Moisés

“In any case, Locke argued that we all have a natural set of property rights and can happily go about our business trading with each other and creating all sorts of prosperity. Only much later do we get together and form governments in order to eliminate certain “inconveniences” associated with the state of nature. This sets up the basic contrasts: economy = natural; government = artificial. The impact of this type of thinking can be truly disastrous. No one knows this better than economic planners in Eastern Europe, who were unlucky enough to ask a bunch of American economists for advice on how to make the transition from communism to capitalism. Naturally, the Americans had no experience in these matters, but they did have an overarching ideology that stipulated that markets are nothing more than the expression of our natural “propensity to truck and barter.” So their advice to the East Europeans was quite simple— don’t do anything. Just destroy all your existing public institutions and markets will magically pop up and take their place. Nothing could be easier. Any country foolish enough to take this advice quickly found that when it scaled back the government’s role, what it wound up with was rampant criminality, not orderly markets.”
― Joseph Heath, The Efficient Society: Why Canada Is As Close To Utopia As It Gets

“The truth is that our market economy is a finely tuned legal and moral system that has evolved over hundreds of years. It is not a natural condition, but an extremely sophisticated institutional construction, one that requires constant monitoring and enforcement. The system of property rights alone requires a massive legal-bureaucratic apparatus just to keep track of who owns what and who owes what to whom. Consumer protection laws, which establish the basic rules designed to ensure that competition remains “healthy,” are also an enormous legal apparatus. (It was estimated, for instance, that after the “velvet revolution,” the Czech Republic needed to pass eighty thousand pages of law in order to get its product standards up to minimum European Union levels.) Furthermore, the number of regulations must increase every time someone finds a more ingenious way of circumventing the old ones (in the same way that the number of rules governing sport increases every time someone finds a new way of cheating).”
― Joseph Heath, The Efficient Society: Why Canada Is As Close To Utopia As It Gets

“Each consumer who holds off on a purchase in order to wait for a sale generates a slight benefit for all other consumers in the form of increased pressure on suppliers to lower the price. Similarly, each supplier who delays putting things on sale produces a benefit for other suppliers in the form of increased pressure on consumers to buy at that price. In both cases, this generates a free-rider incentive—consumers may break ranks and buy at full price, or suppliers may break ranks and have a sale. The consequence of these two collective action problems will be downward pressure on the price of plentiful goods and upward pressure on the price of scarce goods. The only equilibrium will be the point at which the amount of each good exchanged is just right. Inventories will clear, and the resulting allocation will be maximally efficient.”
― Joseph Heath, The Efficient Society: Why Canada Is As Close To Utopia As It Gets

“What are some other goods with significant positive externalities? One extremely important example is education. Being able to read obviously generates significant benefits for the person doing the reading. But it also generates huge benefits for others. Being literate means that people don’t have to tell you in person what to do, they can just put up a sign. The fact that we live in a society with a high general education level generates huge benefits for us all. However, because we are unable to charge people for all the benefits that our education confers upon them, individuals do not always have an incentive to choose an education level that is socially optimal. Even with massively subsidized education, plenty of people still drop out of high school. This may be individually rational, but it imposes significant costs upon society— decreased productivity being the most obvious.”
― Joseph Heath, The Efficient Society: Why Canada Is As Close To Utopia As It Gets