3 ms·
It does a pretty good job of figuring out the correct price of things.
by mostertoaster 5y ago
It does a pretty good job of figuring out the correct price of things.
- dash2 5y agoNo, that's false when public goods exist. The market can't figure out the correct price of carbon, because when I produce carbon, it harms other people than me. Off-topic, but... this is Econ 101! I feel a bit like a programmer would feel when someone says "hey, our car is programmed using an HTML5 supercomputer". It alarms me that an argument which has been known for 250 years, and formalized for 60 years, still hasn't percolated to the educated general public. Markets can't magically work out the correct prices in the presence of externalities. (To head off a nerdy counter-argument: yes, yes, Coase theorem, blah blah. If you think we can automatically negotiate to internalize all externalities, then fine - that seems wildly wrong to me but it's not a logically invalid argument. But if so, markets per se add nothing. Property rights plus individual contract law get you all you need.