Frank Knight on the Leader of the V-Formation of Ducks

I write this on Thurs., Feb. 19, 2026. Yesterday evening, I was reading a section of Milton and Rose Friedman’s Free to Choose on the Negative Income Tax, as part of my revising a paper I have submitted to The Independent Review. As I was reading, I was surprised and numbly elated to serendipitously run across information that I had been seeking, off and on, literally for decades. Every so often I had occasion to tell a story that I was sure originated with Frank Knight. I wrote the script on Frank Knight for an audio series on Great Economists. (The current owners of the series refuse to pay me the royalties that I am owed, but that is another story.) So I thought I knew something about Knight, and own many books and articles by him. Every once in a while I spent an hour or so looking for the quotation, always failing. I even emailed Ross Emmett who many view as the current leading expert on Knight. He said he knew nothing of the quote I sought.

Buddhists who are totally at peace do not carry around with them the annoyance of unanswered questions, so if they run across an answer, it means nothing to them. Maybe this helps understand what Pasteur meant when he lectured that “chance favors only the prepared mind” (1854). The prepared mind carries around unanswered questions, unresolved contradictions, flaws in the world that could use improving. Then that mind stays alert for answers to the questions, resolutions to the contradictions, fixes for the flaws. The mind that pulls us forward is not a mind at peace.

[As an addendum, my discovery of the quote in Milton and Rose Friedman’s most famous book, after many searches in much more obscure places, reminds me of what Gertrude Himmelfarb said in a lecture at the U. of Chicago when I was a graduate student many decades ago. She searched the dusty archives long and hard, but the material most useful for her book on Harriet Taylor’s influence on Mill’s On Liberty, was hiding in plain sight in a volume written by F.A. Hayek on Mill’s correspondence with Taylor.]

Here after decades of occasional search and constant alertness, is the testimony of Milton and Rose, two former students of Frank Knight, showing that my memory of the Frank Knight duck V-formation story was not a dream or hallucination:

Our great and revered teacher Frank H. Knight was fond of illustrating different forms of leadership with ducks that fly in a V with a leader in front. Every now and then, he would say, the ducks behind the leader would veer off in a different direction while the leader continued flying ahead. When the leader looked around and saw that no one was following, he would rush to get in front of the V again. That is one form of leadership—undoubtedly the most prevalent form in Washington.

Source of Milton and Rose quote is:

Steve Lohr. “A.I. Is Poised to Put Midsize Cities on the Map.” The New York Times (Mon., December 30, 2025): B1-B2.

The Himmelfarb book mentioned in my initial comments is:

Himmelfarb, Gertrude. On Liberty and Liberalism: The Case of John Stuart Mill. New York: Knopf, 1974.

The Hayek book mentioned in my initial comments is:

Hayek, F.A. John Stuart Mill and Harriet Taylor: Their Friendship and Subsequent Marriage. London: Routledge & Kegan Paul, 1951. [Some citations to the book have the word “Correspondence” substituted for “Friendship.”]


Entrepreneurs Make Leaps: A Critique of the Theory of the Adjacent Possible (TAP)

In my Openness book, I argue that the innovative entrepreneur is a key agent of the innovative dynamism that brings us the new goods and the process innovations through which we flourish. The Theory of the Adjacent Possible, devised by Stuart Kauffman, Roger Koppl, and collaborators, and popularized by Steven Johnson, aims to “deflate” the innovative entrepreneur, and argues that technological progress is an inevitable result of a stochastic process. I have written an extended critique of the TAP, and have posted the latest version to the SSRN working paper archive. In some ways the working paper, especially the last half, can be viewed as further elaboration and illustration of some of the points made in Openness.

The citation for, and link to, my working paper is:

Diamond, Arthur M. “Entrepreneurs Make Leaps: A Critique of the Theory of the Adjacent Possible.” (Written Jan. 26, 2026; Posted Feb. 18, 2026). Available at SSRN: https://ssrn.com/abstract=6166326

My book mentioned in my initial comments is:

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.


“Several Biting Critiques of the Red-Tape State”

I have been so intrigued by reviews of books by Philip K. Howard that I have bought four of them. I am chagrined to admit that I have not yet read any of them–I am a slow reader, and have a long to-do list. But when I saw Howard’s suggestions of books that critique government red-tape, I made the to-do list even longer.

