Market Failures, Taxes, and Subsidies: Crash Course Economics #21
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- čas přidán 26. 06. 2024
- This week on Crash Course Econ, Jacob and Adriene are talking about failure. Specifically, we're talking about market failures. When markets don't provide a good or service efficiently, that's a market failure. When markets fail, often governments step in to provide those services. Stuff like public education or military protection are good examples of market failures. So, what are some of the ways governments address, market failures? Well, it's funny you should ask, as we also talk about that in this episode. We'll get into taxes and subsidies and externalities and a bunch of other important stuff this week on Crash Course Econ.
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Takeaways:
•Free riders - people who benefit without paying
•Public good - anything having the characteristics of non-exclusion and non-rivalry
- Non-exclusion - the idea that you can’t exclude ppl who don’t pay
•Tragedy of the commons - the idea that common goods that everyone has access to are often misused or exploited. It explains most of environmental problems
•Externalities - situations when there’s an external cost or benefit that accrue to other people or society as a whole.
- Negative externality ex: polluted river
- Positive externality ex: education
•Regulatory policies - rules established by government decree
•Market based policies - policies designed to manipulate markets, prices and incentives to correct market failures. Ex: taxes and subsidies
"...or a satisfying ending to game of thrones"
Yeah, too many free riders...
that was because of lack of "regulation" on the staff as in not contracting them to make long enough episodes and enough seasons for the ending so it was just rushed. Honestly should have changed writers. Luckily they've been kicked off of making a star wars trilogy which is why they rushed and left.
She predicted the unsatisfying end to Game of Thrones ......wow
yes!
The moment I heard it, knew there will be a top comment about this. 😛😛
you beat me by 5 months. people are still watching crash course video 3 years after it posted huh
The power of economics.
I laughed when she said that I thought it was a joke then i saw the video was a 3 years ago 😂
"The question isn't 'which is better, free markets or government', the question is 'how can they work together to make our lives better.'"
I wish more people looked at it this way.
The moment i started reading this, the dialogue in the video lined up perfectly.
Bobo The Talking Clown The government precludes the "true" free market because it gives way to monopolies. Public-service trade unions, corporate lobbying, cartel management and welfare are all impediments to the free market.
@@xxczerxx However the problems you mentioned exist in the current market, how would you prove the "true" free market would not induce similar problems?
@@michaelwang5204 The government could just fight against private monopolies and not help creating government-backed monopolies.
@@michaelwang5204 Because public-service trade unions, corporate lobbyists, cartels, and welfare queens have the gun/law on their side. It's allocation inefficiency. The true free market, as a multitude of free individuals, are much better at this than any state planners with guns.
This 10-minute video is much better than my school's 2 hour lecture
holy bejesus! they predicted the ending of game of thrones !!!!
There are two things certain in life: death and awesome thought bubble animations
death is not certain...
+Alex Stefanov (umnikos) dun dun dunnnnnnnn
+Alex Stefanov (umnikos) Definition of dying is the end of life, therefore death is 100% certain over infinite time. Checkmate atheists!
+Cryp Tic Two things in life are certain: Deez Nuts
+Cryp Tic I see you fucking everywhere!
Politicians, Republican & Democrats alike, should watch these videos.
Like if you agree ^.^
+June Clever Haha. Socialist. If only you knew.
+June Clever I fucking love how hardcore capitalists call these videos socialists while actual socialists call these videos capitalist.
It's the greatest thing.
+Verc James No, they should be replaced with engineers, scientists and people who know what to do and how, not only in USA. in all countrys. (this is called technocracy and it has evolved and kind of been corrupted but it still exist)
sorry for my english it is not my main languaje.
+Verc James I agree but I don't like you specifically because you said "like if you agree".
+Carl M my humble apologies kind sir. I wanted to take advantage of UX design and needed something to take capitalize on the white space that a line break provides. Larger text area's with large white space is easier for the human eye to read at a glance. It also serves to call attention to content. What would you have me replace it with for future comments?
