Why public goods are often underinvested in

TheGrandmaster We Are Better Than This

If a provider cannot exclude freeloaders from the use of an asset, we can expect that private capital will underinvest in that asset class, even if it is useful to society at large, for the simple reason that private investors will not be able to capture the full economic returns to their investments, and therefore will stop investing well before …

Government Contributions, iPhone, Public Research

TheGrandmaster First Line of Defenses, Seven Bad Ideas

Similarly, Mazzucato noted, though we think of Apple as an innovative leader in pure technology, it has been able to exploit research done by various government-sponsored programs around the world. One eye-popping breakthrough was made by two European scientists at the U.S. Department of Energy’s Argonne National Laboratory; when they won a Nobel Prize in 2007, the Royal Swedish Academy …

Sanitation, antecedent to everything, was government.

TheGrandmaster Anti-Libertarian Philosophy, Seven Bad Ideas

Government was exclusively responsible for sanitation in the late 1800s and early 1900s, something often overlooked by economists. Clean water made the growth of cities possible, and cities in turn were major sources of growth, their dense populations providing demand for goods and labor in new and less costly ways. Government also led urban health campaigns, including inoculations that helped …

Good general role of government

TheGrandmaster Anti-Libertarian Philosophy, First Line of Defenses, Seven Bad Ideas

Nonorthodox economists believe that government investment in infrastructure, education, research and development, and health care is at least as important as private capital investment and creates the necessary conditions for business to thrive and for a just and optimistic society. This investment is not required simply because markets fail. Institutional economists recognize the need for equalizing education, but also for …

Protection from Private Power

TheGrandmaster Government is Good

When we see all the various ways that government actions can actually enhance our freedom, it also helps us to see how narrow and stunted the anti-government vision of freedom really is. They refuse to acknowledge that government power can enhance our freedoms. Also, they see freedom as merely being protected from the detrimental effects of government power, not from …

Freedom and Rights are government protected

TheGrandmaster Government is Good

We often make the mistake of seeing our rights and civil liberties as merely the absence of some kind of governmental action. We believe that we have free speech or freedom of religion when the government does nothing to impede those freedoms. But in reality, our rights depend heavily on active government – on positive government actions. In fact, the …

Freedom, Social Forces, Positive Freedom, and Role of Government

TheGrandmaster Anti-Libertarian Philosophy, Government is Good

In his book, The Freedom Revolution, former House Majority Leader Dick Armey defines freedom as “the ability and responsibility to control one’s own destiny.”10 There is much truth to this, but he is mistaken when he also maintains that we can best assert that control when government leaves us alone and stays out of the private sector. He forgets that …

The real threat to freedom 2 – and government as defender

TheGrandmaster Government is Good

The larger point here is that when it comes to freedom, anti-government conservatives are wrong about how they portray both government and the private sector. Government is not nearly the threat they make it out to be and it is actually the mechanism that allows us to best protect and expand our freedoms. Moreover, the private sector is not the …

The real threat to Freedom

TheGrandmaster Government is Good

The Real Threat to Rights and Freedom Imagine for a moment a dictatorship where your rights and liberties are being constantly violated. There is no free speech and you can be punished for espousing your political views. Associating with groups that oppose official policy can invite reprisals. If you complain about the behavior of officials or blow the whistle on …

Markets and Environment

TheGrandmaster Anti-Libertarian Philosophy, First Line of Defenses, People's writings

It makes little sense to suggest that markets can solve every problem, cure every ill, and can work perfectly without any intervention or regulation. It may be a very profitable pursuit of self interest for a company to create a product that sells very well, but requires a great deal of radioactive waste in the process of production. The company, …

Liberal Conception of Government

TheGrandmaster Anti-Libertarian Philosophy, First Line of Defenses, The Price of Inequality

Opponents of regulation always complain that it’s bad for business. Regulations that prevent pollution, of course, are bad for businesses that would have otherwise polluted. Regulations that prevent child labor are bad for businesses that would have exploited children. Regulations that prevent American companies from engaging in bribery or abuses of human rights may be bad for businesses that engage …

