Bob Murphy responds to my post on temporal autarky here. The angle he takes in critiquing it was a little bit of a surprise to me - he writes:
"Yes, there are potentially mutually advantageous trades that aren’t occurring between people in North America and North Korea. They aren’t occurring either because of government barriers or because of “real” transactions costs. Either way, that’s not a typical market failure. Either the government is causing the problem, or the problem is due to something “real” that can’t be solved politically. Look, there are farmers who let oranges rot in Florida even though they would be willing to sell them for a penny to people in India, and even though the people in India would be willing to pay 2 pennies for them. But it costs too much to ship them. That’s not a market failure in any conventional sense of the term.
So, if Daniel wants to use the analogy of North Korean autarky to prove that the market fails in intertemporal trade, I’d like him to first spell out exactly how the market is failing us in interspatial trade with respect to North Korea."
I'm indifferent about whether we want to call this "market failure" or not. We are dealing with an externality. Our decisions today have an impact on people living in 2311 or 2811, but they aren't a party to those decisions. That's an externality. An externality is pretty legitimately called a "market failure". I never called it that in the post, but there's nothing blatantly wrong with thinking about it that way. But we can also just think of it as protectionism. I'd like the market to work intertemporally, after all. It's not like I'm celebrating this! But the laws of physics have real consequences for the laws of economics, and I'm just trying to think through that.
If Bob is uncomfortable with the idea of "market failure" because he doesn't think you can be pro-free market if you think the market fails sometimes (I wouldn't agree with this, but some people do seem to think like this), then we don't need to think about it that way. We can maintain our free market credentials in the eyes of people who think market failures contradict them, and instead think of the laws of physics as protectionist laws of economics. Now the market works, and physics is the culprit! That's fine by me. These all seem to be equivalent claims.
Brian Cox, former musician of moderate fame and currently a physicist working at the Large Hadron Collider, explicitly talked about time as a protectionist force here (1:54):
So if Bob isn't comfortable talking about market failure that's fine - that's why I originally talked about "autarky" rather than "externality". I'm fine blaming the laws of physics (I'm sure they don't particularly care if we blame them). The point is, what are the consequences? The consequences are relative impoverishment. Humans figure out ways to work around autarky and market failure all the time. We innovate our way around these problems. Temporal autarky is another problem that we ought to invest some effort in innovating around.
Procrastinating on April 24, 2017
5 hours ago