If everybody was politically literate then democracy would probably work. What we have is a “market failure”.
Is this simply loooking at a consequence that humans don’t like, and calling it “market falure”? Does the market come into this?
If everybody was politically literate then democracy would probably work.
People would abstain from it or completely ignore it or use it to dismantle itself.
What we have is a “market failure”.
Huh? I don’t see how the market’s involved here. I see government failure: for children, socialist indoctrination camps; for adults, media manipulation and welfare bribes.
This assertion is nonsene.
What state of affairs do you define as “working”?
If everybody was politically literate and motivated enough to participate in the democratic process, we might end up with an even bigger kleptocracy. I don’t know if that’s necessarily desirable?
If everybody were politically literate, there would be anarchy.
I don’t think so. You would still struggle with the calculation problem.
Its a public goods problem, yes. This is why it is important to shove BOPs onto your opponents, because otherwise they just sit around nitpicking the market for not being perfect.
Democracy shouldn’t work.
Dumb question, but what does BOP mean?
Burden of Proof or Blow Out Preventer
Democracy is a fiction.
It’s actually NOT me who said that.
I am more interested in the “market failure” bit. Some people define the market in terms of it’s results. So, if all individuals are rationally ignorant does that mean there is a market failure? Can one apply the market to the concept of voting?
If “the market” is merely an extension of human interaction, then “market failure” is “human failure”. “Market failure” would therefore be a coherant concept and a possibility, but not as something separate from interpersonal problems as such.
Hmmm, interesting. So what exactly is “the market”. How do Austrians define it?
I have ordered myself a X-mas present, so I’ll find out soon enough. Can’t wait. 
Don’t ask me, as in even granting that “market failure” can be meaningful I have deviated from Austrian norms.
If you go to YouTube and search for “David Friedman Market Failure” you should get the video from his speech to some of the members of the Free State Project regarding “market failure”, and how it relates to voting and the political process.
In my very limited understanding, “market failure” is best described as an instance where a group of people want to acheive Goal A for themselves, and can best achieve that goal if most of them choose Action A. However each of them, acting with thier own limited information and with uncertainty, all logically choose Action B, as it appears to maximize thier individual chances of achieving Goal A. However if the majority choses Action B over A, then Goal A is not achieved for most people in the group.
“Market” failure is really a bad term, as pretty much everything is in a “market”, even votes, political power, and government resources. People LOVE to use “market failure” as a justification for goverment action. That is, the solution ot “the market failing” is idealized goverment action. But they fail to see that the goverment still exists in the same grand market, and that the dichotomy between “goverment” and “market” is a fiction.
A much better term would be “System Failure” or something similar. The phenomena as I described above (with the group failing to achive Goal A), is certainly real, so “market failure” as it is used outside of Austrian definitions exists, it’s just a terribly named term.
Old hat. We’ve long since established that the term is a rhetorical instrument for instructing statist bias.
This ^^^. I enjoy David Friedman’s work, but his ideas about market failure are misguided.
- I enjoy David Friedman’s work, but his ideas about market failure are misguided.
Care to expand on that? Is it just because addressing the concept of market failure gives into the rhetoric in the first place, or is there something else?
Markets fail if markets act. A being acts because it has a goal. The methodological indvidualist approach claims that only individuals (not entire markets or groups of people) act.
Just about any scenario can be deemed market failure. Market failure is based in mathematical fictions where there is a “objective” function to maximize.
The market isn’t about reaching objectives. It’s about allowing individuals to peacefully interact with their respetive properties to achieve their individual goals. In a “market failure” scenario, individual goals are usually brushed aside. If they aren’t brushed aside, values are then pre-supposed for each individual. Then the objectives/goals/profit/satisfaction of each individual is compared. But value can’t be compared intersubjectively in a meaningful manner, since value is subjective. (It’s argued that it can work if you impose values/objectives/goals/satisfaction of people. My problem with that is that the problem of “market failure” has little to do with economics at that point.)