The naturally flawed market
Thank you. Someone else with a spark of understanding about the systemic sham known as the free market. From p227 of Sustainable Energy - Without the Hot Air:
Larry and TinaDon't worry about it if you don't understand the argument, Myron. The concept is well beyond your intellectual pay-grade. However, it can be summed up with the simple assertion that the very existence of the Competitive Enterprise Institute proves that this society is incapable of supporting a rational market economy not terminally polluted by lies.
Imagine that Larry the landlord rents out a flat to Tina the povertystricken tenant. Larry is responsible for maintaining the flat and providing the appliances in it, and Tina pays the monthly heating and electricity bills. Larry feels no incentive to invest in modifications to the flat that would reduce Tina’s bills. He could install more-efficient lightbulbs, and plug in a more economical fridge; these eco-friendly appliances would pay back their extra up-front cost over their long life; but it’s Tina who would benefit, not Larry. Similarly, Larry feels little incentive to improve the flat’s insulation or install double-glazing, especially when he takes into account the risk that Tina’s boyfriend Wayne might smash one of the windows when drunk. In principle, in a perfect market, Larry and Tina would both make the ‘right’ decisions: Larry would install all the energy-saving features, and would charge Tina a slightly higher monthly rent; Tina would recognize that the modern and well-appointed flat would be cheaper to live in and thus be happy to pay; Larry would demand an increased deposit in case of breakage of the expensive new windows; and Tina would respond rationally and banish Wayne. However, I don’t think that Larry and Tina can ever deliver a perfect market. Tina is poor, so has difficulty paying large deposits. Larry strongly wishes to rent out the flat, so Tina mistrusts his assurances about the property’s low energy bills, suspecting Larry of exaggeration.