One great benefit of markets is that prices tell us what to do. Not through orders, which often don’t work, but through incentives.
Limits to the homo economicus version of rationality are also limits to the explanatory power of some aspects of introductory-level economics. They do not, however, compromise the case for laissez-faire. If anything, they strengthen it.
Milton the rancher lives downriver from a large chemical factory. In the past month, the chemical factory has been disposing of chemical waste in the river, which has flowed downstream and poisoned Milton’s cattle. Milton is also a libertarian-minded person and prefers to keep government out of his life and out of the lives of […]