You can however go back in our history to times with lesser and lesser regulation of markets-- 100 years ago, 150... And you'll still see similar problems.
Government regulations exist to fix market failure, usually due to information asymmetry. In the old days it was milk in chalk, in the modern day it's closed source code riddled with spyware and engine firmware that cheats emissions tests. Market failure in my book.
We need more, smarter regulations, not less.
EDIT: I don't think it's reasonable to expect everyone to educate themselves on every technical advance. That's not possible with the complexity of technology people encounter in their everyday lives. And that's without even talking about the invisible technology we never see directly, like the software controlling our voting machines, hospital equipment, power plants, etc.
Agreed. And I never said we did. I said that markets with a high degree of asymmetric information and long equilibration times need good regulation to prevent likely but culturally unacceptable practices.
Agreed. Well meaning but idiotic regulation is nearly always the root cause of systemic market failure. "Oh those poor poor people, we can't let them do what they want - what if they hurt themselves? Let's stop them from doing that!"
Best example are drugs like marijuana or even the limits on high fat foods - which research is now showing is not as bad as some other older research thought.
Regulation is one solution to market failures. It's not the only solution, but in many cases it works well. The Clean Air Act, for example, has been extremely successful at addressing the negative externalities created by air pollution.
Beyond that--the lesson that we're learning from modern economics research is that there are no touchstones. Humans aren't rational actors, the efficient allocation theories are predicated on unrealistic assumptions about the behavior of economic actors and the lack of transaction costs, etc. "Laissez faire" isn't any more of a guiding principle than "big brother knows best." The only way to proceed is empirically--use measurements to determine when government solutions are needed and when market solutions suffice.
It's a fairly uncontroversial claim that the market naturally under invents in R&D. It's something you'll see in any basic economics 101 textbook. So why shout "laissez faire" to a government initiative addressing such a market failure?
Saying "we can regulate" is true, but so vague as to be an empty statement, in my opinion, and previous regulatory actions against tech giants (mainly Microsoft) have been - again, in my opinion - simply exercises of extracting money with no benefit to the consumers.
Which regulations would you like to see implemented on Facebook & co?
And by the way, I'd love to see a definition of "market failure" as commonly used that isn't essentially "the market doesn't do what I consider best". People like to (rightly) criticize the liberal right by pointing out that markets are just a tool, but that should come with the realization that a bad outcome can arise without being a flaw in the tool. If the allocation of goods and services is efficient, the market didn't fail, even if the outcome is not socially optimal. We just didn't use it correctly.
Yea, exactly. But with effective regulation, we can get closer to perfect competition, or at least remedy the market failures that are inevitable.
To go on a bit of a rant--ufortunately it appears the trend is going the other way with Big Gov allied with Big Business, out of control banking empires and MIC, made possible by never-ending low interest rates and easy money policies from the Fed that mask it all.
Don't belive me? Real cost of living has increased to where 2 incomes are required for many to just keep their heads above water to afford what their parents had, despite more education and working longer hours. We have never ending wars, 26,000 bombs dropped last year, and the longest war in history and it was never even approved by congress. Our most popular media outlets tell us we need this so we have jobs[1].
Agreed. It's always a shame that the response to purported market failures is either (1) attempt to regulate directly or (2) do nothing, rather than (3) attempt to fix market failure through narrow means.
Isn't that the point of this regulation though? The market failed to deliver, so we regulate the desired option into existence. Government functioning as intended.
Market failure is a thing with insufficient oversight/regulation. But it's just as easy to cripple something by nationalizing and over regulating it.
Take the housing market, when there was no regulations we ended up with inadequate housing and the poor being housed in terrible conditions. Now we brought in all the wrong regulations and it's no longer just the poor who are struggling. Next we'll vote for universal rent control, do nothing else and sooner or later nobody will be able to move.
Edit: and if we completely nationalize it we might end up with inadequate commie blocks for everyone.
Oh sure, I will readily accept market failure as an improvement over regulations that are actively corrupt or otherwise specifically working against the public interest.
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