"A parable: Behold the unicorn. Now the unicorn is the ideal pack animal. It can carry large amounts of cargo. It eats nothing but rainbows. And it's flatulence smells of fresh strawberries. It's clearly the ideal pack animal, save for one thing: it doesn't exist.
"The state is a unicorn. There is no such thing as the state. [...] There's no such thing as the collective, the Uber-mind that has all the information that markets are assumed to lack. So I would hope that before you say "Markets fail," that is, the first pig is ugly, and therefore I want the unseen pig, in this case a unicorn, to solve these problems for me, substitute in this: next time you say I want the state to do x, say I want politicians I actually know to be in charge of this, because they're better informed, because they have a longer time horizon, and I think you'll see that that's nonsense. Politicians are looking for the next election; if they lose, they're done. Now it's perfectly true that people in markets (stockholders, managers) have very short time horizons. But so do politicians. We're in a situation where we have two pretty bad choices. And the idea that we're going to pick one over the other means that we're doomed to continue to make the mistakes that have gotten us to this point in the first place."
"The state is a unicorn. There is no such thing as the state. [...] There's no such thing as the collective, the Uber-mind that has all the information that markets are assumed to lack. So I would hope that before you say "Markets fail," that is, the first pig is ugly, and therefore I want the unseen pig, in this case a unicorn, to solve these problems for me, substitute in this: next time you say I want the state to do x, say I want politicians I actually know to be in charge of this, because they're better informed, because they have a longer time horizon, and I think you'll see that that's nonsense. Politicians are looking for the next election; if they lose, they're done. Now it's perfectly true that people in markets (stockholders, managers) have very short time horizons. But so do politicians. We're in a situation where we have two pretty bad choices. And the idea that we're going to pick one over the other means that we're doomed to continue to make the mistakes that have gotten us to this point in the first place."
Mike Munger, econtalk, about one hour and six minutes in.
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