One of the most prominent economists of the 20th century was the late Milton Friedman, an ardent free market supporter who remained skeptical of government’s ability to correct market failures through interventionist policies.
I found the talk below interesting. Friedman offers several examples of market failures that have been pointed to as a justification for government intervention, and argues that in fact, government often does not truly know what the right outcome is in most cases. He believes that government failure should be just as much a concern as market failure; and that therefore societal welfare would be best met by finding market-based solutions to the misallocation of resources that sometimes arises under conditions in which externalities exist.
As you watch the video, consider Friedman’s claims regarding the role of government, then post your response to one of the discussion questions below.
Discussion Questions:
1.Is government better able to know the “optimal” quantity of output of different goods and services than private individuals are?
2.Under what conditions would the free market be best able to achieve solutions to market failures such as those described by Friedman?
3.What do you think should be of greater to concern to society, market failure or government failure?
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