Wednesday, 2012 February 1, 15:16 — economics

the strawman market

One often hears:

[Libertarianism] can only work if all the conditions of a free market economy are present … things like anyone being able to easily enter any market segment, all consumers having near-perfect knowledge of what they are purchasing, large numbers of sellers selling identical products to large numbers of buyers, etc.

And one is moved to ask whether the political system makes up for such departures from the ideal by adding moral hazard.

Where did the meme came from? My guess is that some introductory economic textbooks contain theorems that rely on those simplifying assumptions, and some students get that far and no further.

I don’t know much about academic economics but I do know that there’s plenty of interest in the negations of those simplifications; for example, Ronald Coase made his name by pointing out the importance of transaction costs, including the cost of overcoming imperfections of knowledge.

What I need is the libertoonian equivalent of the TalkOrigins Archive, containing standard responses to the other side’s tired assertions.

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