How liberal market economies actually work, versus how most people falsely frame things
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The words they say- “Without government, how would everyone get fed?”
What they’re effectively imagining and narrowly framing due to how grossly government has stunted markets- “How would markets get people through borscht lines at the factory any faster?!”
The correct answer and reframing- “Maybe markets couldn’t do that any better. But maybe markets wouldn’t structure in such a way as to have factory cafeterias be the only place for all the workers to get lunch. Maybe markets would make people wealthy enough to own their kitchens where they could prep their own meals. Maybe markets would incentivize the creation of dozens, hundreds of competing establishments just outside of your workplace where you could go and get virtually any kind of food you want.”
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The words they say- “without government, how would we deal with large, diffuse negative externalities like C02 emissions and resulting climate change?”
What they’re effectively imagining and narrowly framing due to how grossly government has stunted markets generally- “The transaction costs are too high for tort or any decentralized legal mechanism to allow cosean bargaining or allow people to quantify their individual standing, let alone pinpoint the exact source of the harm done to them. Therefore markets are incomplete and government must step in.”
The correct answer and reframing- “Maybe that’s true. But also maybe less nuclear regulation and freer markets generally would have made nuclear power so ubiquitous and cheap, and made subsequent red hydrogen so abundant for the remaining energy needs which require chemical energy, that the vast majority of the c02 we’ve put in to the atmosphere over the past 50 years wouldn’t even have happened. Maybe in a freer world, government wouldn’t have subsidized so much sprawl and car culture or done so much ecologically harmful military testing and burning of fuels”.
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The words they say- “Without government, how could you ensure good access to healthcare?”
What they’re effectively imagining and narrowly framing due to how grossly government has stunted markets generally- “empirical evidence shows insurance markets clearly fall in to adverse selection spirals, people can’t price discriminate when they’re having a heart attack, and they aren’t informed enough compared to doctors and providers to make their own rational healthcare decisions.”
The correct answer and reframing- “that’s true now, and maybe would be in a market-based healthcare scenario too. But maybe it’s also true that if we had allowed markets and prices and property rights to operate at all in the healthcare space, then all the many government constraints on supply would not have made even basic care so expensive that we have to use insurance to pay for these things. Thus insurance risk pools would remain stable due to coverage being limited to more actuarially-unknowable events. Maybe providers wouldn’t be prohibited from offering health-status insurance and/or prenatal policies (as they have been) which would limit the numbers of people possibly left without coverage for pre-existing conditions. Maybe insurers or medical clubs that people could join would pre-negotiate rates for emergency medicine and critical care. Maybe doctors and specialists would form in to (currently prohibited) group practices purchased as club goods or through brokerages or fraternities or friendly societies, which have to contract with patients on a more results based and holistic medicine arrangement. Maybe we wouldn’t have an FDA and patent laws which create so many drug shortages and untold deaths from beneficial drugs not authorized or not allowed to be sold across borders. Maybe in a freer world we wouldn’t have tried price controls leading to employer-based health insurance. Maybe prices wouldn’t have to get obfuscated in a system which didn’t enforce de facto universal healthcare by way of forced care, certificate of need laws, and cross-subsidization of medicare/caid recipients.
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Freed markets simply wouldn’t work only within the narrow confines under which they are legitimately failure-prone. Don’t let yourself fall in to the false and arbitrarily narrow framing that (even many economists) ignorantly apply to market dynamics; based on status quo observations. We do not have anything close to free markets, even in most markets in the U.S. Freed markets can and maybe would solve (in band or out of band) or route around nearly all market failure theorized or observed.
They would operate and structure radically differently than they do now; and it is no more possible, nor our responsibility as free market advocates to accurately plan or predict exactly how they would structure or overcome all failures, than it was the job of a complaining soviet peasant to explain to their comrade how modern western grocery stores and food logistics networks would do away with borscht lines.
And furthermore, that as imperfect as even free markets would still be; these theorized failures pale in comparison to actual, observed government failures, political externalities, unintended consequences, corruption/capture/rents, waste, stifling of productivity, police/agent abuses, privacy invasions, war-making, democide and the looming near-existential threats that nuclear states pose.
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Additional reading and references-
https://www.johnhcochrane.com/s/Cochrane-time-consistent-health-insurance-JPE.pdf
https://www.econtalk.org/christy-ford-chapin-on-the-evolution-of-the-american-health-care-system/
http://www.freenation.org/a/f12l3.html
https://www.americanactionforum.org/research/putting-nuclear-regulatory-costs-context/
https://www.everand.com/listen/podcast/591438031
http://bastiat.org/en/twisatwins.html
https://www.mercatus.org/research/policy-briefs/regulatory-accumulation-and-its-costs
https://mason.gmu.edu/~atabarro/PrivateProvision.pdf
https://www.researchgate.net/publication/307527310_Asymmetric_Information_and_Intermediation_Chains
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