Thomas Sowell’s “Knowledge and Decisions” is just as important today as when it was written. This book is dense and takes a bit of time to get through, but it’s worth it. Sowell’s main thesis is that decision-making power has shifted to centralized bodies. This has profound impacts on economics, law, and politics. As power is concentrated, there is less faith in the public and in mutually beneficial, voluntary transactions. Top-down, one-size-fits-all “solutions” are much more likely with increases in centralized power. Local transactions in free markets are seen as chaotic and irrational when compared to articulated policies from above. This has led to increased involvement by intellectuals in politics; the need to articulate “rational” policies precipitates the need for them. Sowell laments the popular belief that intellectuals live for ideas rather than live off of them. He insists that we need to evaluate the incentive structure inherent in intellectual professions just as we evaluate the incentive structure for other positions. He writes that we also need to do much the same for government employees. There is no evidence that intellectuals or public employees operate under a different incentive structure than anyone else. They are ultimately self-interested, as are all the rest of us. The public expects too much of intellectuals and public employees, to the public’s own demise.

Sowell ends with some discussion on the United States and the intentions of the Founding Fathers, which was a fitting ending to the book. He believes that the Founding Fathers were realists about the human condition. They understood that all of us, including public employees, are ultimately self-interested. The United States was designed to not allow ambition to override other portions of the government. The French Revolution, instead, grew out of the belief that people could be changed if they only saw the light. This is very much the same approach that a majority of intellectuals believe today. Even if something is not favored by a large portion of the populace, they will learn to like it because the almighty intellectuals have proclaimed it superior. Sowell believes that this is a slippery slope that eventually leads to totalitarianism, which is certainly plausible. Government has intruded further and further on our lives since this book was written, and a large portion of young voters want even more government involvement in every part of our lives.

As usual, Sowell weaves historical examples and logical deductions extremely well. He is one of the best at looking at economics and history from a libertarian perspective and enforcing his points with diverse examples from all over the world at all points in history. He continually emphasizes that we need to evaluate everything based on the incentives and constraints of the decision makers. This is an economic principle that can be applied to politics, law, business, and sociology. Though it is simple, this type of evaluation is shirked by most of the public. We can judge judicial activism and the rapid growth of governmental agencies within this scope; both grew from the incentive to wield power, money, and influence. Though constitutional controls are meant to limit any part of the government from growing too powerful, judicial activism has allowed for courts to escape many of the constraints facing them. Much the same, governmental agencies have consolidated legislative, executive, and judicial powers within one body, contrary to the spirit of the Constitution. This agencies now hire more people, use more taxpayer money, and wield more power than they would without this consolidation of powers.

This is worth reading. As I said in the first paragraph, this may be even more relevant today that it was when it was written. Leftist intellectuals now wield greater influence over the public’s opinion than they did even ten or twenty years ago. The public need not trust them simply because they are “experts”. Without empirical proof, they are nothing more than talking heads pushing an agenda.

A 2012 publication by Thomas Sowell describes his perspective in the concepts of “Knowledge and Decisions”
In two parts (Social institutions and Trends and Issues respectively).

Part One contains six chapters (role of
Knowledge, decision-making process, economic trade-offs, social trade-offs, political trade-offs and an overview)

Part Two contains four chapters (historical trends, trends in economics, trends in law and trends in politics).

Well worth the time and considering the material present in text or audio book.

I recommend this book to anyone who wants to understand the reason stated political and social intentions somehow never come to pass. It is because those who take the power to make decisions (the intelligentsia) do not have anywhere near enough knowledge to choose wisely even if they are not corrupt.

4.5 out of 5. Falls short of a 5 because the book was a relatively difficult read, albeit one of the most mind-sculpting books I have ever read. Dr. Sowell is my favourite public intellectual. One does not read Knowledge and Decisions; s/he studies it. The book is arguably his seminal work, and I spent thrice as much time writing notes as I did reading the book.

The book's central thesis is that individually, we know so pathetically little, and yet socially we use a range and complexity of knowledge. In society, there has been a chasm between knowledge borne by decision-makers and the decisions they make. The effective feedback of the decisions already made is the lifeblood of future decisions. However, such feedback is insulated by knowledge costs such as complexity and time, which raise the cost of intellectually connecting cause and effect. Over time, decision-making has tended to shift away from voluntary entities such as producers, consumers, and the family, who are most immediately affected by their decisions, toward institutions which are immune to feedback, such as the government, courts, and administrative agencies.

In the economy, the transmission of knowledge through the price mechanism is distorted due the use of force by 3rd parties such as labour unions and various organs of government. When shaping the economy is a function of political processes rather than voluntary markets, the cost of knowledge of benefits is much lower than the cost of knowledge of losses. Hence there tends to be concentrated benefits among special interest groups and diffused losses among taxpayers.

