Economics @ ITT

John Locke, Prices, and Hurricane Sandy

Posted in economics by ittecon on March 6, 2013

Although I find the content of the discussion compelling, but I feel that it is a mistake to say that the best rationing mechanism is to rely on the market. It presumes that the one with the highest ability to pay for a good will put the use to the best use. Here is the problem as I see it in a hypothetical tale.

I am an inventor, but I am poor and I have little access to capital. I have a concept for the invention a good that will benefit society (and perhaps myself along the way). The material for this good costs more than I can afford, yet other more affluent persons can afford this material and routinely “waste” it. Because I do not have access to an infrastructure of venture capital (and why should I allow them to benefit of the backs of society just because they happen to have funds available).

Given the structure of the market, this item may not be developed or arrive late to market. Classical economics solves this by claiming that this will magically be introduced into or discovered by markets because of some market omniscience.

Anyway, these guys do sum up Locke’s position and the Libertarian vantage. Give it a listen (or read the transcript). The basis of discussion  is hinged on Locke’s The Political Writings.

Mike Munger of Duke University talks with EconTalk host Russ Roberts about the gas shortage following Hurricane Sandy and John Locke’s view of the just price. Drawing on a short, obscure essay of Locke’s titled “Venditio,” Munger explores Locke’s views on markets, prices, and morality.

via Munger on John Locke, Prices, and Hurricane Sandy | EconTalk | Library of Economics and Liberty.

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