Market Failure Fundamental

TheGrandmaster The Price of Inequality

When these are not aligned, we say there is a market failure, that is, markets fail to produce efficient outcomes. Private rewards and social returns are not well aligned when competition is imperfect; when there are “externalities” (where one party’s actions can have large negative or positive effects on others for which he does not pay or reap the benefit); …

Liberal Government

TheGrandmaster People's writings, The Price of Inequality

Markets by themselves often fail to produce efficient and desirable outcomes, and there is a role for government in correcting these market failures, that is, designing policies (taxes and regulations) that bring private incentives and social returns into alignment.  If you have to explain the progressive vision of the role of government in an economy in one sentence, this its …

Regulation and Liberalism

TheGrandmaster Anti-Libertarian Philosophy, First Line of Defenses, The Price of Inequality

Opponents of regulation always complain that it’s bad for business. Regulations that prevent pollution, of course, are bad for businesses that would have otherwise polluted. Regulations that prevent child labor are bad for businesses that would have exploited children. Regulations that prevent American companies from engaging in bribery or abuses of human rights may be bad for businesses that engage …

Government Contributions to Health and Electronics

TheGrandmaster American Amnesia, Anti-Libertarian Philosophy, First Line of Defenses

The fruits of these early and extensive investments are countless. The MRI (magnetic resonance imaging) emerged from a series of National Science Foundation grants starting in the mid-1950s. The laser, also vital to medical practice as well as consumer electronics and much else, grew out of military-funded research.55 In drug development, a 1995 investigation by researchers at the Massachusetts Institute …

Unmet Needs in a Market System 1

TheGrandmaster Government is Good

For example, consider the different ways that markets and governments respond in the aftermath of a disaster like an earthquake or flood. Governments and charities rush in with aid to those suffering in the affected areas – a moral response. But the natural response of economic markets is to price gouge. The shortages of such things as food, water, ice, …

Foreclosure of terrible choices

TheGrandmaster Anti-Libertarian Philosophy, The Myth of Choice

First, we should work to ensure that economic need is not a source of coercion. As we think about the range of bad choices people are forced into—to work for an employer who puts employees at risk, to sell sex for money, or to buy cheap, fatty food—many of the most problematic choices are brought about by simple economic need. …

Inequality, Opportunity, Poverty

TheGrandmaster Freedom Reclaimed

Suppose, however, that inequalities in property did grow so extreme as to snuff out sufficient opportunity. At that point, Madison argued, public policies of government served as legitimate tools to restore a relative equality of economic conditions, as he put it, to “reduce extreme wealth towards a state of mediocrity, and raise extreme indigence toward a state of comfort.”4 For …

Wealth exists because it can be defended

TheGrandmaster Cost of Rights

The public costs of nonwelfare rights show, among other things, that “private wealth,” as we know it, exists only because of governmental institutions. Those who attack all welfare programs on principle should be encouraged to contemplate the obvious—namely, that the definition, assignment, interpretation, and protection of property rights is a government service that is delivered to those who currently own …

Growth is Important, but so are other things

TheGrandmaster The Invisible Handcuffs

The chapter describes both direct discipline in the workplace and obvious forms of control, such as the Federal Reserve’s intentional creation of unemployment to make labor fearful of being fired—what Alan Greenspan, then chairman of the Federal Reserve Board, referred to as the traumatization of labor. Such policies are ironic, considering that policymakers pretend that all social objectives—whether higher wages, …

TheGrandmaster Principles of Economics

The relationship between productivity and living standards also has profound implications for public policy. When thinking about how any policy will affect living standards, they key question is how it will affect our ability to produce goods and services. To boost living standards, policymakers need to raise productivity by ensuring that workers are well educated, have the tools needed to …

TheGrandmaster The Great Courses - Foundations of Economic Prosperity

Lecture 6 – National Prosperity If a country invests in basic scientific research, it lowers the cost for private sector firms to invest in related applied research and as a result, leads to overall more investment in research and development, which leads to a more innovative economy, which leads to a more prosperous national Economy. So if you’re concerned about …