In law, there has been an enlargement of the powers of institutions that are least subject to feedback, namely administrative agencies and the Courts. These two institutions have extra-legally and concertedly usurped power that was not given to them under the Constitution or statute. For example, the Civil Rights Act 1964 required that hiring and other decisions be made without regard to race or ethnicity. The EEOC and SCOTUS under CJ Earl Warren transformed affirmative action from a doctrine of prospective equal opportunity to a doctrine of retrospective statistical "representation" or quotas in not only employment, but also forced school integration. The Warren Court was also at the forefront in the revolution in criminal procedure in the 1960s that imposed strictures against the police and prosecution, as a bulwark against criminal defendants. This effectively imposed a higher cost on the transmission of knowledge in criminal courts. As litigation proliferated on procedures, rather than guilt or innocence, criminal proceedings were delayed and clogged, and there was a concomitant rise in violent crime. This was exacerbated by court imposition of less common and less severe punishments.

In politics, the sheer growth of the federal government has given it new powers, at the expense of constitutional division of powers. The big size of government affects the ability of citizens to monitor what it does; escalating knowledge costs reduce the representativeness of government. Further, the ideologising of politics has made preservation of the constitutional framework a matter of reduced importance in the face of passionately felt urgencies. Alongside the growth of government decision-making has been the rise of intellectuals and the intellectual vision to prominence. While the intellectual vision is more axiomatic than it is empirical hypothesis, it almost invariably calls for expansions on the scope of government power against citizens, it exhibits the moral superiority of the "experts", and discredits or dismisses anyone who poses discordant facts. These intellectual visions have been a constant feature of society, from the eugenics movement of the early 20th century to the climate change and gender identity movements of the present.

One of the most profound observations in the book is that there are no "solutions" to societal problems, but only tradeoffs. Both causal determination and policy prescription require coherent analysis rather than gut feelings garnished with numbers. The central question in any social process is not so much what is to be done as who is to decide what is to be done, an under what incentives and constraints.

It is difficult to write a concise review of a book so deep in its thesis yet so broad in disciplines it transcends.

A book that has changed the way I analyze social and political trends.

The first half is rather abstract, defining knowledge and how we know things, and showing how knowledge does and does not affect decisions we make. The second half uses the framework set up in the first half to discuss in some detail economic, social and political decision making and how knowledge is used. The final summary makes a strong case for individual liberty rather than bureaucratic fiat in decision making.

A scholarly must-read.

Awesome content.
Is there anyone alive who knows so much about history, human behavior and real life economy as he does? From the Roman Empire (Gibbon) to the French Revolution, all can be clearly related to what we can see as current trends in politics, laws and economics. Unfortunately what not even Thomas Sowell seems to know is how the US can resume its original spirit, lost while growing loosely its government apparatus during the last hundred years.

https://beingbeliefbehavior.blogspot....

I'd rate it half a star because clearly the man is learned and knowledgeable, but I don't agree with his assertations, plus economics isn't really my jam.

When reflecting upon the extremely authoritative propaganda campaigns with regards to “Russia-gate,” vaccine mandates and “there are infinite genders and pronouns” edicts, it’s scary to think this overt form of totalitarianism was predicted with precision in the 1980s by Thomas Sowell. When the masses dutifully accepted the new reality in 2021 that “science was to be trusted and not challenged” and “falsehoods, mistakes and lies are to be accepted and not questioned,” it becomes apparent we’re already in lock step with what Sowell artfully describes as the radicalization of the intellectual elites. It is the peasants who must now shut up and just accept the fact that rich and powerful elites have all the “good” knowledge and thus know how to make all the “good” decisions. “There is no time for questions and debates; we’re about to lose our freedom and democracy!” the pseudo elites repeatedly remind us at EVERY opportunity! We’re getting played again folks and censoring EVERYONE trying to make you aware of this problem isn’t the solution!


“Various kinds of ideas can be classified by their relationship to the authentication process. There are ideas systematically prepared for authentication (theories), ideas not dereived from any systematic process (visions), ideas which could not survive any reasonable authentication process (illusions), ideas which exempt themselves from any authentication process (myths), ideas which have already passed authentication processes (facts) as well as ideas known to have failed or are certain to fail such processes (falsehoods, mistakes and lies)."

"Ideas which lack logical, empirical or general consensual support may still sustain themselves as acceptable to a consensus of those who regard themselves as special guardians of a particular truth, that is, as the consensual reference group that really matters. Sometimes, the elitism implicit in such a position can be tempered by depicting the idea in question [i.e. gender affirming care, vaccine madates etc.] as beneficial to a broad sweep of mankind outside the group, so that the group is only a temporary surrogate for a larger constituency which will ultimately approve the idea."

