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> The fall of 2008 wasn't a free market. In particular, the government was forcing... To the extent that government regulations are less strong than physical l

by khafra 15y ago

> The fall of 2008 wasn't a free market. In particular, the government was forcing... To the extent that government regulations are less strong than physical laws, isn't the market still free? For instance, methamphetamines are illegal, but they're still produced, distributed, and retailed; just with a higher cost for all involved than if they didn't have to take precautions against, and accept the probability of, detection and punishment. Given the incentives in place, the supply and demand curves for methamphetamines still meet, and the market clears. I've always found the belief that markets can withstand any form of interference except government regulation fairly bemusing. One side-effect that falls out of this more cosmopolitan view of free markets is that the fall of 2008 was the efficient outcome. If market participants had information about what would happen strong enough that they were willing to bet on it in 2005-2007, the catastrophic drop in 2008 would not have happened as it did.

CWuestefeld 15y ago
Given the incentives in place, the supply and demand curves for methamphetamines still meet, and the market clears. Sure it does. But the individual actions that occur in so doing are different than they would otherwise be. So you've got hordes of young black men (yes, stereotyping, but to make a point) killing themselves supplying drugs. This wouldn't be happening in the free market; you'd be buying it legally from your pharmacist, or even the local convenience store. Those young men would still be alive. the fall of 2008 was the efficient outcome. I've no doubt that this is true. Unfortunately, even in that, the perversions of the market have not been allowed to resolve themselves. We've got the "too-big-to-fail" thing that is continuing to incent risky behavior, and we've got the government shoring up housing prices, preventing that bubble from deflating.

by khafra 15y ago

CWuestefeld 15y ago

Given the incentives in place, the supply and demand curves for methamphetamines still meet, and the market clears. Sure it does. But the individual actions that occur in so doing are different than they would otherwise be. So you've got hordes of young black men (yes, stereotyping, but to make a point) killing themselves supplying drugs. This wouldn't be happening in the free market; you'd be buying it legally from your pharmacist, or even the local convenience store. Those young men would still be alive. the fall of 2008 was the efficient outcome. I've no doubt that this is true. Unfortunately, even in that, the perversions of the market have not been allowed to resolve themselves. We've got the "too-big-to-fail" thing that is continuing to incent risky behavior, and we've got the government shoring up housing prices, preventing that bubble from deflating.