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The knowledge problem

But can we know this? There's a big tradition in economics which says we can't. Some economists have thought that knowledge of the future is just impossible. "What does not yet exist cannot know be known" wrote George Shackle in his under-rated book, Epistemics and Economics in 1972. And others have thought that knowledge even of the present is imperfect. Information, said Friedrich Hayek, "is not given to anyone in its totality" but instead consists in "dispersed bits of incomplete and frequently contradictory knowledge" scattered across millions of individuals.

This tradition suggests we should be passive investors not because of any grand theory that markets are informationally efficient but simply because we can't know enough to know any better.

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