There's only one problem that bothers me. And that's something my theorem [ of Impossibility] really doesn't cover. In my theorem I was assuming people vote sincerely. The trouble with methods where you have three or four classes, I think if people vote sincerely they may well be very satisfactory. The problem is the incentive to misrepresent your vote may be high.
Kenneth ArrowKnowledge is a free good. The biggest cost in its transmission is not in the production or distribution of knowledge, but in its assimilation. This is something that all teachers know.
Kenneth ArrowI don't believe that unemployment is all voluntary, by anticipation of future wage movements or this sort of thing. I know you can modify the models by taking into account the indivisibilities, but I don't really think that people are voluntarily unemployed.
Kenneth ArrowIt seems to me that at least as far as the financial markets are concerned, there is increasing evidence against rational expectations, even at the macro level.
Kenneth ArrowThe switch to the market in Eastern Europe, of course, has not exactly been one of the greatest advertisements for the market. There's no question the socialist system - and I hate to use the word 'socialist,' but I suppose some description of a system in which the state is in control - was breaking down, really collapsing. In these countries, most markedly in Russia itself and in a number of the others, it obviously was based on a tyranny, which is unacceptable even if it were producing good economic results, which it was not.
Kenneth ArrowClassic economic theories recognize public goods aspects of one kind or another - the need for economic intervention in, obviously, the supply of infrastructure and of education. We're not supplying that infrastructure at an appropriate rate today. I don't doubt it isn't just money; it's organization and goals and so forth.
Kenneth Arrow