Essentially, it's the Prisoner's Dilemma with 7 billion participants and the outcome for non-cooperation is a sliding spectrum of bad consequences brought to you by the Four Horsemen (pestilence, war, famine, and ultimately death).
*conquest, famine, war & death.
+hyperbolic fuckboi I'm pretty sure it is pestilence.
Jeremy Downey nope conquest, pestilence and death are essentially the same.
+Zach Gaskins It's a bit different than the Prisoner's Dilemma. In the Prisoners Dilemma, no matter what the other guy chooses, it's better for you if you choose to rat him out. In this, if 49.999999% of the world already chose 5%, it's better for you to choose 30% since it's better to pay for solar panels than to experience extreme hurricanes.
hyperbolic fuckboi Pestilence and death are not the same, pestilence is disease. But upon research, you appear to be right. Pestilence is just more common is pop culture because war and conquest are similar, so it makes a more interesting story if the four horsemen are different.
I love you guys!!
You're doing a great job!!
You're making us aware of a lot of stuff that we think are just boring and not important!
P.s. I've never been so intrested in economics and I'm studying economy since 2011
Thank you!
Love this episode - Clearly shows how economics can be applied to improving our society, especially from the environmental aspect which is something I am particularly interested in.
And i am sure other episodes would appeal to other viewers with different interests too~
I have an economics exam next week and I'm watching this entire series as revision, thanks guys it's really helping :)
+NuclearMushroom1000 read Mises
Thank you Jacob, Adrian, John, Hank for providing free education and being such great teachers! I hope Crash Course will discreetly help shape our future (a better one of course) where people are educated and life on earth is better!
I'm thankful for the Crash Course people. Teaching me what my teachers should have taught me instead of ignoring all of my questions. ☺️
This video is a great primer for those who are convinced anarchocapitalism works well, and even for libertarians.
+Matt Smith
anarchocapitalism - Ok in idea, impossible in practice.
You can't have capitalism yet be anarchic at the same time. they're contradictory.
+MeGusta GameStation It's the same with Communism, though. Pure government is just as bad, in practice, as no government.
+Matt Smith there are three things you can't convince the internet:
1 - To be polite in the comment section
2 - That anarchocapitalism or libertarianism (US version) does not work, it is implausible
3 - That no one cares which console has incremental better graphics. In the end of the day, you don't get any money proving which platform is better
+Anderson Andrighi 666% true. We all know the consoles pale in comparison to the PC master race.
+Matthew Beazley +Matthew Beazley maybe even worse because true communism would be harder to escape than pure libertarianism.
Thank you so much for the information. Very impressive.
One of the mains reasons for government involvement in the marketplace is that free markets do not always result in the socially efficient quantities of goods at socially efficient prices. On the other hand, before, I was really disappointed whenever I received my monthly salary less taxes but now I realized taxes helps us a lot and it discourages individual or firms behavior.
Well Game of Thrones had an unsatisfactory ending.
thank you guys for making these, i can wrap my head around the topic in your 10 min video when i cant in a 2 hr university lecture
I love that this was published so close to when my report on government policies and market failures will be due. Nice to see examples and well summarised.
Dannng it is amazing how these videos are so foreshadowing. Last video the gasoline shortage, now the unsatisfying end of game of thrones. Thank you so much for all the work that you do Crash Course 👏🏼
Literally watching this an hour before the final exam XD
It's fascinating to listen to the discussion of the Free Rider problem, and then hear a pitch for Patreon.
Man, I love this series. I regret not taking economics in university so this is filling in the gaps really well. Thanks Jacob and Adriene!!!! (I also figured some appreciation could cut through the grease of comment battles for you guys as well) (Thanks to the BTS team too!)
Interesting video, thanks for making economics enjoyable to watch :)
Reading the comments
Every episode until now: You guys are awesome for explaining why free markets are the best.
