CrashCourse - 2016-01-22
This week on Crash Course Econ, Jacob and Adriene are talking about failure. Specifically, we're talking about market failures. When markets don't provide a good or service efficiently, that's a market failure. When markets fail, often governments step in to provide those services. Stuff like public education or military protection are good examples of market failures. So, what are some of the ways governments address, market failures? Well, it's funny you should ask, as we also talk about that in this episode. We'll get into taxes and subsidies and externalities and a bunch of other important stuff this week on Crash Course Econ. Crash Course is on Patreon! You can support us directly by signing up at http://www.patreon.com/crashcourse Thanks to the following Patrons for their generous monthly contributions that help keep Crash Course free for everyone forever: Mark, Eric Kitchen, Jessica Wode, Jeffrey Thompson, Steve Marshall, Moritz Schmidt, Robert Kunz, Tim Curwick, Jason A Saslow, SR Foxley, Elliot Beter, Jacob Ash, Christian, Jan Schmid, Jirat, Christy Huddleston, Daniel Baulig, Chris Peters, Anna-Ester Volozh, Ian Dundore, Caleb Weeks -- Want to find Crash Course elsewhere on the internet? Facebook - http://www.facebook.com/YouTubeCrashCourse Twitter - http://www.twitter.com/TheCrashCourse Tumblr - http://thecrashcourse.tumblr.com Support Crash Course on Patreon: http://patreon.com/crashcourse CC Kids: http://www.youtube.com/crashcoursekids
"...or a satisfying ending to game of thrones"
Yeah, too many free riders...
that was because of lack of "regulation" on the staff as in not contracting them to make long enough episodes and enough seasons for the ending so it was just rushed. Honestly should have changed writers. Luckily they've been kicked off of making a star wars trilogy which is why they rushed and left.
"The question isn't 'which is better, free markets or government', the question is 'how can they work together to make our lives better.'"
I wish more people looked at it this way.
â@G-Rex Saurus Yeah, no, it's really not. You're saying that the government should break-up private monopolies because that is, based on your intuition, the only thing the government would need to do to foment an efficient allocation of resources. Where would the money for such an enforcement apparatus come from? Who would staff it? How is it possible to do that without levying market-skewing taxes?
Further, why are you focused on private monopolies to the exclusion of other failures like public goods, the adverse selection and moral hazard caused by information asymmetries or the inefficient pricing that comes from externalities?
Even more basic than market inefficiencies, do you think the government should not be involved in protecting intellectual property? Should the government not provide courts to people so they can sue to enforce contracts? Who should standardize time and weights and measures if not the government? These are all forms of government intervention into society.
@talos1279 is not being dishonest, they are demonstrating a serious flaw in your logic. Who appointed you the person who decides the government interventions we need and don't need? At the very least, a market relies on a collective entity to establish property rights and chain of custody, enforce contracts, provide adjudication for financial disputes, and standardize necessary elements of goods and services transacted. Clearly, the idea government intervention should exist to combat private monopolies and ONLY private monopolies implies a deeply flawed framework that fundamentally misunderstands how the pricing mechanism works or how the benefits of the market accrue to buyers and sellers.
Just because combating private monopolies was the only thing you could think of that we need the government for, doesn't mean that's what is actually so. I strongly recommend you re-watch the video again (and perhaps several more times after that) and pay more respect to the delicate balance and the often-violated assumptions that are required to make sure a market works as intended.
Free market all the way!
Minimal government. Government can only make our lives better if they protect our freedom and give us the right to own private property. The rest will be solved by the free market and the consumer will decide the winner. The Keynesians, though, will come up with all kinds of mental gymnastics to fight "market failures" through the government control and intervention.
I think the answer to the question of which is better, the government or the market, is the market is almost always better. Even with schooling, the market does it better. The problem remains though: the market doesn't always provide access to everyone, and that is the fundamental issue that we have to tackle.
@zygi22 you mean like correcting the great depression and great recession?
@Claire Rodriguez No. That's because we've not had a genuine free market since great recession without serious government distortion and manipulation with rules and regulations. We've had pathetic GDP growth of approximately 2%.
