Any industry or economic activity where extractive financialisation takes priority over productive economic activity that delivers human value.
Example: the UK's privatisation of water utilities. The UK's water now exist to turn government handouts into dividends while providing as little practical value as possible.
This is not hyperbole. The industry literally dumps shit in the UK's rivers to save operating expenses, and has built zero new reservoirs since privatisation.
City transit-it transports more people than taxis and uber put together. The trade off is public transit is slower (in my case 35 minutes by link-rail vs 15 minutes by car, and probably 20 minutes if I were to take an uber)
let's reverse the question. Where are markets expected to be optimal?
> definition of 'perfect competition' perfect competition, in which there are large numbers of identical suppliers and demanders of the same product, buyer and sellers can find one another at no cost, and no barriers prevent new suppliers from entering the market.
And that perfect competition provides the price signals that allow the market to be more competitive.
The less that holds true, the less efficient the market is going to be.
What is the price signal on education?
What is the price signal on public infrastructure?
What is the price signal on rule of law and the ability to enforce contracts?
Wartime production mobilization, public health (vaccine procurement, disease eradication), natural monopolies like power grids.
Public transport, water and sewage systems, infrastructure like roads and bridges are more of a hybrid model with a strong planning component, and private contractors (who consume a lot of public funds and often misuse them).
These are good examples and it’s even worth noting that the net impact of these can be a huge boost to the market. But it is a local and greedy optimizer. It doesn’t think “would having public transit improve the economy long term” it thinks “could I make enough on fares to justify the investment” (which is almost always no, at least relative to other investments). This is the nature of positive externalities. They are value that the market is unable to weigh in its decision making.
I’d have thought that ‘the free market doesnt make subways’ is a market coordination problem, not an externality one?
Meaning, I think that ticket sales can a good job of capturing the costs and benefits of transportation - the benefits to the consumer and the costs to the producer. It’s worked well in other areas of transportation, like passenger boats and planes, and the market mostly works well in those areas.
So I’d have guessed that issue with subways, different from planes and ships, is that you have to buy the rights to large portions of underground land in order to build your lines in contiguous fashion. It’s hard for private developers to get the rights to these lands, if one landowner refuses to sell, it can block the construction of an entire line. This is why rail, dam, and highway projects tend to be coordinated by the state. They all suffer this problem, which doesn’t apply to transport by air or sea, as air and sea lack similar private property issues to trip over.
Yes, as you say the market is a local (both in space and time) and greedy optimizer.
Long-term payoffs that increase the value of all participants in society, such as education, healthcare, infrastructure (roads including public transportation, water, electricity, ...), are demonstrably better served by government than by business.
