Values outside of Market Signals

Things that cannot be provided in private markets through private purchasing power, or where “The Invisible Hand” of the market fails or cannot be insured to provide this good or value. Things that cannot be “traded” in the same sense. Not all things can be reduced to individual private trade among parties of private ownership. Some things cannot be privately owned to be traded. Clean air is one classic example. Rivers, streams, lakes could plausibly somehow be bought and owned by a person, but this is almost certainly not pragmatically possible and will thus be under some common ownership of a state or off limits for private consumption. Since these entities go through many different locations, the pollution of them can affect everyone.

Private market signals cannot do everything. Besides fostering economic opportunity, redistribution is needed to ensure that all Americans obtain a minimal standard of living. Market forces alone will not necessarily provide a minimally adequate income to everyone. Whether due to personal circumstance or ill fortune, some people inevitably will be unable to earn sufficient income to care for themselves or their families. Even for libertarians, leaving some citizens destitute and starving is not acceptable. In fact, one of the most effective “safety net” programs, the Earned Income Tax Cr (EITC), derives from Friedman’s proposal, in the 1960s, for a negative income tax. The idea is to use the tax system to supplement the incomes of those earning very low wages. Under the EITC, low-wage earners submit a tax return like everyone else, but instead of being assessed a tax, they receive from the IRS a check to raise their income. This program compensates somewhat for the fact that not all wages offered in the marketplace, even if one works long hours, are sufficient to support a decent standard of living. In this case, government does not replace the market but supplements it activity. (Libertarian Illusion, location 1284)

Redistribution and Failure of Market Signals – one of Laura Tellers friends, some asshole economist, asked simply “Why do you suppose anyone would go hungry in a free market?” Or some other stupid but equivalent question. While ee know the answer, often is hard to come up with the exact answer when not in that mindspace. Well here is about as good of a answer as they come, and its true. Simpky put, some poeples wages won’t afford them the cost of living.