Today's episode: You guys don't know anything about free markets!
Me: I shouldn't read comments.
+TrulyEvilBob Yeah, it's pretty bad.
+TrulyEvilBob Yeah, the comments section is pretty messed up... The dislikes as well, I don't understand why so many people dislike the videos, I think they're great!
Lec sjfsadk Ideology blinds people. If someone is given a fact that goes against established beliefs they will reject the fact snd double down on what they already believe, even if it makes no sense to do so or sometimes violently. It's a piece of human nature we need to constantly point out and fight against. I hope that helps you understand.
TrulyEvilBob yeah, well I thought so, it's just surprising that people still have so many fixed beliefs. We should be able to understand there's no absolute truth by now, and still... Well, as you say, human nature. I hope I won't fall in this trap for as long as possible - or that I'm not in it right now lol.
this series single handedly predicted the coronavirus pandemic and the crappy GoT ending.
VERY insightful video with lots of great examples. Thank you Jacob and Adriene!!
Thanks for sharing in such an illustrative way. It's so much easier to understand things this way.
Become “More interesting to talk to at parties”, yup, that’s exactly why I’m obtaining my degrees
My microeconomics midterm is tomorrow and this helped more in 12 minutes than my professor has in weeks
@0:02 - Dope belt buckle, Jacob!
Thank you for that anecdote on the acid rain program - that is fascinating and positive news!
No one:
Jacob: I'll talk about this abstract thing that most people won't be able to comprehend right away at the speed of bullets being shot out of a machine gun.
Could you please make a video about foreign exchange controls?
thanks guys! you're doing a great job! :)
Thank you so much for uploading this video and working so hard on it, it helped alot in the understanding of this concept ☺️☺️
You guys are calmer now, so I like you better.
Well I guess we brought this shitty end to game of thrones on ourselves
naw, dnd couldn't write. Not our fault.
Thanks for the video! I had to use this video to make notes for homework!
Amazing video, very very good explanation of what causes market failure as well as incentive.
Wonderful explanation. Thank you.
Sorry to break this to you but most of this video is empirically wrong.
+Ryguy2824
Citations?
I find it mildly numerous that you claim that the video is "empirically wrong," and don't provide and empirical evidence to back yourself up.
+Yujie Wang ignore him, hej's a nitwit.
The video proposes taxes and subsidies as an ideal market-based solution to promote government policy, but if you've watched their earlier video about deadweight loss, you would know that actually there is a real, social cost towards taxation due to the decrease in business it causes. So if anything, taxation has a negative externality of decreasing social well-being by stifling the market and making everybody else in the economy less well-off.
But don't despair! This video didn't mention this, but Nobel Prize-winning economist Ronald Coase came up with a solution where the free market can regulate externalities called the Coase Theorem. A good example is with carbon credits (not the same thing as cap-and-trade). By turning carbon emissions into tradeable, priceable goods, markets can be created where these costs can be negated without the deadweight loss of taxation. There are companies that now plant trees to gain credits that they then sell to coal power plants and other polluters. No taxes, no government intervention, no problem.
Best video in this series so far - well done folks
Love this video! Great crash course!!
haha we didnt get a satisfying ending to game of thrones anyways XD
The situation with the students was an example of market failure, but that's because market failure applies to group action and not just product markets. Since governments are also groups of people, they can fail to create rational laws, resulting in harm. Governments also only solve the problems of externalities and monopolies by establishing a larger monopoly (itself) and externalizing potentially more costs onto the population (taxation and regulatory overhead).
really informative, thanks a lot!
well ilustrated! thanks for your help!
*glances at comment section*....why did I think it was a good idea to look in here again?
So is building the largest military in the world a negative or positive externality? & what is the effect on the environment when building & using thousands of tanks, drones, helicopters, fighter planes, ships, bombs, & military bases?
