Well, yes and no Professor Krugman, yes and no

coase.jpg

The economics of this is of course correct For Paul Krugman is indeed an extremely fine economist:

We may live in a market sea, but most of us live on pretty big command-and-control islands, some of them very big indeed. Some of us may spend our workdays like yeoman farmers or self-employed artisans, but most of us are living in the world of Dilbert.

And there are reasons for this situation: in many areas bureaucracy works better than laissez-faire. That’s not a political judgment, it’s the implicit conclusion of the profit-maximizing private sector. And people who try to carry their Ayn Rand fantasies into the real world soon get a rude awakening.

The political implications of this are less so, given that Paul Krugman the columnist is somewhat partisan.

And of course that implication is that since that private sector (as Coase pointed out a long time ago) uses bureaucracy at times then we should all shut up and simply accept whatever it is that the government bureaucracy decides to shove our way.

Which is to slightly miss the point: yup there's command and control islands in that sea. Bit it's that sea that srots through those islands, sinking some and raising others up into mountains. Which is something that doesn't happen with the monopoly of government bureaucracy: they don't allow themselves to get wet in that salty ocean of competition.

That planning and bureaucracy can be the most efficient manner of doing something? Sure. That sometimes it's not? Sure, that's implicit, explicit even in the entire theory. How do we decide? Allow that competition. It's the monopoly of the government bureaucracy that's the problem, not that we somtimes require pencil pushers to push pencils.