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Category Archive: Market Failures and Solutions

  1. Playing Without Protection: Solving Football’s Concussion Crisis

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    Is it crazy to think that making football helmets flimsy or getting rid of them altogether will reduce the amount of football concussions in the NFL?

    In this video we discuss the moral hazard of football helmets. Moral hazard refers to the lessening of people’s incentive to avoid negative outcomes when they are presented with additional forms of protection.

    Will attempts to reduce risk in injuries actually create more?

    We want to hear from YOU! Share your thoughts in the comments below.

  2. How Dirty Laws Trash The Environment

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    Dirty Laws? That’s the confusing part of EPA regulations. While intended to do good, they end up doing quite the opposite. When a corporation dumps its toxic waste a few miles upstream from your tomato farm – sure, you can go to the EPA, but odds are the offending party has filed all the right permits that allow them to do their dirtiest and you’re screwed. Join Law and Economics Prof. Roger Meiners in this Learn Liberty video as he shows how an age-old, British, free-market concept called “Common Law” may be the best remedy – without bureaucratic trash to stink things up.

  3. The Costs of Brazil vs Germany: Protest and Poverty at Brazil’s World Cup

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    Brazil gained prestige in landing the World Cup and Olympics, but sometimes hosting a major global event isn’t as glamorous as it seems. For a start, it’s difficult to justify massive spending — Brazil plans to spend $31 billion between the two — for such a temporary payoff. . Many venues created for these events, including those erected for the Olympic Games in Athens and Beijing, have fallen into disrepair after the celebrations ended. Many workers die on these massive construction projects — hundreds, already, for Qatar’s 2022 World Cup. Government often evicts lots of people from their homes, as Beijing did to over 1.5 million people in anticipation of the 2008 Summer Olympics. So why are cities and countries so eager to host? Often for the international prestige. However, support can sour quickly, as it has in Brazil, when the real costs became more apparent. Economist Matt Ryan from Duquesne University asks you to consider those costs now – a country that wins the bid may lose big overall.

  4. Environmental Protection: The Surprising Solution

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    What do environmental policy, the war on drugs, economics, subsidies and modern music have in common? Learn Liberty professors have addressed all these topics and more.

    What sorts of countries cut down all their trees, pollute without thinking, and wipe out their animals? Prof. Antony Davies and many other professors have studied the best way to protect the environment, among other questions with the objective of finding out how to improve society. These professors discuss the sorts of rules that should be instituted to protect our environment. They have found over and again that economic freedom is the best indicator for environmental protection. Economic freedom enables people to make their own decisions, and countries with more economic freedom—rich and poor alike—take the best care of their natural resources. Have you also thought about these questions? Have you wondered how we can make society a better place? You may find the videos and other resources available through Learn Liberty helpful as you consider these issues and many others. “Give us three minutes and an open mind,” Prof. Davies says, “We’ll rock your world.”

  5. Can Capitalism Save Lives? | Econ Chronicles

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    Thousands of people die in the US every year because there’s a shortage of willing kidney donors. Some people are saved by the generosity of friends and family, but many more suffer because no willing & compatible donors come forward. As in most countries, it is illegal to compensate donors in the US for donating a kidney. Prof. Caplan argues that we should allow a market: if donors could be paid to donate a kidney through a reputable hospital, they could earn money and save a life in the process. Such a system would encourage many more donors, and save many more lives. But most people are uncomfortable with the idea that individuals or companies would make money by solving that kind of problem. They equate making a profit with selfish intentions, and bad results. Economics professor Bryan Caplan calls this “anti-market bias.”  He argues that most people (and voters) are prone to this bias, leading to harmful policies. Another example Caplan gives is air pollution. While most economists think that markets could help curb pollution, most regular people reject the idea. Perhaps this is partly because for many problems we face, it is difficult to imagine how markets and profit could help us find a solution. Caplan argues that this makes allowing markets even more important: they incentivize people to find new & creative ways of solving problems, many of which we never could have predicted in advance.

  6. Make Progress, Not Work | Econ Chronicles

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    As technological developments increased the US agricultural worker’s output tremendously over the last two centuries, the share of the population employed in agriculture fell from around 90 percent to around 2 percent.

