State failure/market failure
Which is worse and why? Im a bit confused so need a bit of help.
"evaluate the case that state failure is worse than market failure"
"evaluate the case that state failure is worse than market failure"
Original post by Theguynextdoor
Which is worse and why? Im a bit confused so need a bit of help.
"evaluate the case that state failure is worse than market failure"
"evaluate the case that state failure is worse than market failure"
Looking at the question, you probably won't come to a definitive answer of which is worse, rather give arguments for both state failure being worse than market failure, and market failure being worse than state failure. This can be done by using real life situations, and showing whether one would be worse than the other, and also by using 'it depends on' to show that it's not as simple as a yes or no. That's why the question says 'evaluate' - you need to give arguments for each side, and then challenge those arguments, with analysis throughout to show your economic knowledge.
markets are lead from the bottom up by rational individuals who have situational incentives in each case such as rewards and competition, whereas the government from the top-down view has no monetary rewards/incentives other than votes every half decade, which aren't going to be proportional to their success; they may even get more votes for less success, whereas in the market, an individual can only reasonably get more money for more success. with government, officials and politicians can point fingers at others and shift the blame, whereas the market is based on contracts whereby a court will determine who is to blame, so a market is more responsible than a government/shadow cabinet duo. also, markets not only "fail" far less frequently than governments, but governments are usually the actual causes of market failures (e.g. setting interest rates too low, e.g. wall street crash 1929). when we're talking about situations where the market fails a lone individual, again, they will get money damages from the company that failed them (or at least a refund) whereas the government doesn't even know who voted for them, so how could it possibly compensate its clientel for lying or failing?
(edited 8 years ago)
Original post by mobbsy91
Looking at the question, you probably won't come to a definitive answer of which is worse, rather give arguments for both state failure being worse than market failure, and market failure being worse than state failure. This can be done by using real life situations, and showing whether one would be worse than the other, and also by using 'it depends on' to show that it's not as simple as a yes or no. That's why the question says 'evaluate' - you need to give arguments for each side, and then challenge those arguments, with analysis throughout to show your economic knowledge.
This helped a lot, so just explain in depth why and so forth and why government failure also fails when it intervenes with market failure?
Btw state failure/refers to government failure right?
(edited 8 years ago)
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