One of my classes today (Income and Wealth Distribution) focused on market outcomes and the idea of a perfect market. My professor (who is on the left) referenced the Austrian school of thought saying that
The Austrian school, which is on the far right, believes that market transactions result in the best possible outcomes. The idea of imperfect, incomplete, manipulated, or asymmetrical information is inconvenient to them. They are out of touch with the real world.I found it very ironic that this professor was making a point about information with incomplete and erroneous information. Whether this was done intentionally or unintentionally was not immediately clear. I chimed up, having once purused Mises' Human Action, saying
Actually, the Austrian school of thought does not assume perfect and symmetrical information in transactions. Instead, it assumes pervasive imperfect and asymmetrical information and simply reasons that the market outcome produces the best possible outcome from said imperfect and asymmetrical information.The professor was perturbed at this, brushing it off as a semantics argument. I could clearly see, however, that he had never actually read any of the works of Austrian economists. Instead, he had merely read leftist critiques thereof.
Supposedly, I'm making a point here and not just bashing a professor that I don't particularly like, right? Right. Let's pretend for a moment that my interaction with my professor was a market transaction. The left would have the government (let's say the economics department) intervene to adjust for asymmetries in information in market transactions (correct the professor for his mistake). The right would just argue for better information (the professor wouldn't have made the mistake in the first place). Both sides have merit as the idea of having perfect information is quite clearly utopian and, some would argue, contrary to the idea of incentives driving the market*. However, getting the government (econ dept.) to intervene involves transactions costs (I have to email them, they have to discuss and agree). Further, such intervention in the context of real world monetary transactions simply redistributes wealth whereas better information invariably leads to greater wealth in the aggregate.
As it is said, knowledge is power.