(p. R5) American government is overdue for a spring-cleaning, so I was delighted to read several biting critiques of the red-tape state, especially Marc Dunkelman’s “Why Nothing Works” and Ezra Klein and Derek Thompson’s “Abundance.” What’s needed is a philosophical shift toward human agency and accountability. In “The Origins of Efficiency,” Brian Potter reveals the role of human ingenuity in refining modern technologies. In “Humanocracy,” Gary Hamel and Michele Zanini describe how decentralizing individual responsibility helps businesses thrive. Barry Lam’s “Fewer Rules, Better People” shows why fairness requires judgment on the spot. Without human oversight, systems always take on a life of their own.

The source for Philip K. Howard’s book suggestions is:

Philip K. Howard. “Who Read What in 2025: Philip K. Howard.” The Wall Street Journal (Saturday, Dec. 13, 2025): R5.

(Note: the online version of Howard’s suggestions has the date December 12, 2025.)

The books suggested by Howard are:

Dunkelman, Marc J. Why Nothing Works: Who Killed Progress―and How to Bring It Back. New York: PublicAffairs, 2025.

Hamel, Gary, and Michele Zanini. Humanocracy: Creating Organizations as Amazing as the People inside Them. Revised & Updated ed: Harvard Business School Press, 2025.

Klein, Ezra, and Derek Thompson. Abundance. New York: Avid Reader Press, 2025.

Lam, Barry. Fewer Rules, Better People: The Case for Discretion. New York: W. W. Norton & Company, 2025.

Potter, Brian. The Origins of Efficiency. South San Francisco, CA: Stripe Press, 2025.

Minimum Wage Advocates Forget That When the Price of Labor Rises, the Quantity Demanded Falls

George Stigler and many others point out that no law in economics is as certain as the Law of Demand: if the price rises, the quantity demanded falls. That applies to goods and labor too. In principles classes I would illustrate the law in several ways, including applying it to the effects of increasing the minimum wage. Much of the empirical work on minimum wages has been done by David Neumark. In December 2025 he posted a revision of his co-authored paper “Minimum Wages and Race Disparities.” Below is the paper abstract:

We provide a comprehensive analysis of the effects of minimum wages on blacks, and on the relative impacts on blacks vs. whites. We study not only teenagers – the focus of much of the minimum wage-employment literature – but also broader low-skill groups. We find evidence that job loss effects from higher minimum wages are more evident for blacks – and more so for black men. In contrast, they are not very detectable for whites. Moreover, the effects of minimum wages are often large enough to generate adverse effects on earnings (and relative earnings) of blacks. Given strong residential segregation by race in the United States, the race difference in the effects of minimum wages implies that the adverse impacts fall on areas with a high black population share. We also find evidence that minimum wage effects are more adverse in black areas, regardless of individual race, which accentuates the concentration of the adverse effects of minimum wages in areas where blacks are a very high share of the population.

Neumark’s co-authored paper is:

Neumark, David, and Jyotsana Kala. “Minimum Wages and Race Disparities.” National Bureau of Economic Research Working Paper #33167, Dec. 2025.

“The Future Doesn’t Belong to the Fainthearted; It Belongs to the Brave”

(p. C5) Thirty-five years ago . . ., on the morning of Jan. 28, the U.S. space shuttle Challenger exploded just over a minute after its launch from Cape Canaveral.

. . .

Reagan postponed his State of the Union address, which had been scheduled to take place that evening, and set out to craft a speech to the nation that would especially reach the hundreds of thousands of schoolchildren who had watched the disaster on live TV in their classrooms.

. . .

. . . the middle of the speech, where Reagan addressed himself to the schoolchildren of America about the harsh lesson of human tragedy, is where the important message is conveyed: Risk is a part of the human story. “The future doesn’t belong to the fainthearted; it belongs to the brave.” Reagan spoke to the families of all the lost astronauts over the following days; they all told him our space program must continue.

. . .

The aftermath of Challenger, which saw a special commission set up to investigate the causes of the disaster through public hearings, points to one of the continuing challenges posed by modern complexity. The Rogers Commission, which issued its report that June, was harsh in its assessment of NASA’s negligence in risk assessment and launch decision-making.

. . .

The usual response to such lapses is to add more layers of bureaucratic review and decision-making. But that is a two-edged sword. While reducing risk, it can also lead to soaring budgets, rigidity, groupthink, and less creativity and innovation. Just compare the cost and progress of NASA’s current rocket and spacecraft designs to recent private sector space efforts.

For the full commentary, see:

Steven F. Hayward. “The Enduring Lessons Of the Challenger Disaster.” The Wall Street Journal (Saturday, Jan. 30, 2021 [sic]): C5.

