From theory to reality - the ineffectiveness of socialism

 

Chantrill's four laws on the ineffectiveness of socialism. 

1. Socialism cannot work because of prices for multiple goods (Mises)
2. Administrative government cannot work because of the Knowledge Problem (Hayek)
3. Regulation does not work because of “regulatory capture” (Stigler).
4. Government programs cannot work because you can never reform them (Chantrill).

There is the positive economics of what we would like the economy and the normative of what it actually is. Reality often gets in the way of theory.  All things are flawed, and systems are broken. Economies are often inefficient due to structural issues rooted in human behavior. Our job in finance and economics is to determine how to navigate an inefficient system to move capital and resources to the places where they will have the greatest impact.