Customer Reviews

Knowledge And Decisions

5 star:		(21)
4 star:		(3)
3 star:		(1)
2 star:		(1)
1 star:		(1)

 

 

Thomas Sowell has called "Knowledge & Decisions" his "most important and comprehensive work." After completing the book, it nearly impossible to disagree. There are two themes in Mr. Sowell's book. First, knowledge is not a "free good." Knowledge has a cost that isn't universally shared. This truth has important implications. In Mr. Sowell's opinion, capitalism uses knowledge more efficiently and directly than other economic systems. Unfortunately, the link between knowledge and capitalism is also a great political vulnerability. The public can get the economic benefits of capitalism without understanding the economic process. Politicians can exploit economic shortcomings into attacks on the economic process. Every perceived problem - whatever its reality - calls for a political "solution." These political "solutions," however, always give power to those who are removed from the knowledge and feedback mechanisms that undergird real "solutions." Not long ago, for example, the First Lady entrusted herself to radically reform the nation's health care industry. The fact she had no medical training or hadn't even run a drugstore didn't keep her efforts from nearly succeeding. Let us now understand Sowell's second conclusion: When making decisions, the question "who makes the decisions?" is just as important as what gets decided. Most discussion of various issues - from education to health care - overlooks the crucial fact that the most basic decision is WHO makes the decision, under what constraints, and subject to what feedback mechanisms. The great strength of the American Constitution is its system of "checks and balances" and "separation of powers." Here, decisions are made by scores of actors who check each others' ambition. This is different from stating that better decisions will be made when we replace "the bad guys" with "the good guys." When citizens choose to leave power in fewer and fewer hands and then have that power wielded by men who are further and further removed from real life, they are paving the road to despotism. Every citizen wants a better school system for their kids and a better health care system for their parents. But who will wield this power? Washington or local school boards? Who has more expertise on life-or-death matters? Bureaucrats or doctors? Constitutional democracy is a new - and indeed, fragile - form of government. As citizens who lived under Hitler's Germany or Peron's Argentina can attest to, it is easy to give up freedom and hard to get it back. In the second half of Mr. Sowell's book, he documents some disturbing trends in law and politics. These trends run contrary to the two points of Mr. Sowell's book. First published in 1980, there has been a lot of good news since then. Voters are starting to understand the costs of knowledge and the limits of political decision-making. But there is always the temptation to go back to the past. Mr. Sowell's book is an excellent lesson in why we must never travel that path again.

Sowell, an economist by training, assumes the economist's standard definition of a scarce resource: "At zero price, there is greater demand than supply." Nothing special here. Then he applies this axiomatic principle to knowledge and decisions based on knowledge. The fun begins. Page after page, he uses this intellectual insight to shoot sacred cows. I have never read any book that offers a greater number of fascinating insights, page for page, based on a seemingly noncontroversial axiom. Modern social policy and far too much of modern social theory are based on this premise: "Accurate knowledge is, or at least should be, a free good. When it is not, the civil government should coerce people to provide it." It is a false premise, and it produces costly errors -- another implication of his premise that accurate knowledge is not a free resource. Buy this book. Read it. Twice. Maybe more. (As an author, I will say this: Sowell makes brilliant writing look too easy and the rest of us look too lazy.)

This is indeed one of Sowell's tomes. Knowledge costs are different for different people. Some knowledge is extremely costly to acquire in both time and money. Articulation may not be an expression of knowledge, but a talent for using words; however, some incorrectly think that if someone has good articulation, then he must know what he is speaking of.

Sometimes the most important decision to be made is WHO is to make a decision. The further away from the knowledge on which the decision must be based the "decider" is, the less informaiton he has and he is more likely to make an incorrect decision. This explains the folly of most regulation: generally speaking, regulators cannot know what it is they are regulating. Shocking as this might be, but it takes sometimes years - maybe decades - for one person to gain knowledge in some areas of patient treatment, but yet people in the FDA regulate the medical industry anyway with the total impossibility of them ever knowing even a fraction of a percentage of what they are regulating! Of course, this is not unique to the medical field, but applies to all fields - regulators are too far away from the correct KNOWLEDGE to make some types of decisions. This fact of knowledge is inescapable, permanent, and nobody can change it.

Sowell also shows the effects of insurgent movements on social policy and how the movements still exist long after they have outlived their usefulness - beyond their point of diminishing returns. He also shows how the courts really screwed up the judicial system by crusading for social causes instead of interpreting the constitution. In the quest for "solving" problems, many social insurgent groups forget that some problems will never be solved and we just have to live with the necessary trade-offs such situations present to us - some of these groups forget that their "solutions" create other problems that they did not forsee. They forgot that life's problems is weighing trade-offs and some "solutions" replace one problem with another.

The theme, for the most part, is coming to terms with a fact of life: we must decide what trade-offs we want to live with. We cannot perfectly manage all of the information out there, and some of the information is too costly to get for some people. We must balance what we know against the chances of what we do not know. Much is left to chance and that is life.