(Note: ellipses and bracketed year added.)

(Note: the online version of the commentary was updated January 28, 2021 [sic], and has the title “The Challenger Disaster and Its Lessons for Today.”)

Hayward is also the author of:

Hayward, Steven F. The Age of Reagan: The Conservative Counterrevolution: 1980-1989. New York: Crown Forum, 2009.

We Do Not See the Benefits That Regulations Block

We owe to Henry Hazlitt the insight that we do not see what wonders would be, if the government was less active. We see the bridge that the government builds with our tax money. But we do not see the refrigerators, televisions and vacations that the taxpayers would have had if they had not been taxed to build the bridge. The same insight applies to government regulation.

The CEO of Oura, an increasingly popular ring that collects health data, has penned a brief op-ed, telling us a couple of features that Oura would now have if they were regulated less:

With a reformed regulatory structure, Oura customers could already be benefiting from a range of advanced features, including screening for high blood pressure. Hypertension is one of the most significant risk factors for heart disease and stroke, while high blood pressure in pregnancy can signal pre-eclampsia, a complication that endangers mother and baby. Another primed capability, sleep-apnea detection, would give users an early-warning tool for a condition that often goes undiagnosed and can lead to serious complications.

The CEO of Oura’s op-ed is:

Tom Hale. “With Less Regulation, Your Oura Ring Could Do More.” The Wall Street Journal (Sat., December 20, 2025): A11.

(Note: the online version of the op-ed has the date Dec. 19, 2025, and has the same title as the print version.)

Henry Hazlitt’s great little book, mentioned in my comments, is:

Hazlitt, Henry. Economics in One Lesson. Irvington-on-Hudson, NY: The Foundation for Economic Education, Inc., 1952.

The Dutch Give Citizen Scientists Property Rights to the Fossils They Find

Holland has significant claim, along with England, to being a strong and early bastion of freedom. So it is fitting that today Holland’s institutions provide a sanctuary for the practice of citizen science. The article below notes that Dutch law gives citizen scientists property rights in the fossils they find. This gives them an incentive to seek fossils AND it gives them an incentive to share information about what they find. (If they did not have such property rights, they would have an incentive to hide the fossils so they would not be seized.)

Dick Moll is an entrepreneur, using some of his fossils as part of a Historyland theme park. His doing good through creative funding, reminds me of Martin Couney, who financed baby incubators for poor families, by displaying the incubators at theme park exhibits.

If academic scientists, instead of hiding behind their credentials, sought clever ways to recruit the eyes of curious citizen scientists, we could learn much more and learn it much more quickly. This would be easier if the values and methods of science were more empirical, more true to Galileo. Let everyone have a look in the telescope.

(p. C1) After scouring a beach in the harbor all morning in Rotterdam, the Netherlands, a retired Dutch engineer, Cock van den Berg, had finally found something interesting: a polished black stone about the size of an acorn with two punctures, like finger holes in a bowling ball.

He held it out in the palm of his hand to show Dick Mol, an expert on ice age fossils.

“What do you think?” he asked. “Is it a mammoth tooth?”

Mol examined it for about 30 seconds and decided it was not. It was a molar from a prehistoric rhinoceros, he said.

. . .

(p. C6) Under Dutch law, beach combers who find fossils on Maasvlakte 2 are not required to report or submit them. They can take their finds home if they like, but they are encouraged to promote scientific research by voluntarily registering them with the Naturalis Biodiversity Center, a national natural history museum and research center in the city of Leiden.

Using a website built by the port of Rotterdam authority and managed by Naturalis, amateur paleontologists can submit a photo and the GPS location of the find so that experts can help them identify it.

“In other countries, like Germany, fossils or anything related to paleontology are protected by the state, but that’s not the case in the Netherlands,” explained Isaak Eijkelboom, a Ph.D. student in paleontology at Naturalis who studies fossils found at Maasvlakte 2 and other locations.

But since trophy hunters don’t have to worry about losing their finds, he thinks they’re more likely to share their discoveries with the museum and collaborate with scientists.

“It allows us to practice citizen science,” Eijkelboom said.

For more than a decade, Naturalis has been using volunteers to gather information for its fossil database, which now lists more than 23,000 finds, he said.

“This is only possible because it’s so open, and so free,” Eijkelboom said. “In other places, when people find fossils, they end up in their closets and the knowledge is hidden away.”