Great topic, great explanation, great video
the greatest channel ever ❤
love u mr &mrs bubles😂❤
So... this video fits the definition of a public good. But it's not provided by the government, it's crowdfunded on patreon... Interesting.
I qualify as a free rider, because I never click ads (personally I think they're unethical) and patreon doesn't take bitcoin.
Maybe doing a video about nonprofit organizations would be interesting. Wikipedia really stands out as a topic for me.
Do the thumbnails for these videos say "Don't Forget to Be Awesome" in Latin? (Look on the arch in the middle of the dollar.)
yes
Thanks for explaining externality for my igcse exam tmr!
Thank you, sir. what are the effects of market failure on prices, efficiency of market operation and economic welfare?
"Sometimes"
"... sometimes markets get it wrong...."
Oh. You noticed.
it is rare to get both sides of the coin on youtube, this is something I value a lot of crash course
When it comes to private and public schools, if there were only private schools then pricing would drop because of the increased competition. There would be some schools that are like McDonalds - low cost, low quality, and others like high-end restaurants - High cost, high quality. So long as all the schools reach certain standards of education, then it would all work out for the most part.
Free market theory and that is what it is and what it will forever remain. Theory.
Did you ever hear the Tragedy of the commons? I thought not. It's not a story the industrialists would tell you...
Very helpful thank you.. some teachers need to watch more YT, they need some improvement in their teaching skills!! JUST SAYING
This presentation encouraging me to shift to economic fields
nice video - easy to understand , grt examples
Crash Course Economics missed an opportunity to acknowledge 'gentrification' is a form of market failure.
Covid 19 is also an example of market failure 😂😂
2:00 Trust me it wasn't the pirates that made got's ending suck. Lol you guys are great.
omg my two favs in one vid
You can't say nobody is perfect. I'm perfect. My mom said so!
+Lucas Robert Hansen Jantunen (Jobnm) What is perfect though?
No, she said you're special. There is a difference.
special needs
yet it's the same subsidies that go into education that lead to the increase in the cost of tuition...some of these examples are too overoptimistic and the criticism against regulations are misleading too.
+That Guy well good for you. Next time leave your irrelevant interjections at the door.
Yes it does, the cost of higher education increases due to subsidies because all those subsidies need to be processed and more admins in financial aid and such are needed to do so. This has been pointed out by several news sources and think tanks. This is then compounded by the expectations parents and students have of college today which is less about academic rigor and more about comfort which leads to schools investing into more amenities and student life. these students/parents are often the most well off while the students who would more benefit from what is lacking now(academic rigor and affordable tuition) are burdened with debt and more likely to drop out.
Here's an article that covers it:
www.nytimes.com/2015/04/05/opinion/sunday/the-real-reason-college-tuition-costs-so-much.html?_r=0
.
.
German tertiary education is practically free for everyone, including foreigners. The cost isn't rising significantly there. It's an American problem.
Thank you. Well done.
This is the best video of the serie ! Big thumb up !
This is the part of economics right wingers like to forget about.
+RaitoYagami88 The Left wants to control business and the Right favors corporate welfare. There's no difference between the two. This video was showing the dangers of crippling government regulations and the poisoning of the free market with subsidies.
+RaitoYagami88 What makes you think economics is a right-wing/left-wing thing? I thought this was about SCIENCE?
+Deadvalley76 What are you talking about? How did you get that out of this video.
+Jachim Soyer If you know politics then you know that a lot of republicans think that a completely free market is somehow a good thing. Thats what he is talking about.
+The ChillyWinds There is no such politician that thinks a completely free market is a good thing.
I cant believe climate change's existence is still controversial in 2016
Doug Dimmadome, owner of the Dimmsdale Dimmadome
Because sadly, there are a lot of rich people who benefit (in their remaining lifespan) from spreading denial.
I mean is that so shocking when the President of the United States is a reality TV Show host who is also a conman?
