Wednesday, March 3, 2010

Complex Economy

Russ Roberts at Cafe Hayek posted a video yesterday. It really got me thinking and it seems to attracting a lot of attention. It shows a Rube Goldberg (you're dating yourself if you know that reference) set-up with music. As the song is over three minutes long, the mechanism is fairly complex. I think it can be used as an analogy to the complexity of the economy.

But where it's very valuable is in explaining why trying to manage the economy is difficult. How many of you think this worked the first try? And how many "unforeseen circumstances" still remain within the mechanism? Is it appropriate to believe the economy can be managed efficiently? Just some thoughts and questions for you and your class. Feel free to share responses.

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