On the word "Tend"

Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.
Lord Action, letter to Mandell Creighton (1887)

When concepts of economics are explained, the use of the word "tend" or "tendency" often causes confusion. An important example is distinguishing between the known tendencies of economic actors, and better-known exceptions to those tendencies. It's important not to confuse the two.

Few would deny that private sector firms make mistakes, including very glaring and stupid ones; likewise, no one claims that all consumers are privately rational in any sense, let alone expectations. In the first case, the fact that private-sector firms make mistakes in planning or pricing is mitigated by the fact that it is very unlikely for all firms to make the same mistake for long. The tendency is for at least someone to identify the mistake and profit from it, thereby drawing attention to it. In the second case, judgments about the future rate of inflation, interest rates, and so forth are not likely to be consistently wrong (biased) UNLESS there is some reason for everyone to make the same mistake, like a sudden change in government policy (see REH).

The point of a tendency is that it is often overridden by random events; for example, it is possible for people to make huge errors about the demand for 3G cell phone service five years out But it is unlikely that those errors will be all in the same direction, since the point of a true error is that it is random. Even if such an event should occur, as perhaps the result of a hugely popular fad, there will be some force in place that tends to compel a correction. Again, if a firm makes a really huge error about the demand for 3G cell phone service, this will quickly be felt through losses, firings of executives, and so on.

When we say a certain thing tends to happen, it is usually a milder form of saying that it will happen. Lord Acton's quote is truthful, but there are notable cases where the person who held such power transcended it and was not corrupted; and there are cases where people appear to have acquired power for explicitly bad ends; in the latter case, it's difficult to say that the person was made corrupt, i.e., susceptible to wickedness, by the acquisition of power. Acton wants us to know that great men are almost always bad men, but not always bad men. The virtuous outlier may exist; and power may not so much corrupt, as enable evil.

However, Acton was not merely acknowledging the existence of exceptions. He was probably trying to point out that the various attributes of political power (in this example) have a dynamic that overcomes good will gradually, but decisively. This is a subtle distinction. Things being hosed down with water don't tend to become wet, they become wet. The sense of "spraying water all over a thing" is almost identical to the sense "that thing becoming wet." The two concepts amount to almost the same thing: wetness means recent contact with liquid. On the other hand, a tendency to become wet implies some intermediate cause. Acton meant (I think) that power, as extraordinary agency, is not in and of itself evil; his argument for liberty comes from the fact that the way power is concentrated into the hands of a ruler, is likely to transgress ethics, and leads to a generalized lassitude towards ethics on the part of the ruler. In other words, the conditions that caused absolute power also to create a moral wilderness for the ruler, leading to a thwarting of moral impulses and a desperate resort to immoral ones.

I am reminded of the concept of Maxwell's Daemon, a wonderful imaginary invention that consists of two chambers connected by a tiny sliding door; anytime a particle moving inside chamber A approaches the door, the daemon observes its velocity and opens the door if that velocity is higher than the average in chamber B. If not, the door remains closed. Conversely, anytime a particle in chamber B approaches the door that is moving more slowly than the average in B, the door opens to let it through. Such door would consume infinitesimally small amounts of energy itself, yet defeat the 2nd Law of Thermodynamics; heat transfer would be from cooler A to hotter B. While the molecules in B might be immensely hot, and those in A bitterly cold, and this would mean the average velocity of particles in A is lower than that in B, nevertheless, outliers in either direction would make it through the door often enough for the transfer to continue.

Now suppose the daemon finally broke down. It opens randomly, although as frequently as before. Being random, it will sometimes do what it was supposed to do, and there will still be gas molecules in B that are much slower than the average in A, which make it through the door. But the vast majority of molecules will be moving faster than that, and in the great majority of cases it will be the fast particles in B or the slow particles in A that get through. This will be a true example of a tendency. The temperature in A will be observed to rise, and that in B will noticeably fall, because temperature reflects the motion of many moles of particles. And the tendency to spell it "Maxwell's Demon" will tend to triumph.
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ADDITIONAL READING: In searching for the Lord Acton quote, I noticed this excellent essay on the meaning and context of it. Special thanks to Brian Martin; here's a link to the rest of his online book, Information Liberation.