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> misallocated resources attract free riders. The problem that people consistently seem to ignore is that 100% free-markets don't incorporate the costs of nega

> misallocated resources attract free riders. The problem that people consistently seem to ignore is that 100% free-markets don't incorporate the costs of negative externalities. So frequently what arises out of the free-market is a situation of misallocated resources. In this case, the cost to society of people not being able to live close to where they work, or having to pay more to live notably outweights the benefit of people getting to pay a bit less for a vacation. However, because that cost is paid by others and not the people putting the home up or staying there this misallocation still occurs.

treeman79 4y ago
Compared to what? Governments that spend billions on useless things and make things far more expensive than they need to be? Healthcare used to affordable for most. Now it’s insanely expensive per month for a family, and still costs a huge amount to actually use. That’s not free market, that’s government trying to help out. Free market has raised hundreds of millions out of poverty. It’s far from perfect, but it’s better then everything else.
- paulryanrogers 4y ago
  Compared to a well regulated market with healthy competition. These things aren't mutually exclusive. Markets free of regulation are not a silver bullet.
- h0l0cube 4y ago
  > That’s not free market, that’s government trying to help out. I figure you’re making reference to the US healthcare system, which is an anomaly in a world of public health systems that function cost effectively
mym1990 4y ago
I would be hard pressed to name an example of any truly 100% free markets. That would essentially be a place that has no taxes, no regulation, no control on production, etc…
gruez 4y ago
>In this case, the cost to society of people not being able to live close to where they work, or having to pay more to live notably outweights the benefit of people getting to pay a bit less for a vacation. However, because that cost is paid by others and not the people putting the home up or staying there this misallocation still occurs. I don't think the standard economics characterization of "externalities" includes the opportunity costs of people not being able to use a resource. Even then, I don't see how your argument that vacationers are creating an externality for long term renters is more convincing than the opposite (ie. long term renters are creating an externality for vactioners). Instead, what you seem to be doing is ignoring price signals (ie. the fact that vacationers are willing to pay more for the same unit than "actual" renters), substituting in your own value judgement, and then concluding that there's an externality because the market behavior isn't aligned with your value judgement.

treeman79 4y ago

Compared to what? Governments that spend billions on useless things and make things far more expensive than they need to be? Healthcare used to affordable for most. Now it’s insanely expensive per month for a family, and still costs a huge amount to actually use. That’s not free market, that’s government trying to help out. Free market has raised hundreds of millions out of poverty. It’s far from perfect, but it’s better then everything else.

paulryanrogers 4y ago
Compared to a well regulated market with healthy competition. These things aren't mutually exclusive. Markets free of regulation are not a silver bullet.
h0l0cube 4y ago
> That’s not free market, that’s government trying to help out. I figure you’re making reference to the US healthcare system, which is an anomaly in a world of public health systems that function cost effectively

mym1990 4y ago

I would be hard pressed to name an example of any truly 100% free markets. That would essentially be a place that has no taxes, no regulation, no control on production, etc…

gruez 4y ago

>In this case, the cost to society of people not being able to live close to where they work, or having to pay more to live notably outweights the benefit of people getting to pay a bit less for a vacation. However, because that cost is paid by others and not the people putting the home up or staying there this misallocation still occurs. I don't think the standard economics characterization of "externalities" includes the opportunity costs of people not being able to use a resource. Even then, I don't see how your argument that vacationers are creating an externality for long term renters is more convincing than the opposite (ie. long term renters are creating an externality for vactioners). Instead, what you seem to be doing is ignoring price signals (ie. the fact that vacationers are willing to pay more for the same unit than "actual" renters), substituting in your own value judgement, and then concluding that there's an externality because the market behavior isn't aligned with your value judgement.