mises.org — A finance professor argues that all human action is rational from the point of view of the actor. So these researchers who claim that government intervention can patch up market irrationalities are barking up the wrong tree. What's more, bureaucrats and politicians can't claim that they are more rational than markets.
Jul 26, 2006 View in Crawl 4
goplatJul 26, 2006
That's because in the most obvious cases of market failure in first-world countries, the government does intervene, and then "free-market" people always claim that that intervention is causing the problem even though the problem came first.
joel3000Jul 27, 2006
Markets are made up of people. It is well known that most people are not rational in the sense that classical economics has defined it. For example, people are irrational judges of risk. They fear dying in a commercial jet crash, but not the much more likely possibility of dying in a car crash. They think they're going to be the ones who make money at a casino, completely ignoring the readily available information that shows the contrary (guess who paid for that flashy casino - sucker!).There is an old saying: "bad money drives out good." If a producer in a mature market finds a way to cheat, for example dumping toxic waste directly into a river instead of paying to properly treat it, he can drive his competitor out of business and then raise his prices. But you can't protect against that without a trusted regulator.The agency best suited to play the role of trusted regulator is the government. If you personally don't like the job the government is doing perhaps its time for you to get off your ass and get involved, citizen. It's still a free country, you can make a difference.
hobophobeJul 27, 2006
Yet Mises would say they are completely rational for commenting based on their belief that they do. He'd also say that using CAPS to emphasize part of a sentence is rational since you believe it's effective. And also that it's rational for you to say such a thing without bother to explain what rational does mean in this context.In this context rational simply means what it does in any context. Given some initial condition, the procession of thought follows the rules of logic.*Belief of person A: "The sky is pink and anyone who says otherwise deserves to be punched in the face."*Statement of person B: "The sky is not pink."*Person A punches person B in the face.This action is rational given the belief of person A. The belief of person A is only irrational in this context if they cannot see the factual reasons discounting their belief when they are presented. If they look at the sky and see pink, it's rational for them to continue to hold the belief that it is pink; if they see another situation, such as C & D, where C thinks to punch people if they deny that fire is cold, and D says fire is not cold, gets punched. A knows fire is hot and realizes it is not right for C to punch simply over this mistaken belief. If A is rational they will discontinue punching people who say the sky is not pink.
smooveJul 27, 2006
"Markets usually do not take care of externalities on their own."That's the standard interventionist argument. The problem is that every attempt so far to present a genuine externality ends in failure: the "externality" turns out to be itself a product of intervention. The standard example is air pollution, and an actual review of 19th-century history demonstrates that the market WAS dealing with pollution effectively, UNTIL government started ignoring property rights for the benefit of industrialization.
psientsJul 27, 2006
No, quantum mechanics is a rational theory. It doesn't say that particle jumps are "irrational," only that they have an equal probability to taking any path and such.I've studied both ecnomics and physics and your post is just plain silly.
ferespoJul 28, 2006
To Smoove:"Similarly, animal behavior isn't called "action." A lion doesn't ponder his hunger and decide that the most efficient solution is to go hunting for gazelle; lions hunt gazelles because that's what they do."So, when a human is considered a "human"? For instance: does a baby acts? A fetus? Does exist madness? And when a human acts? Not when he's asleep, I presume. Could you give a general procedure to identify a human acting by observation?
shovel10Jul 28, 2006
Markets Are Irrational - if you ever read Michael Walzer blocked exchanges, you know the market has humanity limits, moreover if you read Amartya Sen you know the market itself has no moral at all. There are historically speaking enough good examples where the governments do the job at least reasonable (always room for improvement) whereas a market would never be able to enforce similar actions. The government should get lost is in this context just a dumb statement. If people allow their government to lie en f**k with them that's their choice... /2 cents]
mrhuhAug 13, 2006
"I like the FDIC, I like social security, and even though I am not on welfare, I like it and will cheerfully continue to help keep children from starving?" The funny thing is that people like this also support price floors on things like food or restrictions on free international trade and how evil Wal-Mart is.