Market Corrections Not Government Interventions

A Path to Improve the US Economy

2025
Buch

Verfasst von: Clifford Winston
Verlag: Springer Nature Switzerland
Enthalten in: Springer Professional "Wirtschaft+Technik"; Springer Professional "Wirtschaft"

Über dieses Buch

Die Entscheidung, ob man eine Marktlösung oder eine staatliche Intervention empfiehlt, um ein wirtschaftliches oder soziales Problem anzugehen, ist das ewige Thema der politischen Analyse. Im Laufe der Jahrzehnte wechselten Wissenschaftler, politische Entscheidungsträger und die Öffentlichkeit zwischen marktfreundlichen und marktskeptischen Ansichten. Aber spiegeln diese wechselnden Ansichten genau unser Wissen über die Markt- und Regierungsleistung wider? In diesem Buch untersucht Clifford Winston sowohl das Ausmaß als auch das Fortbestehen staatlichen Versagens in der US-Wirtschaft und das Potenzial für Marktkorrekturen, um dieses Versagen zu beheben. Er liefert aktuelle empirische Belege, die die Effektivität staatlicher Interventionen stark in Frage stellen, und er untersucht, ob Märkte sich selbst korrigieren können, um wirtschaftliche und soziale Probleme effizienter zu lösen. Das Buch bietet einen umfassenden Überblick über das Versagen der Regierung und enthält wichtige Definitionen und Klassifizierungen. Winston fasst die verfügbaren empirischen Beweise zusammen und analysiert die Ergebnisse, die trotz der positiven theoretischen Erwartungen an staatliche Interventionen anhaltende Verluste an wirtschaftlichem Wohlstand aufzeigen. Theoretische Erklärungen für das Versagen der Regierung werden dann ausgewertet und festgestellt, dass es ihnen an der Fähigkeit mangelt, effiziente politische Reformen zu leiten. Und schließlich ist die Robustheit der Märkte, ihre Ineffizienzen oder Fehlschläge zu überwinden, durch Marktkorrekturen gekennzeichnet. Empirische Belege werden vorgelegt, um zu zeigen, dass die Märkte ihre Versäumnisse im Gegensatz zum Versagen der Regierung oft korrigiert haben. Für Wissenschaftler und politische Entscheidungsträger hat das Buch zweifache Auswirkungen. Erstens: Wenn sie die Wirksamkeit einer Marktlösung oder einer staatlichen Intervention zur Lösung eines wirtschaftlichen oder sozialen Problems in Betracht ziehen, sollten sie sich des Potenzials für ein Versagen der Regierung und dessen Fortbestehen viel stärker bewusst sein. Zweitens sollten sie auch eine langfristige Sicht der Märkte einnehmen und ihre Fähigkeit zur Selbstkorrektur berücksichtigen. Daher fordert das Buch eine stabilere Perspektive gegenüber Märkten und Regierungen - eine Perspektive, in der Marktkorrekturen und nicht staatliche Interventionen einen Weg zur Verbesserung der US-Wirtschaft bieten sollen.

Mit KI übersetzt

Über dieses Buch

The choice of whether to recommend a market solution or a government intervention to address an economic or social problem is the eternal issue of public policy analysis. Throughout the decades, academics, policymakers, and the public have alternated between market-friendly and market-skeptical perspectives. But do these shifting views accurately reflect our knowledge about market and government performance?

In this book, Clifford Winston examines the extensiveness as well as the persistence of government failures in the US economy and the potential for market corrections to address those failures. He provides contemporary empirical evidence that strongly questions the effectiveness of government interventions, and he explores whether markets can self-correct to solve economic and social problems more efficiently.

Offering a comprehensive overview of government failures, the book includes key definitions and classifications. Winston synthesizes the available empirical evidence and analyzes the findings, which reveal persistent losses in economic welfare, despite the positive theoretical expectations of government interventions. Theoretical explanations of government failures are then evaluated and found to lack the ability to guide efficient policy reforms. Finally, the robustness of markets to overcome their inefficiencies or failures is characterized in terms of market corrections. Empirical evidence is presented to show that, in contrast to government failures, markets have often corrected their failures.

The implications of the book for academics and policymakers are twofold. First, when they are considering the efficacy of a market solution or a government intervention to address an economic or social problem, they should be much more cognizant of the potential for government failure and for this failure to persist. Second, they should also take a long-run view of markets and account for their ability to self-correct. Thus, the book calls for a more stable perspective toward markets and government—one where market corrections, not government interventions, are envisioned as offering a path for improving the US economy.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Abstract

Economists have long argued that government should complement markets by implementing a policy intervention if markets fail. For example, if a firm monopolizes a market by using anticompetitive strategies and sets supracompetitive prices, they hold that the antitrust authorities should bring a monopolization case against the firm and seek a remedy that eliminates the cost to consumers from elevated prices.

