The Omniscience Fallacy

Austrian economics views people as rational actors when making decisions in the market, which is one of the many reasons government intervention is frowned upon. If a person wants to make one decision, and the government forces a different decision, then by definition that person is doing something they would normally consider irrational if not for the threat of government force.

Ayn Rand calls man the "rational animal" saying that reason is the tool of survival for man. She decried the use of government to intervene on the basis that since reason is the tool of survival, forcing a person to act differently is to force the person to act against their own survival.

Both of them would have that a person acting within the confines of their knowledge and desires will attempt to make the decisions that are best for themselves.

This runs into an interesting claim sometimes made by Progressives and Keynesians, that there is no way to consider a person to be a rational decision maker based on not having enough facts with which to make a decision. Supposing a person wants to buy a computer, and he compares several brands at several stores before coming to a conclusion based on cost, capability, and his needs. Well, the progressive will claim, if there is another model out there that still even more closely fits his needs then he didn't make the most rational decision.

By their unfairly high standard, it is impossible for anyone to make a rational decision. This clearly calls for the decision maker to know everything in order to make a decision. It is an attempt to deny that decisions are made rationally in the first place.

Accusing the progressive of demanding omniscience will only result in denials of that charge and a clarification that the person only need to know all the relevant information. But the problem is, that is omniscience. Suppose that same computer goes on sale the next day? Buying it that day will result in what is, from the progressive point of view, an irrational decision.

The irony here is that while creating a strawman in order to "prove" that an individual lacks sufficient facts, the progressive is undermining their own belief system. It is progressivism that believes that central planners can indeed have enough information to make plans, not only for themselves, but for others as well and for the economy as a whole.

The "rational" definition used by both Austrians and Objectivists clearly states that people are rational within the confines of their knowledge. Claims to the contrary are fallacies.