Re: Madness: Bailing Out Greed in Wonderland

[David Farber <dave () farber net>]

Begin forwarded message:

From: Russ Nelson <nelson () crynwr com>
Date: September 17, 2008 12:51:44 PM EDT
To: dave () farber net
Cc: Rahul Tongia <tongia () cmu edu>
Subject: Re: [IP] Re:     Madness: Bailing Out Greed in Wonderland

For IP if you wish, David.

David Farber writes:
> If nothing else, I always remember from Econ 101 that "free
> markets" need essentially perfect information.

Gosh, Rahul, then it seems like you remember nothing.  To have a
perfectly efficient market, you need zero transaction costs and
perfect information.  Anything less and you don't have perfection.
Is that a problem in the real world?  No, of course not.  Everything
has friction and yet we manage to get things done.

Because politicians love to fiddle, no market escapes regulation.
However, you can compare a *more* free market to a *less* free market,
and come to conclusions about the value of freedom to trade.

My own feeling?  We need separation of markets and state.  You may
gasp "Not possible!  What about market failure?!?"  And yet when our
country was founded, all governments chose the religion that their
citizens would observe.  Religious freedom was thought to be
impossible; a sure road to hell.

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