> But governments usually err on the over-interventionist side. When you look at the world you can’t help but notice this pattern, it is really that obvious.
There can be 3 classes of errors with interventions; 1) intervening when it is not warranted (over-intervention), 2) not-intervening when required (under-intervening) and 3) intervening in a way that ends up not working out (intervention-outcome mismatch).
I think most of the errors are type 3, which are most liable to mis-identified as "over-intervention", but they are not. Mismatched interventions do not prove that there is a magical essence to real-world markets that render them infallible, dynamical, adaptive, self-correcting systems.
A simpler explanation to all this is that it is really hard to come up with the right interventions for the market, but also markets really need interventions when they need it.
> I think most of the errors are type 3, which are most liable to mis-identified as "over-intervention", but they are not.
The thing is, there is no reliable way to prevent these errors, which means in general it is better to not interfere. If we had a way to ensure good decisions, we wouldn’t need some of the institutions that we have in our modern states.
One especially egregious example: California Assembly Bill 5. You could argue that this wasn’t just incompetence, but union corruption, costing many freelancers their livelihood. Another one was SF mayor London Breed‘s misguided attempt to regulate food delivery during the pandemic, which had the predictable result of cutting off regulated areas from service altogether.
You cannot let people decide these things that have no personal accountability and suffer no downside from this madness. It sure would be nice if it worked, but it doesn’t.
> The thing is, there is no reliable way to prevent these errors, which means in general it is better to not interfere.
That is not a forgone conclusion. It is only better not to intervene if the expected cost of intervention is higher than the expected cost of not intervening.
> One especially egregious example...
These are relatively minor regulations that you argue gone bad. What do you think would be the realized costs of these misapplications? Would they be in the same order of magnitude with for example the costs of not breaking up monopolies? I highly doubt it.
I get it, in countries like the US the government apparatus has a difficulty representing the welfare of the entirety of the nation, which tends to affect the interventions negatively, but that is not an argument against government intervention but an argument against the government itself, which is culpable of under-regulation just as much as over-regulation. (90's deregulatory Clinton laws on banks and telecommunications come to mind, which led to huge market consolidations and therefore market inefficiencies which we still suffer from.)
As we agree, markets sometimes need serious babysitting, so we ought to pick better babysitters.
There can be 3 classes of errors with interventions; 1) intervening when it is not warranted (over-intervention), 2) not-intervening when required (under-intervening) and 3) intervening in a way that ends up not working out (intervention-outcome mismatch).
I think most of the errors are type 3, which are most liable to mis-identified as "over-intervention", but they are not. Mismatched interventions do not prove that there is a magical essence to real-world markets that render them infallible, dynamical, adaptive, self-correcting systems.
A simpler explanation to all this is that it is really hard to come up with the right interventions for the market, but also markets really need interventions when they need it.
60% of the time, they work everytime.