Source: David Friedman’s Substack
by David Friedman
“The defining feature of economics is rationality, the assumption that individuals tend to take the actions that best serve their objectives. That makes it tempting to conclude that nothing an economist can suggest could improve things: If a change would be an improvement it would already have been made. This point occurred to me reading Douglas Allen’s book, discussed in my previous post, and corresponding with the author. His implicit assumption is that institutions were and are efficient, the best that could be done given existing constraints. The reason England in the Seventeenth Century used patronage and purchase instead of a modern system of employment was not that they were not clever enough to realize the superiority of the latter, it was because, given their technological constraints — no fast communication, ships at the mercy of the wind, agriculture of the weather — our institutions would not have worked as well for them as theirs did.” (07/20/25)
https://daviddfriedman.substack.com/p/can-an-economist-make-things-better