Monday, December 22, 2008
Why This Blog Is Called "The Free Market Alternative" (first post)
I generally believe that free market policies work best. Certainly there is a role for government in providing public goods (like national defense) and dealing with externalities (like pollution). But economics is fundamentally a study of alternatives. Which policy works best? It is not the case that case that the market is perfect or great (although I think it might be good, in and of itself, in some ways). We need to ask the question does the market work better than the alternative, government intervention or regulation? Milton Friedman said that when we have market failure the problem in assuming that government intervention will make things better is that the same lack of information that created the market failure might lead to government failure. Any government policy might also have unintened consequences that make the situation worse (like rent control).