Sunday, June 25, 2006

Market Failure

Glenn Woiceshyn has (what is to me) a new take on the idea that markets don't fail. As he points out:
A free market doesn’t guarantee that an individual will act in rational self-interest—errors are possible—only that he or she is free to do so. If a person fails to act as such, then it’s the person’s failure, not “market failure.” A free market can’t be expected to do what’s metaphysically impossible, such as make everyone equally wealthy regardless of ability and effort, or turn sloth into gold. If a person expects a bicycle to fly, and it doesn’t fly, then it’s not a “bicycle failure” but a mind failure.

Now if the activities of some people harm others, such as harmfully pollute their water or air, and if the harm can be objectively proven (a concept foreign to environmentalists), then it’s the government’s failure to protect individual rights—not “market failure.” And a tax on emissions is not a valid solution, because it implies that it’s okay to violate rights as long as you pay government for the privilege.


Anonymous Anonymous said...

Dr. Hurd makes a similar point in a slightly different context:

7:17 PM  
Blogger Amit Ghate said...

Thanks, I agree it's a similar point.

7:26 PM  

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