Tag: Economics

Markets provide mechanisms for adjusting levels of investment and preventing booms and busts in the business cycle. Government policies, however, often distort markets and nurture the conditions that lead to depressions and human suffering.

What needs explanation is not poverty, which is the natural state of mankind, but wealth. No system better than the free market, based on well defined and legally secure property rights and legal institutions to facilitate exchange, has ever been discovered for generating incentives for wealth creation.

As society becomes more complex, reliance on voluntary market exchange becomes more — not less — important. A complex social order requires the coordination of more information than any mind or group of minds could master.

Negative externalities such as air and water pollution are not a sign of market failure, but of government’s failure to define and defend the property rights on which markets rest.

The public goods justification for the state is one of the most commonly misapplied of economic arguments. But many goods that are allegedly impossible to provide through markets have been, or are at present, provided through market mechanisms — from lighthouses to education to policing to transportation, which suggests that the common invocation of alleged…

Abstract models of economic interaction can be useful, but when normatively loaded terms such as “perfect” are added to theoretical abstractions, a great deal of harm can be done. For the state to be the agency that would move markets to such “perfection,” we would expect that it, too, would be the product of “perfect”…

Markets do not require for their operation perfect information, any more than democracies do. Significantly, politicians and voters have less incentive to acquire the right amount of information than do market participants, because they aren’t spending their own money.