Wednesday, October 26, 2011

LQ&C 10/26/11

- Wendy Alexander ran a private school that eventually went bankrupt and closed 4 weeks into the current school year. Given her proclivity for running an educational establishment that is fiscally irresponsible and delivers poor results, she has decided to take her act to the professionals:
This time, Wendy Alexander wants to use $1.6 million a year in taxpayer money to operate a public charter school called the Academy for Accelerated Learning, serving students in kindergarten through fifth grade.
- EconLog's David Henderson asks why illegal drug suppliers are always called "cartels":
But are they? The defining characteristics of cartels are that they get together to fix the price and agree to limit production. Do these firms do that? I know that the government limits production by going after producers. But do the firms do it?
- A piece from last month by Gary Becker compares market and government failures, and points out that in cases of actual market failure, government can often make the situation worse. While I don't agree with some of Becker's conclusions, I did love his rebuttal to the liberal talking point that without government, ignorant consumers would make the wrong choices:
However, before advocating various forms of government protection of consumers, we should recognize that voters are far more ignorant of political candidates then consumers are of what they buy. The reason is that consumers directly suffer if they make bad choices out of ignorance, while individual voters have negligible influence over political outcomes. Hence voters have little incentive to be informed about different candidates and their positions, and the consequences of the mistakes they make are largely borne by others.
I brought up a similar point in a recent facebook debate with a friend, writing:
We're left with a tradeoff - freedom, with the legitimate chance that people will make poor decisions (and learn from them), or society ran by a cabal of our betters, picked by the very imperfect subjects they wish to rescue, vested with the confidence that they magically know the optimal trade-offs and decisions for millions of strangers, all with scant historical evidence that such demigods have ever existed.
- Warren Meyer appeared on Fox and Friends to explain the folly of our government subsidizing an expensive luxury car (the Fisker Karma) that gets the equivalent of 19 mpg.

- Cafe Hayek featured a letter to the editor from Steve Horwitz regarding the actions of private actors amidst government intervention, featuring one of the most effective metaphors in economics I've ever seen:
If all the traffic lights in Watertown were stuck on green, we’d hardly blame the drivers for the ensuing accidents. When government distorts the signals and incentives facing producers and consumers, the blame for the resulting disaster should fall on government not the private sector. The crisis and recession are what happens when you put “people before profits.”

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