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I wish more people understood that markets include government regulation to ensure they operate in a competitive way. In a competitive market there must be so m
by Diesel555 5y ago
I wish more people understood that markets include government regulation to ensure they operate in a competitive way. In a competitive market there must be so many buyers and sellers so that each has a negligible impact on the market price [1]. Obviously governments try to prevent monopolies to uphold this assumption. Regulation must also prevent market failures. Such failures occur with externalities. The most famous example being a factory that pollutes the environment thus producing negative health effects on people but incurring no cost for that damage without government intervention. Another example of a failure is information asymmetry (the doctor that recommends a procedure he knows you don't need but you trust him for his information) which is illegal.
My point is, markets do include government regulation. Academic debate is not centered on whether or not markets include government regulation by microeconomics definition. The debate is how much, where, when and how. If "free market" is defined as no government intervention, it is not an accepted practice and even conservative economists would not recommend it. I think there is a reason the term "free market" is not included in my microeconomics textbook. We look for a competitive market (described by the desired result), not a "free market" (described by the methods, not the result).
[1] Mankiw, Principle of Microeconomics 8th edition
- jlcoff 5y ago
- Diesel555 5y agoYou in no way responded to the content in my post. "free speech" and "free markets" are completely separate topics which may or may not be mutually exclusive, both of which are studied well academically. I make no claims on free speech. I simply provided a basic academic background to markets in microeconomics. Then you provide random sayings to try to discredit my post which have no logical connection to my content. There is a lot of ignorance in economics. And while ignorance is okay, I am ignorant in a lot of fields, ignorance without recognizing what you do not know is dangerous. This is a well studied field and America's founders even agreed government should have some say in markets. Here is a well cited source for that, search for "free markets". Of note definitions are important and clearly the authors of the link below include government regulation in a "free market" which the definition I gave and the one you responded to do not. https://www.heritage.org/political-process/report/the-economic-principles-americas-founders-property-rights-free-markets-and# https://www.heritage.org/political-process/report/the-econom...
- jlcoff 5y agoYou can argue as must as you want about the legitimacy of my comment. "Regulations" and "free market" are mutually exclusive.
- A_non_e-moose 5y agoConsider this: a) literally zero government intervention. b) some government intervention, to keep the market competitive, as described above. c) total government control. What do you, jlcoff, call a)? If I understood you correctly, it's "free market". What would you call b) and c) then? There is no doubt that a) is strictly incompatible with any government regulation or intervention. Label those two concepts however you want, but I don't think anyone argumented against that. A lot of people seem to use "Free Market" for b) instead of a) and that is confusing. I agree with Diesel555's idea of calling b) a "competitive market" as it avoids a labeling confusion between a) and b).
- jlcoff 5y agob) and c) are either socialism or cronyism, or a variant of fascism (which is in its core a non-USSR controlled / nationalistic socialism).
- unionpivo 5y agoMarket is regulated by its very definition. If it was completely unregulated, the person with the biggest gun would just take everything he wants. It was always abut where to draw the line.