The term “market failure” is regurgitated so often by the left and it’s cadre of professional economists that it’s become conventional wisdom that markets are often broken. Here’s the White House explaining why the country needed Obamacare.
“Addressing insurance industry abuses: In addition to the important coverage expansions described above, the Affordable Care Act immediately begins to prevent many of the worst insurance industry abuses, correcting market failures and securing coverage for Americans who might otherwise go uninsured.”
And here’s the title of liberal economist Robert Kuttner’s op-ed on the environment: “Low Oil Prices Are History’s Greatest Case of Market Failure.”
So let us get our position out here and now: Markets don’t fail; it’s government policies that try to “fix” markets that fail.
Even monopolies tend to exist because of government policies.
A market is simply a process whereby two or more buyers and sellers of goods and services come to a voluntary agreement to buy and sell or trade some of those goods and services. If someone isn’t willing to sell me something for a price I am willing to pay for it, then the negotiations failed, but the market didn’t fail.
But that’s what the market-failure crowd believes.
Take President Obama’s complaint that if an uninsured person just diagnosed with cancer wanted to buy coverage, the insurer would refuse the application.
Imagine that, an insurer was unwilling to accept, say, a $3,000 premium in exchange for perhaps $100,000 or more in health care costs. (Incidentally, life insurers also reject applicants with a terminal disease for the same reason, and no one calls that a market failure.)
What Obama—and the left in general—really means by the term market failure is that some person or company won’t sell its product or service for a price that Obama thinks is appropriate. And so the president will use the full force of the law—or executive action—to make the seller do what Obama thinks is right—regardless of the consequences.
That’s what did to health insurers under Obamacare, and nearly everyone is paying more for health insurance because of it.
Ditto Kuttner, who writes, “The fact is that markets price energy wrongly. They price oil and gas based on current demand and supply, and not based on the costs to the planet in pollution, global climate change, sea level rise, and more.”
Obama thinks health insurance should cost less than it did, and so he imposed a law to try to achieve his vision. Kuttner thinks energy should cost more than it does and so he’d impose laws to make it more expensive.
These aren’t market failures; it’s just that the markets don’t work like liberals think they should. And so they push laws to try and implement their vision, which virtually never work. In other words, it’s the government policies that fail, not the markets.
February 3, 2015