Financial Intervention To Overcome Market Failure

[Thelegend649]

you are an amazing teacher Iv watched so many of ur economics video and they are so easy to understand. Thank youuuuuu so much

[EnglandIndependence]

0:31 Markets cant fail. Only firms can. Keynesian economics is completely deluded!

[BrynJonesOnline]

I agree that government intervention can result in failure. i'm explaining how theory suggests government can overcome the market failure, but it's based on governments having "good" information; with subsidizing ethanol production, they evidently didn't!

[eric5335]

There are plenty of cases were government intervention fails. And in such cases it often costs a lot more to correct it. Corn ethanol is a good example of how subsidizing by the government gives about zero benefits for society (corn ethanol takes a lot of energy to produce it). What happens is that government by force transfers the money.

[rebelq1]

Keynsian bogus! Intervention to overcome market failure.

It's government intervention in a market that fouls it up!

[selfrealizedexile]

How is it that F.A. Hayek predicted the 1929 Great Depression, Ron Paul the 1987 recession, and Peter Schiff the housing bubble and subsequent 2008 recession? They sure as hell weren't Keynesians, but Austrians.

What the man in the video is teaching goes against what Adam Smith taught.

If you want a real laugh, google "History of Keynesian Predictions." They have always been wrong. They believe they can do the impossible; don't buy it. Keep an open mind and question it.

[selfrealizedexile]

study the Austrian school of economics.

[selfrealizedexile]

This man is teaching big gov't economics, people. If that's your bag, that's fine, I guess; at least you know what he's selling. But, to all of you first starting in economics, know that what he's preaching is something that history has resoundingly rejected!

If you want an actual solid economic education where you don't end up supporting gov't policies that create artificial shortages, the artificial boom / self-correcting bust cycle, and starve economic growth,

[SoSyNiKaL]

Brilliant. All your videos are very well explained and make these different situations memorable. I love all these people asking degree level questions in order to attempt to bolster themselves up. You're right, it's A level standard and you're explaining it really well. Thanks very much.

[GaiaGoddessOfEarth]

i agree with you. been to several other videos explaining economics in A level standard with people asking 'bombastic' questions

i kept wondering why, since they're so smart, they failed to realize that the video was just to explain an A level concept?? hahaha

[SoSyNiKaL]

Exactly! Glad we're on the same wavelength :)

[MillionthUsername]

How did you determine that the monopoly extortion racket has the omniscience to know how to properly allocate resources?

How do you test this claim?

How will those who aspire to provide this "good" to society (determining the "social optimum") achieve this position in society? Will they offer their services ethically? Or will they impose their services by force?

If this service must be imposed by force, isn't that proof that it itself is not socially optimum?

[selfrealizedexile]

@MillionthUsername

rofl, perfect counter.

Don't expect anyone to supports statist econ to reply to you. That would require they comprehend sound economic premises.

[BrynJonesOnline]

You talk a lot of sense and will go far! But you are going way beyond A level standard. Your last question: In most cases of market failure it would be the government that decides what the socially optimum level of output would be and then set the tax(or subsidy) at a level that achieves that level of consumption/output. Remember, this is a general, simplified theory; reality would be much more complicated eg How on earth would the govt know how much tax is needed to reduce output by 10%

[selfrealizedexile]

@BrynJonesOnline

And not only that, but if a 10% reduction would have the net effect they desired.

You see, Socialism failed for two reasons. 1) Centrally-planned economies never adequately comprehend the price system and, therefore, 2) cannot adequately meddle in the markets to achieve the effect they desire because they don't know what they'll get.

It's the equivalent of a toddler performing brain surgery and hoping his slices remove the tumor.

[selfrealizedexile]

@BrynJonesOnline

Finally, gov't itself has ripple effects in the market. If you study the history of gov't intervention in markets, you will see the abysmal ability of gov'ts to comprehend all their unintended consquences. I could write you a dissertation on just this topic or even of just one industry. And this is the very same gov't you trust to adequately comprehend the ripple effects of externalities?

NO THANKS! :)

[bmay1000]

question: if the free market is being allowed to produce according to demand, how is manipulating the price good for social optimum? are you not advocating a centrally planned type economy? why would a government attempt to control a product that is obviously in demand and therefore signifying a market that is working properly unless that government is attempting to control those very same scarce resources for its own purposes?

[BrynJonesOnline]

The free market produces the amount firms find profitable to do so, BUT, they do so taking account only of PRIVATE costs and not of any EXTERNAL costs their actions might impose on the rest of society (ie the "innocent" third parties). So, the govt puts a tax on the product equal to the external cost so that consumers face a higher price which accounts for the true cost of consuming the good. As the price goes up, fewer people want to buy the good and so output is reduced to the social optimum.

[Offatwork]

How does any conscious body have the ability to indicate what is a "true" cost of consuming a good? How do you address the incredible failure of the Great Famine in China? I'm sure the government thought that the cost was worth it and that it was an attempt to prevent market failure and promote growth.

Short question: How does a small group of people determine what is "social optimum"?

[Joshtilley1]

thanks so much

i wish u were my econs teacher haha

i will suscribe

[grim99]

thank you soooo much. my professor is very smart but he cannot speak English well at all so I haven't learned anything. However, this might just be my saving grace.

[jahangirbek]

good job,

Thank you,

[xiaodee]

thanks. clear and good explanation! can u do some explanations on the advantages and disadvantages of methods use to solve market failures too?

[Slappy133]

Thankyou. Well explained. Camera movements are bit off putting (refer Richard Mckenzie video for good techniques). But very useful and Im sure you will be helping allot of people along the way. Thanks again,

T