Janet Yellen’s husband, economist George Akerloff, was awarded the Nobel prize in economics by the Swedish socialists at the Swedish central bank for a paper he published in 1970 on “The Market for Lemons.” In the paper he claimed that because of “asymmetric information” in the used car market, where sellers know more about the cars than buyers, the market would eventually collapse, forcing everyone into the new car market. This of course was complete rubbish at the time, and at this time, since the free market had already solved the “lemons” (non) problem with warranties. Nevertheless, the entire MIT/Harvard/Yale/Princeton wing of the economics profession declared that the free market had yet again failed and more government control was necessary. Hurray!
The carnival-like failures of the form of healthcare communism known as “Obamacare” remind me that although “asymmetric information” is not a problem in the market (different information is actually why markets SUCCEED — it’s called the division of labor and knowledge in society) that the real asymmetric information problem is with ALL GOVERNMENT LEGISLATION. The law creating Obamacare is said to be eight times longer than the Bible. Only a few government lawyers ever read it before it was passed into law. No American citizen has the foggiest idea what the hell is in the law, and never could, since thousands upon thousands of regulations are being implemented to enforce it, and thousands of IRS agents have been hired as enforcers as well. Don’t expect any MIT-style mathematical model to be published in any economics journal that portrays this fact of political life as an example of government “failure.”3:26 pm on November 5, 2013 Email Thomas DiLorenzo