84. Modern myths, efficient markets

Markets are efficient and perfect. They find equilibrium if left bereft of regulation. They are the most effective method to optimise outcomes. I miss the times when legends and myths were about Greek gods, romantic vampires and universal floods. They may not have been accurate, but at least they were beautiful and conjured up the imagination. Our modern liberal markets myth is nearly as inaccurate and much more prosaic. The pandemic crisis is showing, some say, that regulation is needed as markets break when an unexpected catastrophe happens, and hence the PPE or ventilator crisis. But this implies that, in the absence of catastrophe, markets work. It ignores the over 1 billion people living in abject poverty, the 600 million who will suffer diabetes by 2050, the unprecedented destruction of habitats and the impending climate change catastrophe. If we need regulation in times of crisis, then we need it all the time. A silent crisis is not in-your-face obvious, but it is a crisis

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Comments

Unknown said…
I think our world honeymoon with the idea of market as a self regulated social structure has ended, maybe even before the coronacrisis. After the fall of the Wall it was like a triumph walk and for some years society chose to believe that it worked out and repeated this idea as a mantra, probably to be able to ignore the obvious daily evidence that it is a lie. Not only unregulated markets do not work for many (do they, for anyone?) but the truth is that they have NEVER been unregulated. The rules and laws have always limited the market in favour of some social elites. The magic is making the rest of the world believe that this rules that work for those benefitting from them are “natural” or “the best way to go”. But this is also an old trick, that has been played by elites during feudalism and ancient rĂ©gime with great success. Maybe is time to change our myths now!!!
SantiDominguezV said…
Clara, you are right, I had not really thought about the parallels with feudalism, but I guess one could say that we are in a feudal fiscal system, where the very rich and the large corporations do not pay tax whilst the others do, so the system is skewed to their specific advantage, we give most to those who need it the least. The US withdrawing from digital tax negotiations is another example, giving the large tech giants a tax pass that they don't need and which has a huge impact in the ability of many countries to collect tax which will be extremely needed to engineer the recovery

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