Tuesday, December 4, 2012

Big Data: Is Hayek Dead?

Proponents of “Big Data” hail it as a “managerial revolution”. What would Friedrich Hayek have said?

Terence Corcoran:
... Many decades ago, The Economist declared "Keynes is dead,"
... As we know, Keynes was resurrected ...
... Given the state of government policy around the world, it's beginning to look like it's time to ask the question: Is Hayek dead?
... Hayek's warning was aimed at the menace of central planning, but it likely also applies to big data corporate planning. Regardless of volume and quality, he said, data and statistics are about the past and are notoriously incapable of predicting even the smallest of changes in economic behaviour. Big data may have uses, but a management revolution based on terabytes of data and YouTube views? Let's hope Hayek isn't dead yet.
This also brings to mind “climate change”. Whether applied to directing an economy or managing “climate change” (which inevitably leads to attempts at directing the global economy) central planning is fatally flawed.  Both climate change and economics have in common: 
Huge complexity   |
Faulty theory       |
Faulty data          |  >> Disastrous policy
Faulty models       |
Hayek is alive and well.


Anonymous said...

ludwig von mises asserted that economic data in the form of charts, graphs, and studies are excellent predictors of the past but are not really of much use after that.
hayek is not dead. hes in hibernation and waiting for when the time is right to be unfrozen so he can tell all those morons in power, "i told you so."


Anonymous said...

There is a program on the Bolshevik Broadcating Corporation (BBC) every weekend -- the first was on Keynes, the second was Hayek, but this upcoming weekend's program is on Marx.

Funny think is that they said Margaret Thatcher implemented Hayek type policies but refused to relinquish total control to the markets and wanted to maintain control over the currency.

I reserve judgement on the series till I see the episode on Marx.

Gerry from GTA