Tuesday, July 08, 2008

Market Failure Roundup

From the housing crisis and the meltdown of the financial derivative sector, to the widespread hunger created by the big business/big government bio-fuels scam, to runaway global warming it isn't a good time for the free market ideologues and defenders of the Washington Consensus. Their smug certainty in the unfettered genius of the unregulated market has brought us all only huge disaster and even huger chasms between the winners of their zero sum game and the losers.

The Bulletin of the Atomic Scientists concludes that the Stern Report was right and :
Climate change is the result of a colossal market failure. At least, that is one way to view the unimpeded dumping of carbon dioxide into Earth’s atmosphere. In the case of climate change, the cost of carbon dioxide emissions, measured as damage to the biosphere, has not been factored into the price of energy. The failure to account for these hidden costs encouraged the overuse of carbon-emitting technologies and has led ultimately to the market failure known as global warming.
And after ripping into a big chunk of the Globe and Mail's comment section today, its only fair to point you to Joseph Stiglitz's masterful dissection of the utter failure of neoliberal economics.

The world has not been kind to neo-liberalism, that grab bag of ideas based on the fundamentalist notion that markets are self-correcting, allocate resources efficiently and serve the public interest well. It was this market fundamentalism that underlay Thatcherism, Reaganomics and the so-called “Washington Consensus” in favour of privatization, liberalization and independent central banks focusing single-mindedly on inflation.
For a quarter-century, there has been a contest among developing countries, and the losers are clear: Countries that pursued neo-liberal policies not only lost the growth sweepstakes; when they did grow, the benefits accrued disproportionately to those at the top.

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