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Regarding the loan officer example: Surely having at least someone doing the job is a big win? As compared to either no loans being available, or everyone who asks getting a loan, or loans being distributed by lottery (these last two cases would likely bankrupt the creditors and devolve to the first)?

But if you acknowledge that having some degree of intelligence applied to deciding who gets loans is worthwhile, then it becomes a matter of diminishing returns. Certainly the field can reach a point where bringing in additional intelligence is not a good use of resources. But how do we know if we're at that point?

This, ultimately, is why I appeal to the signals of the free market, despite the many known failures: because how else can we answer that question?