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July 28, 2009

Comments

citoyen

Obviously there is no "guarantee"; that does not mean that in some contexts there might be a "comparative advantage" for the government that makes it more able to act rationally than the market. The issue should be put in comparative rather than in absolute terms. This is Stiglitz's view, indeed http://www2.gsb.columbia.edu/faculty/jstiglitz/download/papers/1989_Onthe_Economic_Role_ofthe_State.pdf

In general, the state -just like most bureaucratic organizations- is procedure rather than outcome-oriented which makes it a more conservative institution.

jameshigham

he notion that the state is rational is as fanciful as the notion that it is benevolent

Not only no guarantee but almost a guarantee in the opposite direction.

Leigh Caldwell

Thanks for the writeup Chris - you make some good points.

I have responded in more detail to the point about 'how rational is the regulator?' in the following item: http://www.knowingandmaking.com/2009/07/buzz-about-behavioural-finance.html

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