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October 2006

Science and Free Markets

I was very glad to see free markets being defended by someone from academia! The comparison between scientific progress and the free market is right on!
Link: Pure Pedantry : On the parallels between science and the free market.

I have always been struck by the parallels between the free market and the scientific enterprise -- yet I am puzzled that so few scientists embrace free markets.

Let me put it this way. What would happen if the government decided what scientific questions we should pursue by fiat? Most scientists would tell you that new discoveries would be stifled because the scientists could not pursue those questions that they find most interesting. Bureaucrats would not be as educated in all the areas the scientists were studying, nor could the enterprise benefit from the plurality of techniques employed in the absence of central planning. Science -- it would appear -- benefits from a form of entreperneurial competition.

Yet, most scientists -- at least the ones I have met -- are not whole-hearted proponents of free markets. Most scientists I have met have a strong socialist bent. Why they fail to see how what is beneficial to the process of science would not be desirable for the rest of society is a source of continuing puzzlement to me.


Scientific enterprise would be perfectly amenable to central planning if we knew what the answers would be in advance. Unfortunately, we don't. Similarly, state planning of the economy would be lovely if we knew what technologies would turn out to be important and where resources should be allocated years into the future. Unfortunately, we don't. Because we do not operate in a world filled with ideal information, Phelps argues that society benefits from the dynamism and creative destruction of the free market. I would argue that the same premise applies to the scientific enterprise -- and that scientists should recognize the parallel.

Using Microfinance to help disaster victims

Today, OpinionJournal has an excellent article, A Hand Up, Not a Handout, by Mr. Yunus urging to use microfinance to help Katrina victims. The best is at the last:

... giving someone a hand up doesn't always require a handout. The most important thing is to help people get back to work while letting them hold on to their self-respect. Microloans can do just that.

Mr. Muhammad Yunus and the Grameen Bank (which he founded) jointly won the 2006 Nobel Peace Prize. A very well-deserved recipient in a very long time.

Why microfinance is so successful for helping poor?:

The basic philosophy behind microfinance is that the poor, although spurned by traditional banks because they can't provide collateral, are actually a great investment: No one works harder than someone who is striving to achieve life's basic necessities, particularly a woman with children to support. Sadly, it is also true that in catastrophic circumstances, very little of the cash so generously given ever gets all the way down to the very poor. There are too many "professionals" ahead of them in line, highly skilled at diverting funds into their own pockets. This is particularly regrettable because very poor people need only a little money to set up a business that can make a dramatic difference in the quality of their lives.