Seriously - especially since global temperature has been stagnant now for over a decade and all warming prior to that has underperformed the models.
Well maybe if scientists kept overestimating the rate at which the polar ice cap is shrinking, and creating predictive weather formulae that tells them whatever they want it to, it wouldn't.
Its cause isn't proven to be linked to Co2 ,so it exests but regulating CO2 will not help.
The crash course at cruising speed videos..had to watch at 0.9x :))
Great channel! Thanks :)
Too many people illegally downloaded GOT I guess....
We didn’t get a satisfying ending to Game of Thrones. Too many people illegally downloaded I guess.
Came here to say this
Perhaps this is true, maybe D&D were so pissed off about it they decided to ruin it on purpose. Or perhaps, they were the market failure in the first place, banking on someone else doing the heavy lifting and then when Martin told them to eff off they tanked.
thhis is amazingly informative
You completely omitted the exclusionary use of property rights to solve environmental problems.....
your argument sounds like one advanced by an Austrian, likely an an-cap.
traditionally, a thing (but specially land) passes from unowned to owned via either occupation, substantive improvement or by force of arms; if you are trying to use private property claims to protect land from human encroachment you can't use occupation or substantive improvement to justify your ownership claim, leaving just.......
+gusg343 Wat about cases where it is hard to quantify exactly who is being affected by what, like climate change?
Sideeq Mohammad Well would you the 12 different treaty's and billions spent on regulation has worked?
I sure wouldn't, new technology will make oil and gas obsolete and that will have to happen at the pace of improvement, throwing billions at it has not speed up the development of alternatives so more of the same seems useless.
Stevie Wonder Force of arms is perfectly justifiable when used to defend someones rights to life liberty or property, outside of that it is morally wrong.
gusg343 So what is the criteria to be able to own land? Can I claim any land I want? How does 1 determine what is rightly THEIR property?
game of thrones references didn't age well
Who else likes that they use the thought bubble ITS HELPS SOOOOOO MUCH!
New episodes pls! can't get enough
Why is democracy any more likely to produce correct allocation of resources than the market? Are they not also subject to the exact same failures as markets? Possibly even to a greater extent.
Then Dictatorship FTW!!! No one can do something under glorious dictators nose! If one does,meets end of barrel!
But really,if we voted for someone and we find out he does not do the things we asked him to do its ether to the fact some smaller politican's are misusing there power or the president does not care for our problem and is hoping some bigger mass of idiots will vote for him... It's never for "Government is evil!" Being evil for no reason is dumb AMD not how things work...
+sharperguy Perfect example of government working is education. If government did not intervene in education, there'd be a stupider nation, and a stupider nation can't produce as many resources as a smart nation, even if that smart nation 'throws away' some of its resources on social programs like education.
Adam Hamdan That's the government failing because the U.S has a crappy government, not because government intervention is inherently bad. Where I am, kids go to private schools to get easy As, in order to be able to apply to prestigious universities, and then flunk out of those universities since university is a lot harder than they were ready for. Public school is generally superior.
If you're millionaire rich though and can afford a high level private school that does offer quality education, send your kids to it. That's free market doing its job, and working great. But it costs a lot of money to afford private school that's superior to public school, since the government offers free education, demand is very low.
+Jeremy Downey The allocation of resources only works best when the government actively reduces corruption in it's own governmental foundation and in the market as well. Obvious evidence is in the reduction of the middle class. Proof of a working economy is only evident when there is high class mobility and a large middle class. Capitalism does not work when the politicians in the government and big companies owners jerk each other off, because it lets the upper class have unrestrained political power, therefore they have no competition which reduces class mobility.
+Tr lawi0 A dictatorship is even more likely to create an incentives failure than democracy.
