In this National Journal article, Congress is challenged on its ability to make informed decisions. We have recently just covered a section on information asymmetry that exists in the market place. Many examples provide solution in the form of government intervention to prevent market failures. However after reading this question, I am uncertain that the federal government (or any level of government really) can provide timely and effective intervention when their source of information comes from research that may be biased. According to the article, Congress significantly "gutted" its research staff in the 90's and are now swimming in the sea of information with a sail. The result may be the emergence of more internet-is-not-a-truck comments from the chairman of senate committee on commerce, science, and transportation. A more extensive overview of the report cited in the article can be found here.
We have learned asymmetry of information in the market usually leads to higher costs, I wonder what will be the cost when the people that are suppose to protect consumers from such failure are subject to the same blindfold. In the face of overwhelming information and little knowledge to navigate through them, are consumers at the mercy of special interest groups?
1 comment:
Moh A: 88/100 for a capitalization and a grammar error. I did not take off when you said "with a sail" when you probably meant "without a sail". Plus putting "swimming in the sea" together with "without a sail" is a mixed metaphor: it doesn't make sense if you think about it.
There actually is a school of thought that hasn't made it to textbooks for non-specialized classes like ManEc yet that discusses government failure rather than market failure. The position of this literature is that addressing market failure with government requires a cost-benefit analysis of the government intervention ... and government should be dissuaded when its actions are likely to make things even worse.
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