An Assessment of and Ongoing Challenges for Market Corrections

This chapter shows the importance of market corrections by comparing their contribution to addressing economic and social goals with the government policies that have failed to address those same goals and considers the potential for market corrections to address ongoing economic and social challenges in the book Market Corrections not Government Interventions: A Path to Improve the US Economy. Government regulatory and technology polices have significantly reduced welfare, while market corrections have significantly increased welfare by enabling deregulated industries to operate more efficiently and by incentivizing all industries to develop important technological innovations without government incentives. Antitrust and information policies often appear to be solutions in search of a problem because they have generated enforcement and compliance costs while producing negligible welfare gains. Independently, market corrections have stimulated competition to reduce the welfare costs of anticompetitive behavior and have developed information technologies that have benefitted consumers and workers. Government policies to correct externalities, reduce poverty, and provide merit goods have increased welfare at excessive costs to the public, while market corrections have achieved some success in addressing those goals at lower costs. Present economic challenges to markets include the dominance of high-tech firms, the costs of transformative technologies, and the existential threat of climate change. Social challenges to markets include preparing for a future pandemic, preventing the social safety net from deteriorating, and improving social mobility. I discuss how market corrections could potentially help to address those problems.