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Monday, April 26, 2010

Is Market Fundamentalism the Easier Argument?

This is probably a "grass is greener on the other side" argument, but when I listen to market fundamentalists argue for their side, as many have so far today in the sessions I've attended at the Milken Global Conference, I get envious. It's such an easy argument to make. No matter what the problem, the solution -- though stated in many, many creative ways -- is always the same. Get government out of the way and let markets do their magic. A tax cut, a reduction in government spending, or easing of regulation will always make things better, not worse. And if there are problems in markets, they can always be blamed on government. Even when fundamentalists admit there is a market failure because it cannot be denied, they can (and do) argue that the government will still make things worse if it intervenes. Thus, no matter the problem, there is always a simple explanation and a simple solution. When you argue for government intervention, the job is much harder. You have to identify the specific market failure, argue that it's significant enough to justify government intervention, come up with a policy that will address the particular failure without making other things worse, and then argue that the political process won't mangle the policy so badly as to make it worthless or counterproductive.

I don't have a problem with the baseline assumption being that we should leave markets alone unless it can be demonstrated that significant problems exist, and that there's a chance of making things better, but the deck does seem to be stacked against the interventionist position.

    Posted by on Monday, April 26, 2010 at 12:15 PM in Economics, Market Failure | Permalink  Comments (74)


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