Posted on 10/18/2007 6:47:35 PM PDT by chemical_boy
PRINCETON, New Jersey (Reuters) - Societies should not rely on market forces to protect the environment or provide quality health care for all citizens, a winner of the 2007 Nobel Prize for economics said on Monday.
Professor Eric Maskin, one of three American economists to receive the award, said that he "to some extent" takes issue with free-market orthodoxy championed by U.S President George W. Bush and some other western leaders.
"The market doesn't work very well when it comes to public goods," said Maskin, a slight, soft-spoken 57-year-old who lives in a house once occupied by Albert Einstein.
Maskin, together with Leonid Hurwicz of the University of Minnesota, and Roger Myerson of the University of Chicago, received the prize for their pioneering work on mechanism design theory which examines whether trading mechanisms are the best ways of allocating resources.
In its statement with the award, the Royal Swedish Academy of Sciences said the market's efficiency may be undermined because consumers are not perfectly informed, competition is not completely free, and "privately desirable production and consumption may generate social costs and benefits."
"Markets work well with goods that economists call private goods" like cars or other consumer durables, Maskin said in his office at the Institute for Advanced Study in Princeton, New Jersey.
"If I buy a car, I use the car, you don't and the market for cars works pretty well. But there are many other sorts of goods, often very important goods, which are not provided well through the market. Often, these go under the heading of public goods," he said.
"How do we ensure in the case of public goods that they are provided at all, and that they are provided at the right level, taking into account citizens' preferences?" he said.
A clean environment, for example, is not a private good in that "my enjoyment of it doesn't preclude yours," he said.
"So the theory of mechanism design asks what sort of procedures or mechanisms or institutions could be put in place which allow us to choose the right level," he said.
Those mechanisms could include taxes to allow the more efficient provision of public goods, he said.
Maybe it doesnt work perfect but its at least twice as effective as the collective solution.
Environmental quality is a "public good" in almost every respect. Health care is only a "public good" in very limited circumstances.
You don’t think that if a company is singled out as a serious polluter that matters? I say it sure does, the company’s reputation matters a whole lot to the company and it’s shareholders. Public pressure would be immediate and unrelenting if the company did not fix the problem.
This whole notion of public goods is nonsense, socialism nonsense, from a professor who lives in Minnesota.
Why does the Goracle sound like this guy, uhhh because the same loons that gave Gore the peace prize gave him his prize, could be.
An example of the above in action, and in total dissonance with his comments is that of charitable donations to environmental organizations. Organizations like the Sierra Club and the Nature Conservancy exist because in our capitalist society people gave them money, as charitable donations. Irrespective of what any of us may or may not think of those organizations, they are benefiting from the charitable donations of those who made their money in our free market system. One quick question for our new Nobelist. What countries have the best air quality, water quality, public safety record for consumables, and track record with nuclear energy; socialist nations such as the USSR, China, Communist East Germany, and Korea, or capitalist nations like the US? Nuff said about his observations.
Sure the market is flawed, but it works better than any other system.
Why do you act as if industrial activity is the only source of pollution? Ask yourself how “free market” forces could ever deal with something like auto emissions.
People know this. That's why Hillary and the rest prattle endlessly about how they will provide "quality" health care. As if just saying the word were a magic incantation which would make quality a reality. It isn't, and it won't.
Obviously, then, government must make those decisions for us.
The Nobelist is a socialist masquerading as an economist.
That which is commonly owned seldom benefits from market forces.
Isn't that always the case when it comes to anything that can be defined as a "public good" in this country? Why do you think we have a U.S. military that answers to the executive and legislative branches of the U.S. government?
The Nobelist is a socialist masquerading as an economist.
You might be right, but there is no evidence of that anywhere in the quotes that are attributed to him in this article.
Not a good year, was it?
He neglects to note that customers are not always perfectly informed, when it comes to the government nobody is ever perfectly informed about anything ~ in fact, it's standard practice for governments to avoid communicating needed information until the spin artists have gone through the messages to make sure no one is offended, and none of them are blamed!
Socialists treat profits as if they are some kind of vice. Maybe the only sin they actually recognize. The real vice is losing profits.
His is referring to health care and the environment.
The government needs to be removed from the former...and severely restricted in the latter.
The only reason the market doesn't work well in the health care sector is because the government has distorted it.
The market usually works very well in the environmental area...if it is allowed to function freely. Unfortunately, there is a presumption by the left that landowners don't have any respect for their own land.
Which is an utterly false notion.
Well the auto manufacturers seem quite willing to put in place new design features and compete on safety. Surprisingly, when auto manufacturers offered safety features before their mandated time, the public paid extra for them. If there was real value shown, then I think they would compete on auto emissions. But the problem is after 30 years of mandated auto emissions, the is very little real additional progress for the enormous costs incurred. LA is as polluted as ever, for instance.
So how could a system work, first you use facts not propaganda, then you use the bully pulpit to convince people to do the right thing. It will work, if the facts are true.
As an example, I remember I bought a 66 model Mercedes SL. Liked it and had it for a long time. Then came government emissions testing. Well my Mercedes had fuel injection and it passed with flying colors, ran better and performed better. I used to laugh at all the folks swetting out their emissions tests. They wondered how I did it, fuel injection ... now every car has it. Why was my SL so far advanced, it was the price of gas, being a European model, gas costs meant a lot, performance meant a lot, in 1966 emissions meant nothing.
Up to a point, that point being where additional changes produce little real return(where we are at today with auto emissions) manufacturers will compete if the buyers feel there is value. And free market competition will produce better solutions.
The problem today is so much regulation is just for the sake of regulation, and produces no real value. Like the various grades of gasoline for different regions of the country.
“The market doesn’t work very well when it comes to public goods,”
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it doesn’t follow that governments work well when it comes to public goods.
Conservatives agree that you need a moral, caring society to fully take care of those who were left out by the market.
Well certainly this almost certainly can NOT be his contribution. Market failures have long been known in economics.
Additionally James Buchannon pointed out that while there may be market failures, there can also be government failure. Market failure is bounded by the market. Government failure is unbounded. James Buchannon won an earlier Nobel prize for that among other insights.
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