Posts tagged ‘voluntary exchange’

Public Choice Explained by Michael Munger

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Free Markets and Voluntary Exchange are Awesome

“Nothing breeds vice like an attempt to promote virtue by force.”
Moman Pruiett (1927)

I, Pencil

Competitive markets work so smoothly and silently that they fool us modern folk into thinking that the lives we lead are normal – fool us into thinking that poverty (rather than wealth) has causes; fool us into supposing that people my age (almost 55), because we still have all of our teeth and aren’t remotely yet decrepit, are “middle-aged” rather than old, ancient, nearly dead by historical standards; fool us into believing that possession by each person of several changes of clean, washable clothes is the norm; fool us into imagining that living under a solid roof atop solid walls joined to solid floors is natural; fool us into forgetting that starvation and malnutrition were in store for distressingly large numbers of our ancestors . . . .

Capitalism Is Awesome

Free markets, voluntary exchange, freedom of association, freedom of speech, freedom of conscience – these are awesome.

The Free Market: What it is – What it Implies

“The real conflict in political theory … is not between individualism and community. It’s between voluntary association and coerced association.”
David Boaz

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Public Choice, System D, Black Markets

The growth of federal regulations over the past six decades has cut U.S. economic growth by an average of 2 percentage points per year, according to a new study in the Journal of Economic Growth. As a result, the average American household receives about $277,000 less annually than it would have gotten in the absence of six decades of accumulated regulations—a median household income of $330,000 instead of the $53,000 we get now.
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So if the effects of regulation are so deleterious to economic growth and the prosperity of citizens, why do countries enact so much of it? Dawson and Seater’s paper mentions three theories: Arthur Pigou’s notion that governments enact regulations to improve social welfare by correcting market failures, George Stigler’s more cynical view that industries capture regulatory agencies in order exclude competitors and increase their profits, and Fred McChesney’s argument that regulations are chiefly aimed at benefiting politicians and regulators. I asked if their results fit most closely with McChesney’s. Dawson replied: “This could be the conclusion that one reaches based on our empirical results (since they show a net cost of regulation over time), but again we did not set out to prove or disprove any particular theory.” Seater added that their research does not address the question of “why society allows excessive regulation….It’s an important [issue], but it is one for the public choice people to study, not for macroeconomists like me and my coauthor.”

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