Quotation of the Day…

by Don Boudreaux on June 8, 2012

in Economics

… is from page 352 of my GMU Econ colleague Larry White’s new and superb book, The Clash of Economic Ideas:

Unless government has a technique for solving the demand revelation problem that private entrepreneurs cannot adopt, [Paul] Samuelson and [William] Nordhaus’s statement that “because private provision of public goods will generally be insufficient, government must step in” is a non sequitur. ¬†Lacking a way to elicit the necessary information about willingness to pay, we lack assurance that government stepping in will move us closer to economic efficiency….

Whenever private provision of a good is presumed inefficient because of a demand revelation problem, government provision should also be presumed inefficient.  We should expect the same goods that exhibit market failure ipso facto to exhibit government failure to achieve Pareto efficiency.

Be Sociable, Share!

Comments

comments

Add a Comment    Share Share    Print    Email

Previous post:

Next post: