 ways to approach this. You could think about this in terms of the standard model of a market with demand and supply curves. Or, you could think in terms of Hayek's idea of a spontaneous order. I'm also curious about whether you think one of the 2 approaches is better than the other?
"One thing struck me. After all the experts we've talked with, after all the research we've done, we still can't find out who exactly sets the price of a gallon of gasoline, which human being in America does that."My reaction? I can't believe it. Perhaps it suggests we should draw the conclusion that there is widespread economic illiteracy?
My question for you is: How would you explain to someone listening to or reading O'Reilly's analysis that he's got things all wrong? I suggest that you should consider 2 ways to approach this. You could think about this in terms of the standard model of a market with demand and supply curves. Or, you could think in terms of Hayek's idea of a spontaneous order. I'm also curious about whether you think one of the 2 approaches is better than the other?
