A Contrarian View
October 25, 2008 – 11:26 pm by BHThis used to be pretty close to the consensus view, but no longer:
The kind of self-regulation or light-touch regulation which is being denounced right now by commentators of all stripes is generally speaking pretty effective in most areas of economic life. Restaurants have good incentives not to poison their customers etc. This suggests that in most places self-regulation is not only the first-best solution, it is also optimal in a second-best world i.e. even in the presence of widespread externalities and irrational behaviour it is still manifestly superior to government regulation or central planning.
That’s oxonomics blogger Mark Koyama responding to one of his co-bloggers. It’s worth reading the whole exchange.
