It seems to me that at least as far as the financial markets are concerned, there is increasing evidence against rational expectations, even at the macro level. Kenneth Arrow More Quotes by Kenneth Arrow More Quotes From Kenneth Arrow Knowledge is a free good. The biggest cost in its transmission is not in the production or distribution of knowledge, but in its assimilation. This is something that all teachers know. Kenneth Arrow assimilationcostteacher Unsolved problems, that's one of the great signs of progress in my opinion. Kenneth Arrow progressopinionproblem The rate of growth of the relevant population is much greater than the rate of growth in funds, though funds have gone up very nicely. But we have been producing students at a rapid rate; they're competing for funds and therefore they're more frustrated. I think there's a certain sense of weariness in the intellectual realm, it's not in any way peculiar to economics, it's a general proposition. Kenneth Arrow frustratedgrowththinking Markets are not, in my opinion, a full solution to any problem. The obvious problem they don't meet is the concerns of the welfare of individuals who may get lost in the operation of the system - the distributional question. We've seen this growing as we go further and further toward a market ideology in the United States and the United Kingdom. We've seen a decline in the welfare of the working poor, leaving aside any other pathologies, just the working poor, a very distinct increase at the very top levels. Kenneth Arrow growingleavinglevels Education is still, in spite of private education, a state matter. Kenneth Arrow spitestatesmatter Now virtue may not always be its own reward, but in any case it is not usually bought and paid for at market rates. Kenneth Arrow rewardsvirtuemay The world is changing. We're not really proceeding on a stationary basis. Kenneth Arrow stationarybasesworld One thing I learned from meteorology is that being an actual science was no guarantee of exactness. Kenneth Arrow meteorologyexactnessguarantees Vast ills have followed a belief in certainty. Kenneth Arrow certaintybelief I think on the efficiency level, not only the distribution level, capitalism is a flawed system. It probably has the same virtues as Churchill attributed to democracy: It's the worst system except for any other. And I think that's right, but it cannot be thought that some unmitigated belief in free markets is a cure even from the efficiency point of view. Kenneth Arrow democracyviewsthinking One way of looking at Impossibility Theorem is that we proposed some criteria for what a good system should be: what is it you want from a voting system, and impose some conditions. And then ask: can you have a voting system that guarantees that? Kenneth Arrow guarantees-thatvotingwant One doesn't like instabilities in markets; they may be damaging, but probably not fatal, as the October '87 crash showed. It turned out to be essentially inconsequential. So if that's true, I'm not very worried about the welfare of those who are investing any more than I am about the welfare of those who go into casinos. Kenneth Arrow investingoctobermay Usefulness depends on tractability. Kenneth Arrow usefulnessdepends The switch to the market in Eastern Europe, of course, has not exactly been one of the greatest advertisements for the market. There's no question the socialist system - and I hate to use the word 'socialist,' but I suppose some description of a system in which the state is in control - was breaking down, really collapsing. In these countries, most markedly in Russia itself and in a number of the others, it obviously was based on a tyranny, which is unacceptable even if it were producing good economic results, which it was not. Kenneth Arrow hateeuropecountry There are all sorts of institutions in the economic world which depart from the simple price/market model which I worked on in an earlier incarnation and which has been sort of the mainstream of economic theories since Adam Smith and David Ricardo. There are all sorts of contractual relations between firms and individuals which do not conform to the simple price theory - profit-sharing schemes and so forth - and the explanation for these suddenly became clear. We now understand why these emerged and that they are based on differences in information in the economy. Kenneth Arrow differencessimpleworld The intrinsic social structure, the family structure and so forth, is certainly in a very bad state. And I think that this is showing up in productivity. I think part of the reason, and I can't prove this, we're seeing a decline in some places is the breakup of the family, which is partly the result of an extreme form of individualism. Kenneth Arrow showing-upbreakupthinking Some people say Russia is running at 50 percent of its gross domestic product under that during the Communist period. In fact, none of the countries seems to have recovered the level that they had under communism, although the other countries in Eastern Europe are doing better than Russia and particularly the Czech Republic seems to be doing modestly well. East Germany I can't count because they have a rich uncle. You have economic benefits which have nothing to do with the workings of the system. Kenneth Arrow unclesrunningcountry The MD is well aware that the forecasts are no good but he needs them for planning purposes. Kenneth Arrow planningpurposeneeds The general uncertainty about the prospects of medical treatment is socially handled by rigid entry requirements. These are designed to reduce the uncertainty in the mind of the consumer as to the quality insofar as this is possible. I think this explanation, which is perhaps the naive one, is much more tenable than any idea of a monopoly seeking to increase incomes. Kenneth Arrow mindideasthinking Venture capital has done much more, I think, to improve efficiency than anything. Kenneth Arrow venturedonethinking