Van den Berg, who discovered the rhinoceros molar, said he was excited to share it with Naturalis. A few years ago, he found a jaw part from a macaque monkey at Maasvlakte 2 and donated it to the Natural History Museum in Rotterdam. The rare specimen, which scientists dated to 125,000 years ago, was described in three scientific papers, Mol said.

. . .

Mol joked that the “biggest mistake of van den Berg’s life” was donating the monkey jaw to the museum and not to Mol’s “Mammoth Lab” at Historyland, a museum and theme park that he helped establish in the town of Hellevoetsluis, about a 15-minute drive from the beach.

There, Mol, a retired airport customs official, has his own impressive collection of 55,000 ice age fossils. An autodidact who never attended university, Mol is nonetheless widely recognized as an international expert; in 2000, he was knighted in the Netherlands for his significant contributions to paleontology, and he was featured in Discovery Channel documentaries such as “Raising the Mammoth” and “Land of the Mammoth.”

. . .

In spite of a steady stream of beachcombers, Eijkelboom said there will still be plenty more fossils to find for a long time to come.

“In general, in paleontology, a lot of people say we’ve only discovered the tip of the iceberg,” he said. Rising sea levels will require continued fortifications of the Dutch coastline, using North Sea sand deposits for quite some time to come, he added.

Although it is unfortunate that such action is needed to prevent humans from going extinct like the mammoth, he said, “at least there will be more and more beaches where we can hunt for ice age fossils.”

For the full story see:

Nina Siegal and Ilvy Njiokiktjien. “On the Hunt for Mammoths.” The New York Times (Weds., November 19, 2025): C1 & C6.

(Note: ellipses added.)

(Note: the online version of the story has the date Nov. 17, 2025, and has the title “A Day at the Beach Hunting Mammoths.”)

FDA Worked Better and Much Cheaper Before 1962 Expansion

Before 1962, the FDA regulated for drug safety, but not for drug efficacy. If the FDA returned to regulating only for safety, that would imply that Phase 3 randomized clinical trials would no longer be mandated. Phase 3 trials are usually more expensive than the Phase 1 and Phase 2 trials combined. They cost a lot more, and usually take a lot longer. If the FDA no longer mandate Phase 3 trials we will have more drug innovation, more quickly, and have much lower costs. And we will have more freedom.

(p. A13) From 1938 through 1962, the Food and Drug Administration required proof of safety before drug approval but not proof of efficacy. The approach was abandoned due to a significant misunderstanding of the thalidomide tragedy—when thousands of babies outside the U.S. were born with severe birth defects.

The issue with thalidomide was a failure of safety, not efficacy. But under pressure to react, Congress required, through the Kefauver-Harris Amendments of 1962, proof of efficacy before granting marketing approval. The new rule addressed a problem that didn’t exist and, in doing so, imposed a substantial new cost burden.

Before 1962, developing a drug took about two years. Now it takes 12 to 14 years. Since 1975 real development costs have risen about 7.5% a year, roughly doubling every decade. Today, we estimate that bringing one successful drug to market costs about $9 billion on average.

For the full commentary, see:

Charles L. Hooper and Solomon S. Steiner. “Deregulation Can Make Medications Cheaper.” The Wall Street Journal (Sat., Oct. 18, 2025): A13.

(Note: the online version of the commentary has the date Oct. 17, 2025, and has the same title as the print version.)

Attia Makes Case for Optimism That Rapamycin Can Extend Human Lifespans

Dr. Peter Attia gives a clear summary of the state of knowledge about the promising supplement rapamycin. (The YouTube clip above, posted by 60 Minutes, is from the CBS 60 Minutes episode that first aired on Sun., Oct. 26, 2025.)

New Hampshire Unbinds Electric Entrepreneurs

The energy sector of the economy is both heavily regulated and much in need of innovation and expansion. Unfortunately the heavy regulation often blocks the innovation and expansion. Travis Fisher and Glen Lyons describe New Hampshire’s solution–a new law that greatly reduces regulations for electricity suppliers who do not connect to the broad “public” grid. Unbinding energy entrepreneurs should bring more innovation and greater competition–more electricity at lower prices.

Fisher and Lyons’s commentary is:

Travis Fisher and Glen Lyons. “New Hampshire Sparks a Revolution in Electricity Supply.” The Wall Street Journal (Sat., Sept. 27, 2025): A11.

(Note: the online version of the commentary has the date September 26, 2025, and has the same title as the print version.)