Venkatesh Rao

I’m generally pro-market/capitalist but for different reasons than libertarian idealists who think the market will magically fulfill a function like weather service or environment more “efficiently.” Which means I’m pro-state in more cases, and *different* cases.

First efficiency is not an end in itself by default. There are other concerns like robustness, worst-case capability, values etc. The efficient way to provision many things is to not provision them. The efficient solution to poverty might be to let them all die.

Second, it’s far better to have an apathetic, incompetent, inefficient state bureaucracy fulfilling a function than a crony capitalist efficiently, competently, and passionately pursuing self-interest against the public good.

One reason free marketers often hate Coasean economics is that to be a Coasean is to recognize a) social costs b) the principal-agent problem of having a few profit-oriented firms in charge of a function where their agency allows them to hide social costs.

Imagine if the response to the forest fires was to privatize firefighting. You can bet the first thing the crony capitalists would do is drive legislation declaring non-approved unlicensed AQI meters illegal and take over the EPA. Control your comp metrics. Hide externalities.

It would naturally be a consortium of PE types who also own private prisons and wilderness interface real estate who bid for the firefighting business. They’d figure out a way to keep rich areas clean and avoid instrumenting poor areas with sensors.