“Market Failure” Doesn’t Exist

by | Jun 21, 2006

In a recent column in Canada’s National Post (June 10, 2006), “economist” and author Mark Jaccard of Simon Fraser University argued that (alleged) manmade global warming represents a “market failure” that must be corrected by government taxes on carbon dioxide emissions. Leaving aside the fact that there is no scientific evidence that human carbon dioxide […]

In a recent column in Canada’s National Post (June 10, 2006), “economist” and author Mark Jaccard of Simon Fraser University argued that (alleged) manmade global warming represents a “market failure” that must be corrected by government taxes on carbon dioxide emissions. Leaving aside the fact that there is no scientific evidence that human carbon dioxide emissions are causing harmful climate change and that environmentalists are notorious for arbitrary, scare-mongering assertions, there is no such thing as “market failure.” Like the unicorn, it doesn’t exist.

To say that something failed means it did not meet a standard that it was designed to or capable of meeting. For example: “a valve failed to open” or “a student failed a math test.” The free market refers to a group of people involved in the voluntary exchange of goods and services. It presupposes that each individual participates to pursue his or her rational self-interest and that a government exists to protect individual rights, including property rights. It’s based on the recognition that everyone can benefit from division of labor and free trade.

A free market doesn’t guarantee that an individual will act in rational self-interest–errors are possible–only that he or she is free to do so. If a person fails to act as such, then it’s the person’s failure, not “market failure.” A free market can’t be expected to do what’s metaphysically impossible, such as make everyone equally wealthy regardless of ability and effort, or turn sloth into gold. If a person expects a bicycle to fly, and it doesn’t fly, then it’s not a “bicycle failure” but a mind failure.

Now if the activities of some people harm others, such as harmfully pollute their water or air, and if the harm can be objectively proven (a concept foreign to environmentalists), then it’s the government’s failure to protect individual rights–not “market failure.” And a tax on emissions is not a valid solution, because it implies that it’s okay to violate rights as long as you pay government for the privilege.

The allegation of “market failure” is used by leftists and other power-lusters to justify government interference in the free market, such as price controls, coercive union legislation, massive regulations, taxation schemes, antitrust laws, minimum wage laws, etc. The net effect of such policies is to suppress innovation and productivity, punish ambition and ability, fuel inflation, and destroy wealth on a massive scale.

Such destructive consequences are not a “market failure” but a barbaric sabotage of the market by the government. If I pour muck into my Mercedes fuel tank and the engine dies, it’s not an “engine failure” but a mindless sabotage of a wonderful machine–and the free market is the most wonderful “machine” of all.

Mark Jaccard, and anyone who makes the charge of “market failure,” should be charged with “intellectual failure.”

Glenn Woiceshyn is a freelance writer, residing in Canada.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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