"Much of the justification for government intervention comes from the assertion that markets have failed. One money manager scoffed at this idea. “The markets are working fine, but they’re giving people answers that they don’t like, so people cry market failure.” Stocks and bonds low? That’s because investors are afraid of a prolonged depression and continued government interference. House in a jobless region of Michigan worth almost nothing? A place with 50% of its former jobs only needs 50% of its houses. There are plenty of former steel towns where the price of a comfortable house stabilized at $20,000 decades ago and has barely moved since."
David Friedman discussed the misuse - and the economic implications - of 'market failure' as a justification for government intervention when he addressed the society last term. And, on the subject of effective dissemination of ideas, Brian's talk last November contains excellent advice on spreading this meme.
1 comment:
“The markets are working fine, but they’re giving people answers that they don’t like, so people cry market failure.”
Uh yeah, that's the idea. "The answer we don't want" is everybody losing their jobs and homes.
A place with 50% of its former jobs only needs 50% of its houses.
No, a place with 50% of its former population only needs 50% of its houses. A place with 50% of it's former jobs and 50% of it's former houses now has twice as many unemployed people and twice as many homeless people.
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