Quotation of the Day…

(Don Boudreaux)

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… is from page 129 of the 1987 reprint of my late colleague Gordon Tullock’s 1970 book, Private Wants, Public Means:

It must be remembered, of course, that selecting a suitable institution to deal with an externality, in a sense is playing God. In the real world, these decisions are likely to be made either by governments or by businessmen. Neither is free from error; mistakes are made. Furthermore, the decision-making processes used in democratic governments insure a suboptimal outcome.

DBx: No informed person denies the reality that Gordon here identifies. Yet very many people – including economists who should know better – continue to discuss ‘market failure’ and ‘externalities’ as if the very existence of these problems implies that government should be empowered to ‘solve’ them. The market is recognized, correctly, to be the imperfect real-world institution that it is, while government is assumed, quite incorrectly, to be godlike.