Well Put My Friend

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On page 63 of Knowledge and Decisions, one of my all-time favorites, Thomas Sowell reminds readers how expensive knowledge is. Particularly, one of the favorite business relationship for people to complain about, the farmer and the dreaded "speculator", is actually less costly for everyone than the alternative-

The fact that costs differ vastly with respect to individual knowledge and preferences creates an opportunity for people who specialize in bearing particular kinds of risks. A farmer may have considerable knowledge of how to grow a particular crop, but little knowledge of the economic data or complex principles which cause the prospective price that he can expect for his harvest to vary by large amounts as of planting time. Someone else who has specialized in studying the economic facts and principles may have a much narrower range of expectations of future prices for that crop, even if he could not actually grow the crop himself if his life depended on it. Either individual could directly acquire the knowledge that the other possesses by investing the time needed for both the theoretical understanding and the practical experience to apply it. A less costly alternative may be to transact with one another on the basis of their existing knowledge.

Sowell is giving social scientists insight and giving everyday people advice. Look for those who know more than you about a topic and trade (knowledge) with them.

 

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