*** The Official MAGAposting thread ***

[wufwugy]

You asked for a market-wide failure. If you're contending that it's not market-wide because it doesn't affect people who live without electricity, then I think I have to shake my head and walk away. Can you clarify?

One firm collapsing at one point in time is not a market failure. A market failure would be if those people in Vermont had an electricity market in which government didn't intervene and the private sector also didn't find a solution, both within reasonable time.

Note that we should be saying "free market" in this case instead of "market". But we're generally using "market" to mean "free market" so let's leave it as is. That's normal.

Right. So what happens if a school becomes unprofitable? What will it's shareholders do with their investment instead?

It's certainly plausible. Let's say a school does a massive expansion/remodel with the intention of attracting a larger student body and generating more revenue. Now let's say people don't change to that school enough to cover the additional overhead and the school starts losing money. Why would that school stay in business?

What happens to the students when it shuts down?

Use your imagination. Markets correct for this sort of shit constantly in all sorts of other markets.

This is not what I'm talking about happening. What I'm talking about is the government stepping into markets and eliminating risk.

Two things: (1) this has the frequent effect of creating other risk. The concept is called moral hazard. (2) The risk has a cost, so the cost of the attempt to eliminate it should be balanced with that cost. Government tends to adjust for this risk/cost dynamic less well than the private sector. We end up with a situation where a specific risk is eliminated at a higher cost than the people affected value it.

When the government subsidizes risk, you create a situation where the business is actually encouraged to take higher risks, seeking higher returns, but never feeling exposed because the government has your parachute ready. This is bad for consumers. It means businesses, in this case the very business that controls education, and thus your entitlement to fair access to the market place, is able to take on new risks with impunity.

The first part is correct and shines of the moral hazard issue. I'm confused on how you go from there to the second part. In a free market, the government isn't subsidizing risk nor do businesses control education. Consumers control it more than anything in that case. There is not taking on of risk with impunity in the marketplace free from government intervention. It's the intervention that causes the impunity.

Bottom line. If you're going to privatize education, then you must either
A) have the government subsidize the risk. Essentially declaring schools "too big to fail". This is bad.

It's awful and it's not free market capitalism. It's crony capitalism.

B) accept the risk that a school, or district, might fail and essentially leave those citizens without access to education. This is also bad.

This is a screenshot. Economics discusses what happens over more than a screenshot. In the situation you described, the incentive for others to fill the gap increases. But that's still not the right way to look at it because there are millions of moving parts. We see the millions of moving parts in action in other markets, where firms fail all the damn time yet quality and quantity of goods/services keep increasing.

Honestly wuf, if you're going to advocate to privatize anything, even if it works, the final resolution is probably going to be some slow, complicated, unweildy monster made up of a hybrid of private business and government. Why bother??? Wouldn't your efforts be better spent using the political tools at your disposal in order to drive effective management of education by the government?

The reason for not focusing on better management by government is because by nature it is not possible (over time, on average, in aggregation). That is, unless you can show in theory that the government has an information advantage over the private sector. To be more specific, a government education system simply cannot undergo the same level of trial and error to progress that a private system can. I want to put my efforts where they matter.

If you're just gonna say "government sucks at everything, so why bother trying to fix it", then you're guilty of the same cynicism that drives black youths to drop out of high school.

I don't say that. I say government sucks relative to the private sector because it does not have as robust structural incentives regarding bettering peoples' lives as the private sector does.