Clifford Winston

Government Failure

Frontmatter

2. Defining and Measuring Government Failure

Abstract

Government failure is the leading cause of resource misallocation in the United States and in every other country in the world because it encompasses the vast array of economic, social, and even foreign policy interventions that adversely affect an economy.

Clifford Winston

3. Government Policies, Institutions, and Benchmarks for Assessing Government Performance

Abstract

My analysis focuses on the two types of government microeconomic policies that give rise to government failures.

Clifford Winston

Chapter 4. Empirical Evidence of Government Failures

Abstract

In this chapter, I draw on books, academic journal articles, and working papers to present scholarly evidence of government policy failures and to categorize their welfare effects. I supplement that evidence with descriptive evidence in newspaper and magazine articles.

Clifford Winston

5. The Failure to Explain Government Failure

Abstract

This chapter assesses the evidence of various theories’ ability to explain government failure in the book, Market Corrections not Government Interventions: A Path to Improve the US Economy. The theoretical literature has identified the major sources of government failures as comprising voters’ inadequate knowledge about policy issues, the influence of organized interests on policymakers, the self-interested behavior of policymakers and self-selection of individuals who choose to work in government, and the weaknesses of government institutions. However, the evidence obtained from tests of the existing theories suggests they have very little explanatory power and are unlikely to help guide improvements in government policy. Capture theory—the idea that government policymakers are captured by the entities that they are supposed to regulate—has been used to explain specific policy failures and empirically tested more often than any other theory of government failure. I conclude that capture is not more persuasive than alternative idiosyncratic explanations of a policy failure. Clearly, more work is needed to explain government failure but the complexity and opaqueness of policymaking makes it extremely difficult to explain the many relevant factors that may have contributed to a policy failure.

Clifford Winston

Market Corrections

Frontmatter

6. Defining and Illustrating Market Corrections

Abstract

This chapter defines and illustrates how market corrections occur in the book, Market Corrections not Government Interventions: A Path to Improve the US Economy. A useful definition of a market correction is an improvement in market performance that enables markets to address an alleged failure that motivated or could have motivated a government policy intervention. A market correction may be facilitated by an increase in competition or a technological advance or both. Market corrections may offset the cost of government failure by providing an opportunity for policymakers to withdraw their costly intervention in a market or by improving market performance even though government continues to intervene in a market. Some market corrections, however, may be possible only if the government withdraws its intervention.

I use a series of stylized graphs to illustrate how the forces of competition and technological advance could address market failures that motivated government to implement policy interventions to address those failures. Market corrections are shown for a monopolist’s abuse of market power, natural monopoly, imperfect information, a negative externality, and public production.

Clifford Winston

7. Empirical Evidence of Market Corrections to Address Economic and Social Goals

Abstract

This chapter reviews the empirical evidence of market corrections that have helped to address economic and social goals that government policies have failed to address efficiently in the book, Market Corrections not Government Interventions: A Path to Improve the US Economy. I draw on scholarly evidence in articles and books and supplement that evidence with descriptive evidence in media publications. Evidence is presented for market corrections that occur independently of government policies, market corrections that government has facilitated by significantly withdrawing a policy intervention that prevented a market solution, and preliminary market corrections in the sense that they have modestly but not significantly increased social welfare but they have the potential to substantially increase social welfare in the future if a major technological advance occurs that allows the initial correction to evolve fully.

Market corrections that have occurred independently of government policies and improved social welfare include generating additional sources of competition to reduce alleged market power, advances in information technology, developing new innovations, increasing job opportunities and transportation access to labor markets, and technological innovations and new sources of competition that have improved alternatives for the public to obtain merit goods. Market corrections facilitated by government policy reforms include deregulation, which has greatly benefited consumers by increasing firms’ productivity and efficiency and technological advance, and the emergence of private companies, such as ridesharing, which are able to compete with public services. Market corrections that have the potential to produce large benefits include technological innovations to reduce the social costs of negative externalities and new actions to reduce discrimination toward all types of people.

