2. Lessons from the Tsunami: Too Much of a Good Thing?

3. Peter Foster: What Haiti Needs Is Adam Smith

4. Lessons from Katrina for Haiti

5. Why Haiti Is So Vulnerable

6. The Underlying Tragedy

7. Andy Kershaw: Stop Treating These People Like Savages

8. Haiti and the Broken-Window Fallacy

Plainly there is no purely naval way to stop the pirates. Somalia’s coast is more than 3,000km long. They seem unafraid of the warships. If accosted, the pirates usually dump their guns and grapple-hooks in the sea. The patrolling navies are reluctant to arrest them because of the legal complexities. On the rare occasions when pirates are taken aboard, they are usually given medicine, water and enough fuel to go back to Somalia. Within days they will set off again to seek their prey.

The U.S. Treasury Department will remove the caps on aid to Fannie Mae and Freddie Mac for the next three years, to allay investor concerns that the companies will exhaust the available government assistance.

The two companies, the largest sources of mortgage financing in the U.S., are currently under government conservatorship and have caps of $200 billion each on backstop capital from the Treasury. Under the new agreement announced today, these limits can rise as needed to cover net worth losses through 2012.

Cap removal will accompany the eligibility of Fannie Mae Chief Executive Officer Michael Williams and Freddie Mac CEO Charles Haldeman Jr. for individual compensations of as much as $6 million this year, although an apposite, incentive-based stipulation would involve compelling the mortgage financiers’ CEOs to wear pink bunny pajamas.

While my expectations are high, thus far I have only read interviews with Paul Romer and Douglass North. Hence, rather than offer a premature assessment, I want to direct readers to Mike Gibson’s review of the book at Let A Thousand Nations Bloom. Also, Reason.tv’s interview with the authors follows:

(For extended discussion, Econtalk has an interview with Arnold Kling.)

Let me state this one more time with feeling — while there may be macroeconomic problems, there are only microeconomic explanations and solutions. Aggregate variables do not interact with one another independent of the choices of individuals. And those choices are guided by the incentives actors face, and the informational signals they receive. In short, economics is about exchange and the institutions within which exchanges take place. It is all about property rights, relative prices, the lure of profit and the penalty of loss.

Microsoft wants to stop Google, which already rules much of online advertising, from dominating mobile advertising too. Microsoft, after being on the receiving end of antitrust action for a long time, has now taken up the weapon to use against its rivals.

Presumably, such a comment likewise references the Microsoft lobby against Oracle’s proposed acquisition of Sun Microsystems — a purchase which Geoffrey Manne opines is “procompetitive.”

Perhaps it’s fitting to remind readers of Bastiat’s assertion:

When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it & a moral code that glorifies it.

Do competition authorities have any concern for the precedent they establish? Are they aware of the perverse incentives which their initiatives so frequently warrant?

Of particular interest will be their Hayekian critique of mechanism design and other attempts at engineering optimal outcomes through institutions such as contracts. Boettke cautions that, in efforts to orchestrate the “perfect” institutional environments, we may actually thwart otherwise emergent, desirable solutions.

When I was growing up my father told me that a man only needs three things in life: a good bartender, a good priest, and a good tailor. I think Dad intended that different people wear those three hats, otherwise it just doesn’t work. But wearing conflicting hats is the unfortunate mission we have given to the Fed at this point. Some regulatory re-gearing, and an enhanced audit capability for non-monetary policy activities at the discount window, could be what we need to get the Fed on the right track.

The case against the regulation of the market (even by well-meaning and conscientious public servants), rests upon insights into this corrective process and into its socially benign character. Long before this corrective process can possibly lead to even approximate coordination, changes in the basic data of the market (individual preferences, the endowments of resources, and available technology) will have rendered the hypothesized state of full equilibrium (defined with respect to the initial state of the data) utterly irrelevant. But the discrepancies continually stimulate, in turn, changes in these existing patterns of resource allocation.

The truth is that, as Hayek explained four decades ago, the economic problem faced by society consists of the need to ensure that, as far as possible, the available bits of scattered knowledge of separate individuals be somehow mobilized to contribute to relevant decisions that affect the societal pattern of resource allocation. To try to measure the success with which a society addresses its economic problem, with a yardstick reflecting a pattern appropriate to hypothesized centralized omniscience, is akin to an attempt to assess the efficiency of an allocation pattern for scarce resources by comparing its results with those that might be imagined for a world in which scarcity is absent: The whole problem is how best to cope with scarcity (emphasis added). Similarly the socio-economic problem is how best to cope with the inescapable decentralization of knowledge.

We may put the matter quite succinctly: For reasonably successful coordination within a decentralized decision-making system, the discovery process constituted by competitive-entrepreneurial alertness to profit opportunities is crucial. Attempts at improvement by direct regulation are likely to be based on erroneous information (because the regulators cannot utilize the discovery process of profit pursuit) and are likely to block or distort the market’s own delicate discovery process.