Difference between revisions of "Market Failure"

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[[Category:Economics 101]]
 
[[Category:Economics 101]]
 
[[Category:Markets]]
 
[[Category:Markets]]
[[Real Markets|300]]
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[[Category:Real Markets|300]]
Libertarians, because they insist on "[[Freedom (propaganda)|freedom]]", do not want to do anything about market failure.  Their three major responses then are (1) [[denialism]] (a public relations style of lying)  (2) insisting that market failure is optimal because all other possibilities are always worse or (3)  the argument that government has failures too.
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Libertarians, because they insist on "[[Freedom (propaganda)|freedom]]", do not want to do anything about market failure.  Their four major responses then are (1) [[denialism]] (a public relations style of lying)  (2) insisting that market failure is optimal because all other possibilities are always worse (3) all market failures are caused by government or (4)  the argument that [[Government Failure|government has failures too]].
  
 
(1) is [[wikipedia:Bullshit#In_philosophy|philosophical bullshit]].  That is a technical philosophical term, believe it or not.  In short, the bullshitter does not care about the truth of what he is saying: he is concerned with other effects.  In the case of denialism, the goal is FUD: fear, uncertainty and doubt.
 
(1) is [[wikipedia:Bullshit#In_philosophy|philosophical bullshit]].  That is a technical philosophical term, believe it or not.  In short, the bullshitter does not care about the truth of what he is saying: he is concerned with other effects.  In the case of denialism, the goal is FUD: fear, uncertainty and doubt.
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(2) Long experience has shown that government intervention in market failures can greatly improve markets, both in micro and macro economic senses.  Most obviously, the creation of stable law of property, defense and infrastructure such as roads which markets have never been able to do themselves.
 
(2) Long experience has shown that government intervention in market failures can greatly improve markets, both in micro and macro economic senses.  Most obviously, the creation of stable law of property, defense and infrastructure such as roads which markets have never been able to do themselves.
  
(3) Yes, government does have failures too.  But they are not the same failures as markets have, and so we should expect to find some cases where markets do better and some where governments do better.
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(3) Most market failures are not caused by government: they are due to externalities, transaction costs, and a host of other non-government causes.  This is another example of Manichean thinking: all good from the market, all evil from government.
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(4) [[Government Failure|Yes, government and businesses have failures too.]] But they are not the same failures as markets have, and so we should expect to find some cases where markets do better and some where governments do better.
 
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Latest revision as of 23:12, 6 February 2021