Clifford Winston

chapter8. An Assessment of and Ongoing Challenges for Market Corrections

Abstract

This chapter shows the importance of market corrections by comparing their contribution to addressing economic and social goals with the government policies that have failed to address those same goals and considers the potential for market corrections to address ongoing economic and social challenges in the book Market Corrections not Government Interventions: A Path to Improve the US Economy. Government regulatory and technology polices have significantly reduced welfare, while market corrections have significantly increased welfare by enabling deregulated industries to operate more efficiently and by incentivizing all industries to develop important technological innovations without government incentives. Antitrust and information policies often appear to be solutions in search of a problem because they have generated enforcement and compliance costs while producing negligible welfare gains. Independently, market corrections have stimulated competition to reduce the welfare costs of anticompetitive behavior and have developed information technologies that have benefitted consumers and workers. Government policies to correct externalities, reduce poverty, and provide merit goods have increased welfare at excessive costs to the public, while market corrections have achieved some success in addressing those goals at lower costs. Present economic challenges to markets include the dominance of high-tech firms, the costs of transformative technologies, and the existential threat of climate change. Social challenges to markets include preparing for a future pandemic, preventing the social safety net from deteriorating, and improving social mobility. I discuss how market corrections could potentially help to address those problems.

Clifford Winston

Implications for Economists and Policymakers

Frontmatter

9. Implications for Economists

Abstract

This chapter discusses the implications of my analysis of government failure and market corrections for economists in my book Market Corrections not Government Interventions: A Path to Improve the US Economy. The main implications are that economists should broaden their perspectives to consider the potential for and cost of government failure to address a microeconomic policy issue efficiently. In addition, economists should be more receptive to the possibility that in the long run, a market correction may be a better solution to a microeconomic problem than a government intervention. Accordingly, economists should attach greater importance to government failure as well as to the potential for market corrections in the process of distinguishing between market failure and government failure, comparing market and government long-run performance, and identifying a market failure but ignoring government’s failure to address it efficiently. In future research, it would be desirable for economists to continue to provide new empirical evidence of market and government performance and attempt to provide theoretical explanations for government failure that are supported by empirical evidence. Finally, it would be desirable for economists to include extensive discussions of government and market performance in the content of their courses.

Clifford Winston

10. Implications for Public and Private Sector Policymakers

Abstract

This chapter discusses the implications of my analysis of government failure and market corrections for public and private sector policymakers in my book Market Corrections not Government Interventions: A Path to Improve the US Economy. Economists frequently distill the implications of their empirical research into policy recommendations. Generally, economists prioritize offering policy recommendations to government policymakers because they believe that their research will be most useful if it is included as part of the public debate and if it helps to improve social welfare. Economists rarely offer policy recommendations to CEOs or other private sector decision-makers unless their work is intended to identify ways that firms could become more profitable by increasing their efficiency and competitive strategies. I reverse economists’ priorities here because I think it is in the interest of private sector decision-makers to consider seriously the policy implications of this book even though I do not explicitly identify and recommend efficiency improvements or competitive strategies for firms to increase their profitability. Of course, it would be desirable for government policymakers to find it in their and the nation’s interest to consider seriously the implications of my discussion. But after devoting much of the discussion to the persistence of government policy failures, it would be unrealistic for me to recommend policy reforms to reduce those failures and to expect that government policymakers would consider those reforms seriously. The private sector should recognize and appreciate that market corrections have assumed great importance for the performance of the US economy because they have helped to address significant economic and social problems that government policies have failed to address. Given markets’ compelling track record, it is in the private sector’s interest to accelerate and broaden its efforts to help address economic and social goals. Of course, those efforts should and will be motivated by the pursuit of profits. But whether they lead to greater competition or technological advance or both, those efforts have produced and will continue to produce large social benefits while benefiting enterprising market participants.

Clifford Winston

Titel: Market Corrections Not Government Interventions
Verfasst von: Clifford Winston
Verlag: Springer Nature Switzerland
Electronic ISBN: 978-3-031-92815-4
Print ISBN: 978-3-031-92814-7
DOI: https://doi.org/10.1007/978-3-031-92815-4

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Market Corrections Not Government Interventions

A Path to Improve the US Economy

Über dieses Buch

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Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Government Failure

Frontmatter

2. Defining and Measuring Government Failure

3. Government Policies, Institutions, and Benchmarks for Assessing Government Performance

Chapter 4. Empirical Evidence of Government Failures

5. The Failure to Explain Government Failure

Market Corrections

Frontmatter

6. Defining and Illustrating Market Corrections

7. Empirical Evidence of Market Corrections to Address Economic and Social Goals

chapter8. An Assessment of and Ongoing Challenges for Market Corrections

Implications for Economists and Policymakers

Frontmatter

9. Implications for Economists

10. Implications for Public and Private Sector Policymakers

Backmatter

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