I have read about 12 of Thomas Sowell's books now, give or take. They do tend to be over-wrought with detail, but in this case it may be that he really did need as many pages as he used to say what he did and could have used more by filling in specific examples.

Kudos to Sowell for using the very accurate idea of *social behavior* as a basis for explaining intergroup difference (rather than something so tenuous as IQ), and the separation of the actions of specific agencies from "society." Most writers do not bother to clearly delimit their operational terms and working notions. Also particularly clever was his observation of how institutions work as a matter of *self-interest* and create problems because it is in their best interest to have these problems.

The book must be read LINE by LINE. When he uses some of his very abstract statements to characterize a social process it is often NOT filled in with details. A theme that appears in many of his books is: "If it has happened once, it will happen again independent of settings." While you go through and read some of his statments, you will have to think back through your experiences of life and see if you have seen the same situation. And THAT is what makes this book take such a long time to read--expect it to take a month if read properly.

The index is excellent and I found it particularly useful for referencing subjects like black IQ research and things like that. Well researched if nothing else, and it goes a LONG way in explaining current situations by extrapolations of things in the book itself.

Perhaps it could have been made just a bit easier to read. Again: this is NOT light reading, and while it is chock full of information, it is WAY over the heads of most people.

This book is *required reading* for young black Americans. If paid careful attention to, it will do great things to break some of the bad habits that have infected us for a long time now. Really, it is a good book for any people who are looking for concrete reasons for group differences. And maybe in the case of the readers who would be the greatest beneficiaries of it (black Americans, from my view), it would undo some of the damage caused to young Blacks by Black Studies departments across the nations.

Feel free to email me with any questions/ comments.

Thomas Sowell is a masterful economist and social theorist, and this may be his greatest work. Sowell expertly links the two broad topics of decision making and knowledge in a highly expansive way. This book was published in 1980, but is a much stronger treatment of the role of knowledge (and learning) than many of the more recent, highly confused works on knowledge management. This book is quite heavy reading, and is most appropriate for business knowledge strategists, etc. Much of the book addresses governmental policy issues related to decisions and knowledge, and therefore is also highly relevant to policy makers.  

Seen through the clarity of Sowell's empirical analyses, the modern liberal politician and her/his totalitarian leaning institutions are both rendered nakedly self-serving. The rise of the unaccountable, omnipotent government agency and the willingness of the Supreme Court to make policy rather than protect the Constitution degrade the principles of democratic representation in America. Individual freedom is reduced as established authorities succeed in expanding their grip on the free market process in economic, political and social venues. Sowell believes in the efficiency of private self interest rather than the articulated, unverifiable product of "intellectuals" to deliver us into a future where individual liberty is paramount. I agree. Please read this book.

No one in my lifetime has penetrated with more authority the nature of the political process. One can almost picture him in the closed room with Jefferson, Monroe, Adams, etc. debating the nature of man and his appropriate relation to the state. The big difference between Sowell and those men is his prodigious mastery of the facts of worlwide history and culture. His almost anatomic dissection of the decision making process in this book was frighteningly perceptive. Would that our political decision makers were required to absorb his ideas before playing with our freedoms.

Every serious reader has his own list of the most influential books in his life. This spectacular, monumental volume is second only to "Atlas Shrugged" on mine. "Knowledge and Decisions" has focused my thinking on human social and economic behavior in a way few works before or since have, giving me a clearer outlook and new insight into how societies and economies function. Closely reasoned and meticulously argued, it still finds room for countless small gems of Sowell's ironic wit, making it entertaining as well as enlightening.

The free-market, libertarian conservative viewpoint has found such an eloquent voice in Thomas Sowell that Steve Forbes would do well to choose Sowell (a Forbes columnist) as his running mate in his next stab at the Presidency.

If you like to think, buy this book.

Dr. Sowell offers a very readable argument for the proposition that people should make political choices on the basis of what is actually good for them, and not on the basis of what their self-appointed "betters" think that they ought to want. Required reading for anyone whose political feet are not already set in concrete. Love it or hate it, it will force you to think. (Your brain is more important than your abs.)

Economists almost never write in a way that can be understood by educated persons at large. This is a major exception, so much so that this is perhaps the best book ever written about what was wrong with the general trend of bureaucratically administered public policy in the 20th century. That public policy requires detailed information about people, businesses, and markets, information of a kind that is impossible to obtain in a free society.

Sowell is a discrete Austrian economist without the jargon. He made accessible to all the fundamental insight that a market economy is a self-organizing phenomenon that economizes on the need for articulated knowledge. He did this some years before the Santa Fe Institute got off the ground.

My only objection is that the 1980 edition contained many errors that should have been caught by a proofreader. Here's hoping the 1996 reprint cleaned these up. An outright second edition would be even more welcome, as there is always water flowing under the bridge that Sowell has built.