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MARKET_FAILURE

                                             November 16, 2011
                                             October  25, 2013

There are cases where
the incentives of                 The prisoners in the famous dilemma
individuals are                   would all be better off if they
perverse, and lead to             were unionized-- they need an
results contrary to               external agency to increase the
the interests of the              penalty for defection.
individuals.

     How is it so hard
     for some people to
     grasp that point?         The moral objection to
                               catering to human        Those stupid prisoners
                               weakness, and thereby,   deserve to rot in
                               perhaps inadvertantly    defection hell if that's
                               encouraging it.          what they prefer.

                                             But-- once you get past
       The case for an idealized             the the delusion that
       government is easily made.            rational actors are
                                             reality-- that's a
       But then the case for a               psychological issue that
       faillible one--                       can be examined: you can
       that nevertheless works               mitigate penalties for
       tolerably well on average--           failure without
       would not seem to be that             eliminating them.
       difficult either.

       The free market enthusiasts
       like to believe that they're
       more *realistic*, so where
       does this "perfection or
       nothing" attitude come from?

           The necessarily fallible
           nature of any governing
           agency, is not by itself
           an argument against them










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