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Politics : American Presidential Politics and foreign affairs
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To: DuckTapeSunroof who wrote (38580)11/13/2009 5:57:10 PM
From: TimF  Read Replies (1) of 71588
 
I understand the concepts of market failure and imperfect markets. The point is that "government failure" is common. Even when specific cases of market failure happen its often far from enough to justify government intervention. Even though the market is imperfect, in fact even in specific cases where its clearly imperfect, its still typically (to use your exact words) "the highest/best allocator of resources".

Or to express it another way, in order of decreasing "higher/best" perfection you may have

1 ideal markets with perfect competition and perfect knowledge

2 most normal real world markets

3 specific markets with clearly identifiable market failures

4 most political attempts to "nudge" the market

5 attempts to completely take over from the market and allocated resources through political decision making.

----

In cases where #1 is ruled out (for the strongest meanings of perfect knowledge and competition, most of the economy, and even relaxing the meanings, its not rare), and even in rarer cases where you can't rise to the level of #2, #3 is still the market functioning, and its reasonably likely to function at a "higher/better" level than any other alternative.
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