Street lights and other infrastructure are important and should be paid for by those in the area. For instance, if a business wants people to be able to get to them, then they need to pay for the infrastructure around their location and simply add that to the cost of their good/service. There are also private roads, tolls, and plenty of other privatized options for paying for these things that would be far more efficient. America's infrastructure is currently crumbling. Give the responsibility to those who use the infrastructure and you have more accountability and more efficiency. Private companies already build pretty much all of it. Just cut out the middle-man called government. The tragedy of the commons is exactly why I don't want public goods/services. They are common goods that everyone has access to. They are often misused and exploited. There is plenty of corruption and waste in these things with little real accountability. Instead things like education should be in private hands where they are far less easily exploited and far more accountable to the consumer. This produces higher quality and lower prices for such goods/services through free market competition. Just keep the government out of it and let it be truly free. The tragedy of the commons is exactly why we should have less public things and more private things. People take care of things they own themselves, privately. If you own something as a collective, then you generally care less about its maintenance. With environmental issues, the solution is private property. If a business is harming your person/property (polluting the air you breath, your land, your water, etc.), then you should seek legal action against them. You should also boycott them and encourage others to do the same.
'Tragedy of the commons' sums up humanity very nicely.
Woah! AC/DC Econ is on here!! Moving up in the youtube food chain.
I've been watching since episode one, and Adriene Hill gets prettier and prettier
Betsy DeVos needs to watch this.
I m from IndiA , I love ur channel !
Loved this one ^_^
Also education is one of the biggest examples of government failures when it comes to trying to mandate a higher supply at the expense of high costs and poor quality.
Yes.. To assume that everyone gets a great education is what makes this video wrong.
And the implicit assumption that private = prohibitively expensive
I'd choose 6p with the goal that no one gets extra points... Yeah, I'm that kind of douche...
+Rififi50 I would choose 6 because I would be perfectly fine with getting none, what do I have to lose? It also makes it more fair if nobody gets it.
If everybody gets 2 points the value of points decreases.
+MiddleClass SeaBass Yeah, I agree. Everyone equally losing out on just 2 points is way more fair than letting a couple douchebags win 6.
+dangerouslytalented Only if the test would be curved down.
+Rififi50 This is why we can't have nice things. But seriously though, I read that professor's study. People don't ever pick two points because two points never does anybody good, but people on the edge need that six points.
A great, centralized video. Very minimal bias.
After seeing all Crash Course Economics videos, i came to this conclusion: for the free market to operate in nice terms and to common benefit, it depends a lot on ethical practices. I guess you could say this applies to everything, but since free markets is how most countries operates in the globalized world, it requires a special focus. I'm still somewhat cetic about free markets, as it's implemented, is the best system for trading and other related stuff.
The free rider problem isn't a market failure, it's a collectivism problem. You get it with government, not with the market.
Also fire, defense and education aren't a collective issue. People should be free to opt out as they see fit. No payment, no service. Further, the market isn't failing to provide them. The government took them over.
Defense actually isn't non-excludable either. You can choose to not defend a patch of ground.
James Adams How about those who can't afford to pay? Should we let them die in the fire because they "chose" to buy food instead of a fire insurance ?
Zoykah appeal to emotion fallacy. No person is entitled to a good or service for existing.
James Adams So you say yes, we should let them die. Well I understand now why you seem to be a fan of the Austrian school. I mean, sure those people who don't have insurance could die because of that, but at least we followed logic, so the system works!
so you say the army could say "ah we don't defend your house just your neighbours house?" thats just rediculus.
And you have basic human rights if you can pay for it or not. Otherways everyone with a disbility woud be left to die. If really think so you are just a monster.
It's not "rediculous" but just impractical.
You don't have a "basic human right" to someone else's stuff, period. To suggest otherwise is slavery. That makes you the monster, not me.
A video about how crowd sourcing doesn't work
On a crowd sourced channel
Great for the IB! thnx
As always, it leaves lots of confusions to me.
The piracy example is bad, I wouldn't watch it if I couldn't get it for free. There is no loss for anyone. I've actually gotten several people to pay for it, so I'm actually helping them out.