tag:blogger.com,1999:blog-1740670447258719504.post7528267409881675823..comments2024-03-27T03:00:27.024-04:00Comments on Facts & other stubborn things: Market Failures and Market Economists Like MeEvanhttp://www.blogger.com/profile/12259004160963531720noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-1740670447258719504.post-66851563741503880402012-02-07T20:17:39.168-05:002012-02-07T20:17:39.168-05:00was it a market failure when private debt went to ...was it a market failure when private debt went to 300% of GDP<br /><br />were the really really stupid bets made by AIG "market failue"?<br /><br />same for all the banks who made stupid bets whom we save with TARP?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-28994381035243023642012-02-07T12:54:38.322-05:002012-02-07T12:54:38.322-05:00Thanks for being fair-minded, Patch. In response ...Thanks for being fair-minded, Patch. In response to your opening query - Daniel (or any real economist) ought to be able to give you a simpler explanation, but I'll attack the question obliquely - In a situation where the unregulated market has, operating by itself, resulted in a bad outcome, why would you focus on government as the problem? In truth, separating government entirely from the workings of the market is impossible (and thank goodness), even in a nearly idealized lassiez-faire state.<br /><br />If economists try to parse out such a difference (where the value of trying to parse it out seems very suspect to begin), I think they are demanding a much too rigorous foundational argument for the science (and I see the same problem, but worse, in the tendency to try to separate out markets from governments - be they democratic or otherwise).<br /><br />Daniel: See, this is why you can't ever be a liberal demagogue. No market failure? Your points on the term make sense, for sure - they're a bit subtler than the usual terminology of free (or non-free) markets or my personal favorite, the supposed "Ponzi scheme" structure of taxes.<br /><br />Nice connection with Bob Murphy too - that reading is a bit extreme, so if Bob were a Catholic apologist he might say that taxation merely a venial sin (like some forms of lying), not a mortal one.Edwin Herdmanhttps://www.blogger.com/profile/05040978095707760636noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-7504381469660006502012-02-07T10:28:45.553-05:002012-02-07T10:28:45.553-05:00I don't have a whole lot of time, so I'll ...I don't have a whole lot of time, so I'll make this short. I appreciate the other commenter's reply to my post. <br /><br />"As I've said many times before, I don't like the phrase "market failure" and I rarely use it myself (do a word search on the blog - most times I use it will probably be in reference to others who have already used it). Market failures are really just descriptions of situations where institutional preconditions for the nice, neat functioning of markets don't exist. It seems deeply unfair to me to call that a "market failure", because the market hasn't "failed" at all - it hasn't been given the chance to operate, so why blame it for "failure"?"<br /><br />The point here is that are these institutional defects due to the market itself (eg. laissez faire world) or government intervention? Are markets the most efficient at correcting themselves? Thats the important point. <br /><br />Bear in mind that I'm not trying to make the distinction of "Austrians versus Keynesians", as they are the only two schools of economic thought in the world. Nor am I trying to say you don't praise the market, or aren't "pro market." I just think there is an important difference between a free market economist and a "pro market" economist. Pro market economists are not against using government to correct what they believe are flaws that would develop in a laissez faire setting. Free market economists would not advocate any government intervention since they believe markets, unburdened by government (or "free"), would achieve the best outcome.Patchnoreply@blogger.com