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Another Instance of Political-Market Failure

Posted By Don Boudreaux On November 29, 2011 @ 11:21 am In Other People's Money,Politics | Comments Disabled

Here’s a letter to Economist.com:

The distinction that “M.S.” highlights between commercial advertising and political advertising – namely, that “In commercial advertising, making a demonstrably false or misleading negative statement about a competitor’s product would be legally actionable” – isn’t the only distinction of interest (“Corporate and political advertising [1],” Nov. 29).

Here’s another: false and misleading commercial advertising harms only those people who fall for it.  And because cause and effect is much more direct and less mistakable when using commercial products than when using political products, even many gullible folks become appropriately jaded when confronted with commercial advertising claims.  Bubba’s purchase of penis-enlargement pills inflicts no costs on others, and soon his endowment of useful information is enhanced as that of other of his features is not.

False and misleading political advertising, in contrast, invites the gullible to impose the costs of their credulity on everyone.  If enough Joneses recklessly clamor to buy the latest Save the World political elixir, even the alert and wary Smiths must share in the resulting harm.  And too often the swindler – skilled, after all, in the cunning arts – can for a long time successfully, if falsely, blame his elixir’s failure on dozens of extraneous circumstances.

Sincerely,
Donald J. Boudreaux

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[1] Corporate and political advertising: http://www.economist.com/blogs/democracyinamerica/2011/11/mitt-romneys-political-ad?fsrc=nlw%7Cnewe%7C11-28-2011%7Cnew_on_the_economist

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