One comment on “Economism: Bad Economics and the Rise of Inequality

  1. “Free trade unleashes market forces and therefore benefits everyone.” The problem is that businesses try to regulate the market by interfering. Ways markets are influenced by businesses: patents, copyrights, monopolies and cartels. I think these are great reasons for government interference.

    “Maximum economic efficiency is achieved through market forces of supply and demand” and its conclusion — I don’t think we will be able to prove the maximum economic efficiency. Our supply chain and production are flawed.

    We have businesses that constantly interfere with the market (patents, copyrights, monopolies and cartels). Through regulations and restrictions, governments have been able to keep companies in line. The other thing is that are markets (respectively company owners) are driven by profits and not maximum economic efficiency — if you let them. It would be economical for companies to be resourceful regarding our natural environment. Eliminating waste and refurbishing costs taxpayers millions. One interesting thing people forget — government interference has very many positive aspects. Constraints can and do lead to market and social innovations. The consumer will buy was is available. When we take a look ar the Clean Air Act introduced in the 1970s, the American automotive industry became more in line with consumer demands (for example fuel-efficient cars which the Japanese were already producing). Health and safety regulations have not only reduced health costs. The decrease in the number of pesticides allowed encouraged companies to develop less toxic pesticides. It stimulated market innovation in the chemical industry. One of the examples is Dow Chemicals in California. They had to close wastewater evaporation ponds. Dow had to redesign its production process. Through redesign, they were able to save around USD 2.4 million annually.

    BTW, interesting is Liebig’s Law of Minimum: It says “Neoclassical economic theory has sought to refute the issue of resource scarcity by application of the law of substitutability and technological innovation. The substitutability ‘law’ states that as one resource is exhausted — and prices rise due to a lack of surplus — new markets based on alternative resources appear at certain prices in order to satisfy demand. Technological innovation implies that humans are able to use technology to fill the gaps in situations where resources are imperfectly substitutable.

    A market-based theory depends on proper pricing. Where resources such as clean air and water are not accounted for, there will be a “market failure”.'s_law_of_the_minimum

    Generally, when it comes to pricing, even without government interference, we would have a flawed marketing. Clean air and water are not accounted for in pricing. If it were, it would be again considered restrictions on government’s behalf. We pay for it indirectly with taxes.

    Liked by 1 person

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