Inducing Market-Failure

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I must agree with Don Boudreaux. From my perspective the most critical economic function of a government is not its ability to correct externalities and market-failures, but its ability to induce them. The institutions that governments maintain can either sustain and enrich or feed off and combat economic activity.

As a result of geographical monopoly and historical accident, a range of governmental forms--and resulting economies--can be found. After a cursory analysis, it becomes absurdly clear that the power to induce and sustain market failure is most often found in the poorest countries.

I could be pursuaded otherwise, but I hold fast because of two charts that Don asked me to quickly assemble a few months ago--plotting Economic Freedom and Freedom to Trade vs. GNI per capita:


ef_in.gif


ef_in.gif

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Carnival of the Capitalists from d-42.com: Josh Cohen online on May 16, 2004 6:51 PM

The Carnival of the Capitalists for the week of 5/17/04-5/23/04 Greetings and salutations to you. I'm Josh Cohen, author, traffic reporter, radio producer, and blogger. I'll be hosting this week's Carnival of the Capitalists, which you're reading right... Read More

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Don was kind enough to link to T&B.

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This page contains a single entry by Kevin published on May 10, 2004 12:48 PM.

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