    The lay American public supposes that when workers lose their jobs, we become worse off — they suffer from what economist Bryan Caplan calls the make-work bias. But would anyone prefer to live in a society in which many went hungry and no one enjoyed the wealth, financial security, job growth, and innovation created as a result of all those workers losing their farm jobs?

    Unfortunately, the more that democracies enact policies that reflect the make-work bias, the closer we come to such a society. Follow Caplan, author of The Myth of the Rational Voter, as he explains the gap between the lay public and the professional economist’s views about the merits and demerits of making work for individuals instead of letting them find work.

  7. How Much Immigration Is Too Much Immigration?

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    The United States has laws in place to limit the number of immigrants granted entry. How many immigrants should be allowed to call America home? Bryan Caplan, professor of economics at George Mason University, argues that the United States should have open borders. Jan Ting, professor of law at Temple University, argues that there need to be limits on the number of immigrants.

    In this clip from the debate, Prof. Ting argues that the risks of trying an open border policy are too great. He points out that the U.S. population is estimated to grow at a fast rate in the next 50 years and through the end of the century if we do nothing. He is concerned that allowing free immigration will overwhelm U.S. infrastructure and cause too much environmental damage.

    Prof. Caplan responds by arguing that the market will ration immigration just as it rations anything else. Indeed, the idea of immigration without quotas is overwhelming if we do not consider how market forces will play a role. He argues that we can have open borders without fear because of the power of the market.

  8. From Rags to Riches: The Cayman Islands Revolution

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    The rule of law, Hayek wrote, is “a rule concerning what the law ought to be”: It ought to be general and abstract; equally applied, with legal privileges for none; certain, not subject to arbitrary changes; and just. In this Learn Liberty Academy, Andrew Morriss sets sail to show how the law of the Cayman Islands conforms with Hayek’s ideals, how it got that way through astute political entrepreneurship, and how the world at large benefits from its legal wisdom. The benefits of Caymanian rule of law are so diffuse and far-reaching that we can even attribute the American poor’s high consumption of healthcare to it.  Embark on Morriss’s expedition — read, watch lectures, and discuss!

    Song credit: “Coconut Water” – Dan O’Connor

    Archival images courtesy of the Cayman Islands National Archive

  9. Recycle Smarter Than A Third Grader!

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    Reduce! Reuse! Recycle! All right? Maybe — maybe not, says scholar Daniel K. Benjamin. Making an unused tissue out of a used one wastes resources and hardly benefits the environment. Melting and casting aluminum cans, though, both saves resources and benefits the environment. But you don’t need to exhort the aluminum company to save those resources: saving scraps is in its own interest. So why does it take a lesson from your third-grade teacher to get you to recycle household waste?

     

    For more insightful work by Daniel K. Benjamin, check out his page on the Property and Environmentalism Research Center’s website

  10. Digging Out of Debt | Life of Debt Episode 3

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    They have your name, your number, and your credit card records.  Debt collectors have a funny way of tracking you down and can take people to court. What can we do? For Lee Campbell, he can rely on keg colleague and college professor Peter Jaworski to magically appear and teach him a few tricks to negotiating with collectors over the phone.  Watch as Peter guides Lee through the debt battlefield – you might learn a thing or two.

    Check out the whole series!

    Episode One: Brave New World (of Debt)

    Episode Two: The Debt Luck Club

  11. The most dangerous monopoly: When caution kills

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    Everyone wants the items they buy to be safe to use or consume. When products undergo third-party certification processes to determine their safety, market forces are able to optimize the amount of testing conducted and consumers can use the information provided by certification firms to make their own decisions. It is difficult to say how much testing is enough: another test can always be run on a product, but at some point the benefit of the extra testing outweighs the costs. In a free-market system, competition among certification firms allows the market to work as it should and prevents both under- and over-testing of products. Conversely, when the government holds the monopoly on safety standards, products are likely to be over-tested, delaying their entry into the market and making them more expensive. Sometimes the costs of such delays cannot be quantified; lives can be lost while life-saving medicines are held up in safety-testing processes.