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As an optimization mechanism, failures of the market can be either one of two things: - It optimizes the wrong thing, or - It fails to optimize what it intend
by someguyorother 5y ago
As an optimization mechanism, failures of the market can be either one of two things:
- It optimizes the wrong thing, or
- It fails to optimize what it intends to optimize.
Externalities fit into the former category. Business cycles and some types of path dependence (e.g. Keynesian demand deficiency) fit into the latter.
- gatestone 5y agoThe book is not juridically or economically naive. Externalities are considered. The book is also not about moral philosophy and a priori concepts of property and freedom. Friedman is utilitarian, trying to figure the "machinery", like right property institutions and laws for difficult things like pricing carbon exhausts.