Maggie's Farm

The term "Market failure" has become a fashionable phrase for things that somebody claims "require government intervention" in the economy.

In my opinion, there is no such thing as market failure, given time, fair competition, and honest free markets. Markets always eventually reflect people's economic interests, and their personal desires.

"Market failure" is used, it appears to me, whenever a political agenda, for better or worse, desires to overpower market forces to achieve some postulated "public good." Thus using the loaded term "market failure," as I have seen it used lately, is often a misnomer because it's not the "job" of markets to directly supply "public goods."  Indeed, the term MF can be abused to apply to anything these days: legal help, medical care, the price of gas, environmental protection, eminent domain, Microsoft, wages - you name it. These days, the Left sees market failure everywhere they look for it because they do not like free markets (which means, to me, that they do not approve of the free choices people make).

When politics intervene in markets, with all of the fearsome power of the State behind them, they enter perilous waters, but it is often politically necessary in democracies, and sometimes practically necessary. My political hero Teddy Roosevelt was a great market-intervener with his trust-busting, and I would not care to live in a village without zoning, a country without an army, or to invest my money without the SEC cops to keep markets reasonably honest.

But once the door has been opened to market intervention, there is potentially no end to it. It can be a slippery slope to obnoxious authoritarian (see Mayor Bloomberg telling people what kinds of fat they can eat) and/or socialist solutions. That is the creepy part for a nation which was founded on an ideal of individual freedom (and the property rights which enforce individual freedom against the power of the State), but it has been one of the prime drivers of politics (and political funding) since FDR - who, to my mind - was a noblesse-oblige socialist: "Socialism for thee but not for me."  Sort-of like the Clintons, but they lack the noblesse piece.

Howard Dean sees a "market failure" in the small number of listeners to left-wing talk radio. That's a good example of how a well-functioning market can end up being politically labelled as a "failure:" people don't want what he wants to sell them. See Howard Dean: "We need to re-regulate the media."

Photo: The Grand Bazaar in amazing Istanbul. A wonderful maze of a free market. I advise everyone to save their pennies and visit Turkey - and not just Istanbul. It is a fine and fascinating place to which I am eager to return. And I need a new rug, about 20X30'.