Based on what Cowen has written elsewhere, I think the sentence "it's only through a market process that we find out where the Amish should be living" is just shorthand. It isn't that we think the Amish have actually figured out the best possible place to live, rather that their actual decisions, stemming from a web of interconnected market signals, are more informative than any explicit cost benefit calculation that an individual could carry out.
This is Hayek's classic argument, and one that Cowen's recent intro econ text emphasizes. As far as I can tell Cowen doesn't believe that markets (Amish or otherwise!) are "efficient" in the strong sense of the word, merely that they generally mobilize more and better information than is personally "knowable."
There's actually a pretty famous econ joke about this distinction:
Freshwater: "Markets are efficient. Use markets!"
Saltwater: "Markets are inefficient. Don't use markets!"
George Mason: "Markets are inefficient. Use markets!"
I would quip that displaced South American farm workers "should" be living in shanty towns on the edge of cities, but I have a feeling Cowen would nod and say "yes, that's exactly right."
All is for the best, in the best of all possible worlds.
Based on what Cowen has written elsewhere, I think the sentence "it's only through a market process that we find out where the Amish should be living" is just shorthand. It isn't that we think the Amish have actually figured out the best possible place to live, rather that their actual decisions, stemming from a web of interconnected market signals, are more informative than any explicit cost benefit calculation that an individual could carry out.
This is Hayek's classic argument, and one that Cowen's recent intro econ text emphasizes. As far as I can tell Cowen doesn't believe that markets (Amish or otherwise!) are "efficient" in the strong sense of the word, merely that they generally mobilize more and better information than is personally "knowable."
There's actually a pretty famous econ joke about this distinction:
Freshwater: "Markets are efficient. Use markets!"
Saltwater: "Markets are inefficient. Don't use markets!"
George Mason: "Markets are inefficient. Use markets!"
I would quip that displaced South American farm workers "should" be living in shanty towns on the edge of cities, but I have a feeling Cowen would nod and say "yes, that's exactly right."
All is for the best, in the best of all possible worlds.