My Question:
What if market failure is nonexistant, but is instead a scapegoat for government failure? Can I critique "market failure" in my presentation?-Eliot
Reply:
"Eliot,Let's stick with the assignment about addressing a market failure. You need to understand that at times, the market underallocates and/or overallocates resources or does so inefficiently. It would be too predictable for you to critique market failure -- try to look at all sides and see what you come up with.Mr. Benson"
What should I do, then?
Schools are labour camps.
eliotn:What should I do, then?
What you have to do is admit that the market failed -- that is what the teacher wants to hear. However, you have to change your frame of reference from the free-market to the coercive-government-privilege market -- which is probably what your teacher will not expect. So, in a sense, the teacher is right: the "market" does misallocate resources but in our current state of affairs, the "market" is not a free market. Rather, it is a collection of interactions whereby the government participates coercively. You have to introduce the connection between coercion and misallocation of what people want.
So, here is an example: monopolies are commonly seen as market failures by statists.
What you have to do is demonstrate that it is a misallocation of resources. Then, show how breaking up the monopoly will be more efficient -- that is what your teacher wants to hear. Here comes the surprise: suggest that the monopoly be broken up by removing the government privilege. I recommend that you choose your monopoly carefully. Not all "monopolies" are the same. Choose a monopoly that benefits from government privilege, for example, patent protection. The pharmaceutical industry is a good one to expose.
You face an uphill battle because you would also be expected to present models of how the market will respond if there are no government privilege. Your teacher may simply dismiss your point of view by saying something like: "Yeah, but without patent protection we would not have innovation blah blah blah. Therefore, government privilege makes things efficient blah blah blah." I recommend that you nip that argument in the bud in your assignment by conceding the point and suggesting that patent protection be extremely limited in duration -- a statist concession, indeed. Alternatively, you can be cavalier and say that too much innovation is actually a bad thing because it leads to pollution and massive population growth and depletion of the Earth's resources.
Furthermore, it would be interesting for you to discuss/critique the common concept of efficiency -- something your teacher may not expect either.
WARNING: Be ready for a failure on your assignment.
Tell him that you can't because there is no such thing as market failure. He can assign you to explain how a square circle exists, but that's no different. The market process does not "over/underallocate" resources unless bad signals are provided by government interference. Write it about how market failure doesn't exist. If he doesn't like it--tough. You're not there to please him. If you are, tell him to just give you the answers he wants so you can regurgitate it like a good little sheep. But if he wants you to actually learn, then he needs to STFU.
How does he mean "predictable" for you to do so? Anyway, you can give a presentation from the typical point of view, like he wants, and nonetheless argue why you think it's wrong.
-Jon
To darkness I condemn you...
You're not there to please him. If you are, tell him to just give you the answers he wants so you can regurgitate it like a good little sheep. But if he wants you to actually learn, then he needs to STFU.
I think this is how teachers view their students giving their own opinions.
Jon Irenicus:Anyway, you can give a presentation from the typical point of view, like he wants, and nonetheless argue why you think it's wrong.
Yeah, that seems like the best way to do it.
On one hand you're covered, on the other you get to say what you want.
Tough asking him for the asnwers he wants to get, like Knight suggested, could be quite funny.
i suggest just be subtle about it. refrain from titling your presentation. "market failure, never".
accept that intervened markets, are markets, of a type.
and just analyse a regulated market, that suffers failure. maybe something simple like property (rent control.)
just leave for the final part of you talk, that the 'failure' of the 'market' was government interference.
and propose reduction of interference as the anti-dote. job done.
the discrepancy between you and mr benson seems to be over the word market. he meaning real world markets as we view them, and you meaning free market ideal which we are restrained from enjoying. thats my suggestion.
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
Sometimes students must make a choice on what is more important:
- Earning a high grade that will lead you to greater success later
- Wasting time and effort in trying to convince a teacher about something he won't appreciate.
Sometime it is better just to play the game and choose another course with another professor next semester.
Art transcends ideology.
http://mises.org/Community/blogs/ruben
Perhaps you could address market failure by looking at a number categories of market failure and then showing that in every case the so called market failure is a result of government intervention of some sort: distorting prices; raising the barriers to entry; etc.
i.e. similar but opposite to Mark Anthony's speech supposedly not praising the dead Julius Caesar, but in fact doing so.
The only difficulty would be in keeping you presentation down to a reasonable time!!
Rubén: Sometimes students must make a choice on what is more important: - Earning a high grade that will lead you to greater success later - Wasting time and effort in trying to convince a teacher about something he won't appreciate. Sometime it is better just to play the game and choose another course with another professor next semester.
This reminds me of something:
"Tu ne cede malis sed contra audentior ito"
I say ignore your teacher, state the case for "market failure" and then criticise it as best you can. If your teacher wants to give you a bad grade for it, ask him why.
"You don't need a weatherman to know which way the wind blows"
Bob Dylan
Jon Irenicus:How does he mean "predictable" for you to do so?
By "Predictable", he thinks that I would do that, being a free market advocate.
Knight_of_BAAWA: Tell him that you can't because there is no such thing as market failure. He can assign you to explain how a square circle exists, but that's no different. The market process does not "over/underallocate" resources unless bad signals are provided by government interference. Write it about how market failure doesn't exist. If he doesn't like it--tough. You're not there to please him. If you are, tell him to just give you the answers he wants so you can regurgitate it like a good little sheep. But if he wants you to actually learn, then he needs to STFU.
Yup. However, I discovered yet another assignment on market failure.
With this assignment, you research an "externality", say how it is an "externality" in one page you present in class, and say how government can "fix the externality" in the other page.
I thought of a great idea: present government as the externality, then show how government can solve it by abdication.
In Judy Jones' An Incomplete Education "market failure" is defined as something like "when economic actors don't act according to my models -- someone else's fault."
Of course, while that is clever enough... in the same book, they say that Austrians are crazy for thinking big companies should be allowed to fail during recessions.
eliotn:I thought of a great idea: present government as the externality, then show how government can solve it by abdication.
For a quick response say that the market does not fail, but that the free market does not always lead to economic prosperity. Just because there is a recession does not mean the market is not working, the market is not a single being and therefore does not consider human suffering as a failure. The real market is trying to work now. Efficiency is not always benevolence, vis a versa
Democracy is nothing more than replacing bullets with ballots
If Pro is the opposite of Con. What is the opposite of Progress?
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