"The movement towards totalitarianism is a one way movement. No totalitarian goverment has ever chosen to become free or democratic, though a free and democratic nation may choose to move towards totalitarianism as Germany did in 1933."

"In Rome as in later Western countries, both the zealotry and the power were concentrated precisely in those particular intellectuals who dealt in non-verifiable theories; religious theories in the case of Rome, social justice the contemporary West."

A very good good book though I have to admit that Thomas Sowell lost me a handful of times as I read him. Overall it was a very good experience and I look forward to reading more of his canon.

I would narrow down the books theme to the question of who is qualified to make certain decisions given the reality that knowledge has initial and incremental costs. Thomas Sowell goes in depth to show that the pursuit of increasing knowledge in order to make a specific decision is not always cost effective. This brings about the need to tag and sort things and even people. We do this naturally in the vast majority of cases (a brilliant feat of human ingenuity, albeit unknown ingenuity but brilliant nonetheless).

The book shows how knowledge, it's limitations and a poor choice over who should make what decisions has affected trends in History, Law and Politics. He does this so well that you begin to use his process to understand how things have gotten to where they are in your culture and context as well.

He ends the book with what I would call a scathing indictment of the intellectuals. He properly defines them and then explains how their involvement has been a sort of Trojan horse in the decision making field and has caused a lot of things to go haywire.

I would encourage anyone with access to this book to read it. It is brilliant!

One of the densest books I have ever read. In the words of Tucker Max, it teaches you "how to think."

It can be summed up as such;

The question is not what is the decision made but who makes it and with what constraints, incentives, and feedback mechanisms.


Quotes:

"The kinds of people attracted to the original insurgency, under the initial set of incentives and constraints, tend to be very different from the kinds of people who gravitate to it after it has become successful and achieved a major part of its goals. By definition, an insurgent movement forms under a set of incentives and constraints very different from those which it seeks to create."

"The more general and more important point is to distinguish between (1) examining issues and institutions in terms of their process characteristics versus (2) examining them in terms of their proclaimed goals or ideals."

"Feedback mechanisms are crucial in a world where no given individual or manageably-sized group is likely to have sufficient knowledge to be consistently right the first time in their decisions."

"There are inherent constraints, given the limitations of nature and the unlimited desires of man, and economic systems are simply artificial schemes for administering the inherent scarcities."

"We are all in the business of selling and buying knowledge from one another, because we are each so profoundly ignorant of what it takes to complete the whole process of which we are a part."

"The residual claims method of payment creates a set of monitors who do not need to be monitored themselves, because they have the incentive of self-interest to see that residual claims are maximized."

"As the government adds its own set of prerequisites to those of the negotiating parties, the number of negotiations that result in mutual agreement is almost certain to decline."

"Nobody needs to know the whole story in order for the economy to convey the relevant information through prices and secure the same adjustments as if everyone had known."

"The most basic question is not what is best but who shall decide what is best."

"Most objections to sorting and labeling in general are based on ignoring the costs of knowledge, or ignoring differences in the cost of knowledge between one decision making process and another."

"Arbitrary, categorical or 'bureaucratic' rules in general cannot be criticized as wrong merely because some individual consequences are sometimes nonsensical as compared to what an intelligent and impartial person would have decided in the light of all the facts of the particular case. Neither the facts, nor intelligence, nor impartiality, are free goods. Categorical rules are a recognition of this and an attempt to economize on the resources available in the light of their costs."

"Governmental agencies are generally authorized to carry on processes rather than to achieve results."

"There is no such thing as objective, quantitative 'need.' Whether with airports or apartments or a thousand other things, how much is 'needed' depends on the price charged."

"The use of force is significant not simply because force is unpleasant, but because it distorts the effective knowledge of options."

"What is politically defined as economic 'planning' is the forcible superseding of other people's plans by government officials."

"Its problems were the classic problems of planning. Initial miscalculations based upon the inadequate knowledge of the distant planners were not readily correctable by feedback based on the knowledge possessed or acquired by the experience of those actually on the scene."

"A legal right worth X is not in fact a right if it costs 2X to exercise it. This is obvious enough when the rights and the costs can be reduced to money. The principle is no less true in cases where the values are nonfinancial."

"Every year if not every day we have to wager our salvation upon some prophecy based upon imperfect knowledge."

"If freedom was to exist, it had to be systemic rather than intentional."

"Freedom is not simply the right of intellectuals to circulate their merchandise. It is, above all, the right of ordinary people to find elbow room for themselves and a refuge from the rampaging presumptions of their 'betters.'"

wow....there is an explanation to most things you would dismiss as chance..nicely done and narrated