Re:Economists effectively assume that capitalism is unnecessary
by AnimalMuppet on Monday October 26, 2015 @05:45PM
(#10454707)
> If not then there's no clear argument against government action to prevent or deal with bad local optima.
There may not be an economic argument, but there's a political one.
In theory, government can move you from a local maximum to a global one. In practice, though, government moves you to a maximum likelihood of [them] getting re-elected, not to a maximum of any economic utility function.
More bluntly: You worry that the free market is going to produce a sub-optimal solution? Okay; that's a valid concern. But you think Congress is going to make things better? Have you looked at Congress lately?
(And, yes, of course I know that the Ayn Rand unfettered free market is not the answer. We really do need regulation. I get that. But be wary of the assumption that government can do better than the market at optimizing aggregate results. Government is a very blunt hammer, not a fine adjustment.)
There may not be an economic argument, but there's a political one.
In theory, government can move you from a local maximum to a global one. In practice, though, government moves you to a maximum likelihood of [them] getting re-elected, not to a maximum of any economic utility function.
More bluntly: You worry that the free market is going to produce a sub-optimal solution? Okay; that's a valid concern. But you think Congress is going to make things better? Have you looked at Congress lately?
(And, yes, of course I know that the Ayn Rand unfettered free market is not the answer. We really do need regulation. I get that. But be wary of the assumption that government can do better than the market at optimizing aggregate results. Government is a very blunt hammer, not a fine adjustment.)