Today's Quote of the Day...
…is from page 227 of the 6th edition of Robert Cooter and Thomas Ulen’s textbook Law and Economics:
In communist countries like the former Soviet Union, planners could not get the information that they needed to manage an increasingly complex economy, which caused the economy to deteriorate. An increasingly complex economy must rely increasingly upon markets, which decentralize information. In this respect, making law resembles making commodities. As the economy grows in complexity, central officials cannot get the information that they need to make precise regulations. Instead of centralized lawmaking, the modern economy needs decentralized lawmaking analogous to markets.
JMM: Oftentimes, complexity is given as a reason to justify increased regulation. But, just like with markets, more complexity means more knowledge, wisdom, and information are needed to formulate such regulations. What’s more, as complexity increases, the costs and likelihood of systematic errors increases. Law develops, emerges, and evolves not through some central planning process, but rather in the same manner as the market process: through challenges, trial and error, and good old-fashioned human ingenuity. Law is, like the economy, a matter of human action but not human design.