I thought this was an interesting talk about a history of how different economists thought about government and market failures, incentives, information, and pricing. It's interesting because it...
I thought this was an interesting talk about a history of how different economists thought about government and market failures, incentives, information, and pricing.
It's interesting because it steps outside of the usual economic conversation and is focused on the theoretical issues behind market and government failures.
A few interesting quotes:
But, the idea that the private sector has lousy incentives is certainly true. And our insight--not our insight--our position that government bureaucrats have bad incentives because they do not have skin in the game is also true.
Backhouse and Medema wrote a paper about the Cambridge economist's view of groping and tatonnement in the 1920s and 1930s... And they said, 'That'll work. What we need is not a government committee that will make the final choice. What we need is a government committee of experts that will manage the inevitable problem of choosing, making mistakes, and then updating. Because these experts can do it better than the sort of blind groping of the market,' which doesn't have any telos. Markets are evolution... there's nothing that normatively it is trying to accomplish. Survival is the only thing markets do.
Michael Munger: But, let's be fair. What they're saying is: Mistakes are going to happen under either system, markets or government... The question is, which system can learn better and faster? And, markets, you have to wait for someone else to try something.
Now you said it's been flipped on its head. Franklin Roosevelt, in 1932, before he took office, made a speech that was based explicitly on this viewpoint, where he said, 'We are going to make lots of mistakes. We're going to have systematic experimentation, and we're going to make lots of mistakes.' It is based explicitly on this view that that's how we're going to learn.
There are a lot of interesting ideas discussed in this talk.
GPT-4o summary here
In this EconTalk episode, Russ Roberts interviews economist Michael Munger of Duke University, focusing on government failure. They discuss Munger's paper co-authored with William Keech, which critiques the concept of market failure and introduces the idea of government failure. The conversation explores historical economic theories and key figures such as Adam Smith, Ludwig von Mises, and A.C. Pigou, touching on their contributions to the understanding of market and government dynamics.
Munger shares anecdotes about Keech, emphasizing his intellectual contributions and sense of humor. They discuss the limitations of both markets and governments in addressing economic issues, highlighting the complexities of information and incentives. Munger explains the Public Choice perspective, which argues that government officials often lack the information and incentives needed to outperform markets.
The episode delves into the history of economic thought, including the Cambridge Welfare School's recognition of information problems and their advocacy for government-led experimentation. The discussion critiques both the simplistic view of market failure and the notion that government intervention can easily correct such failures.
Roberts and Munger also touch on the practical challenges of implementing effective government policies, using examples like infrastructure and healthcare. They highlight the importance of recognizing the limitations and potential of both markets and government actions, advocating for a nuanced, case-by-case approach to economic policy.
Overall, the episode provides a deep dive into the theoretical and practical aspects of market and government failures, encouraging a more sophisticated understanding of economic systems and the role of public policy.
I thought this was an interesting talk about a history of how different economists thought about government and market failures, incentives, information, and pricing.
It's interesting because it steps outside of the usual economic conversation and is focused on the theoretical issues behind market and government failures.
A few interesting quotes:
There are a lot of interesting ideas discussed in this talk.
GPT-4o summary here
In this EconTalk episode, Russ Roberts interviews economist Michael Munger of Duke University, focusing on government failure. They discuss Munger's paper co-authored with William Keech, which critiques the concept of market failure and introduces the idea of government failure. The conversation explores historical economic theories and key figures such as Adam Smith, Ludwig von Mises, and A.C. Pigou, touching on their contributions to the understanding of market and government dynamics.
Munger shares anecdotes about Keech, emphasizing his intellectual contributions and sense of humor. They discuss the limitations of both markets and governments in addressing economic issues, highlighting the complexities of information and incentives. Munger explains the Public Choice perspective, which argues that government officials often lack the information and incentives needed to outperform markets.
The episode delves into the history of economic thought, including the Cambridge Welfare School's recognition of information problems and their advocacy for government-led experimentation. The discussion critiques both the simplistic view of market failure and the notion that government intervention can easily correct such failures.
Roberts and Munger also touch on the practical challenges of implementing effective government policies, using examples like infrastructure and healthcare. They highlight the importance of recognizing the limitations and potential of both markets and government actions, advocating for a nuanced, case-by-case approach to economic policy.
Overall, the episode provides a deep dive into the theoretical and practical aspects of market and government failures, encouraging a more sophisticated understanding of economic systems and the role of public policy.