Noteworthy comment

Relevant to the post below on Empirical question?, Ophelia Benson (she of About Butterflies and Wheels) offered a relevant comment at Crooked Timber: Environmental Deregulation :

Members of the church of the free market do talk as if the market solves all problems, even when the problems in question are ones the market can’t solve, pretty much by definition, because there is no profit to be made by solving them. Like providing medical care to penniless sick people, for example.

"Market failure" happens not because the market is a bad thing and has "failed" in some sort of moral sense but simply because one type of human relationship cannot solve all human needs.

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I find it fascinating and heartening that so many questions here and elsewhere (and by no means only in the blogosphere) are about such fundamental issues as the individual and the state. I feel transported back -- in a rather healthy sense -- to college and graduate school. People quote Rawls and Kant as if they were in the next office. Of course, it helps that there are so many college professors around etc.

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This past week I was talking with a contemporary about congestion pricing as "not creating a real market" but simply using a market mechanism as a regulatory device. I mentioned the word "libertarian" (as in "..and I think that a lot of conservatives and libertarians have a misplaced understanding of and hope for congestion pricing...") and his fifteen year old son, who was with us, interjected something about libertarians. (His remark wasn't too complimentary at all but I was impressed that a fifteen year old would even know of such a faith -- and faith it is.) Though my own faith is flagging that libertarianism has much useful to offer (and societal reforms of a libertarian nature would be welcome if they did not deny the reasonable impetus for too-big government) I came to the defense of the libertarian viewpoint.

"Oh I wouldn't be too concerned that libertarianism will destroy society. I think that the regulatory state is --- for better or worse --- so well-rooted and so fundamentally popular and accepted that it's not going to up and disappear. Libertarians as a group, at least the extreme "let's privatize the police force"-types, marginalize themselves. People may moan and groan but when it comes to being part of a large organization which provides social security at the most basic sense, they like it; even Republicans have internalized the notion that government's number one function is to "Create Jobs!" When you have conservative Republicans parroting such liberal tripe, you know you have a social consensus around very activist government. But libertarians do provide a very useful function by asking these very basic questions --- college seminar questions --- about how society is organized and forcing people to rethink their core assumptions. No one else really asks in any sort of serious fashion; the libertarians may come to impractical solutions but they sure are stimulating along the way. And while the regulatory state appears to be the only practical way to organize a mass society, there is an awful lot wrong with the manner in which it regulates and spends our money. So the libertarian perspective is a welcome tonic, even if it doesn't truly quench the thirst."

Comments

[Kevin Brancato]

Members of the church of the free market do talk as if the market solves all problems, even when the problems in question are ones the market can’t solve, pretty much by definition, because there is no profit to be made by solving them. Like providing medical care to penniless sick people, for example.

See, that's strange, because none of us free-market economists at George Mason University would dare talk this way. And neither do those at the University of Chicago. I have never met any serious economist who thinks that markets solve everything.

Members of the church of the free-market want to be more specific about "problems."

Having someone other than the purchaser of a good or service actually consume it is not a problem in the market. For example, a doctor is perfectly willing to examine my son, even though my son is penniless, because the doctor knows I will pay him.

But when a large group of people want to purchase goods and services, and have no way to pay for them individually, it is clear that an institution must be stood up--either by themselves or others--to help them out, to finance these purchases.

Has anybody denied this?

The nature of this institution will either be coercive or charitable. Ophelia Benson's "problem" is getting the specific institution she wants, a transfer of income from those who've earned it to those who want to spend it.

But this is not "market failure", since we all agree that there is no market here.

[back40]

Well said Kevin.

Ophelia and the Timberites (wasn't that a 70s rock group, OATS) seem (from their words) to be blind to their authoritarian memetic infections. There's a bit of magical thinking in their views in assuming without evidence that the 'problems' they identify can be cured by regulation. The briefest examination of non-market societies or non-market systems within market societies shows this to be false. We can't simply dictate behaviors and solve problems because we don't understand either the causes or cures. Both are yet to be discovered. This is what Lynne Kielsling calls "The Knowledge Problem".

The memetic war between caricatures of the libertarian market position and the authoritarian command and control position is less useful and less entertaining than an informed debate about which social and economic problems are actually problems and what remedies exist for them; more useful and entertaining for me at any rate since the OATS performance is merely political, intentional exaggeration for persuasive effect.

[Ophelia Benson]

Perhaps I should have defined what I was referring to more narrowly. I can believe that academic economists don't talk that way. The parishioners I had in mind are the ones who talk in venues like NPR, for example, where I have indeed heard it said that the market is the best way to solve the problem of the uninsured.

I wasn't talking about regulation in this particular instance; I didn't mention the word; I was talking about the provision of social goods that don't make a profit. Such as medical care for people with little money.

[David Sucher]

Regulation is, when not abused, a public good.