"You can support Crash Course at Patreon, a voluntary subscription service where your support helps keep Crash Course free, for everyone, forever. There's just one small catch..."
No one:
Jacob: I'll talk about this abstract thing that most people won't be able to comprehend right away at the speed of bullets being shot out of a machine gun.
By socialist dictators
There are two things certain in life: death and awesome thought bubble animations
+Cryp Tic Two things in life are certain: Deez Nuts
+Cryp Tic I see you fucking everywhere!
+Alex Stefanov (umnikos) lol
@Nate Petersen Yup.
and taxes
Well Game of Thrones had an unsatisfactory ending.
Essentially, it's the Prisoner's Dilemma with 7 billion participants and the outcome for non-cooperation is a sliding spectrum of bad consequences brought to you by the Four Horsemen (pestilence, war, famine, and ultimately death).
@hyperbolic fuckboi War and conquest are different, yes, but similar. You have to have war before conquest, and conquest is the assumed action after war.Â
You can die by means other than disease though. Bleed out, brain damage, freeze to death, burn to death, there are many ways. You can survive a disease as well. Many people survive the flu and the common cold.
Then when you, as a content creator, have a story with the four horsemen as characters, you're going to describe their appearance. Typically famine is a painfully skinny person, war is a guy decked out in armor with a sword, disease has a bunch of pus leaking out, and death is a skeleton or a shadow in a cloak or something. Conquest would look pretty similar to war.
@Jeremy Downey
If there was freezing or burning then they would fire and ice horsemen, in the same way all four horsemen cause death.
Also conquest and war are distinct looking, pestillence would just be a diseased zombie horseman, which is basically death.
https://upload.wikimedia.org/wikipedia/commons/e/e1/Apocalypse_vasnetsov.jpg
http://paisleycircus.com/wp-content/uploads/2013/02/four-horsemen-4-seasons-sebastian-giacobino.jpg
+Zach Gaskins its nash equilibrium at the end.
@hyperbolic fuckboi Look, it's fact that in pop culture the names "Pestilence, War, Famine, and Death" are more common than "Conquest, War, Famine, and Death." I'm just guessing at the reasons to it.
+Jeremy Downey
Disease can be plagues, war can cause plagues but isn't plagues, droughts cause war and plagues, and death is the result of the other three.
Pestilence is a really good word too.
I'm really impressed. I've always been a free-market type of person, but this is the first video I've seen that really made a strong case for something like cap-and-trade. I still think there has to be a better way, but I can see now why so many people favor the idea.
@Mikhail Romanov Oh my, so much nonsense to unpack here.
"It was directly created by the credit freeze from the banking system imploding on itself since the Fed didn't impose any kind of regulation on it such as keeping a certain amount of money"
I'm assuming that by "it" you mean the 2008 crash? Well the crash certainly didn't occur because of a credit freeze, in fact during the crash the fed was telling everybody that things would be fine and the banks were still giving out loans. So the facts simply do not line up here, the crash was obviously caused by something previous to 2008 and there was no credit freeze.
Not to mention the fed does not impose regulation on the banking system ever, they just control the interest rate and the amount of money in circulation.
"If not a credit freeze then what else, if that is almost what caused deflation in 2008?"
Well if you look at what caused the most turmoil it was bad loans made prior to 2008, not a freeze after the fact. Specifically in 2004 when interest rates were turned down to 1% by the fed and what that does is encourage lending, so obviously much of that lending was bad. If you understand what the interest rate does this should be obvious. This was part of the plan to solve the dot com bubble, lower interest rates and inflate a housing bubble which obviously burst in 2008.
"You are an idiot if you think government intervention actually caused the banking system to fail"
Our banking system is the most tightly controlled and heavily regulated industry in our country, if you think they can do anything without federal approval then you are simply being foolish. The whole concept of a sub prime loan was created and absolutely mandated by the government because they wanted more people to own homes. This creates artificial demand for housing and inflates a bubble. In no small part was the affirmative action aspect of the lending system intervention. See, black people have low credit scores and that was deemed to be a problem so a government mandate was created so that people with low credit scores could still get loans and this was against the will of the banks. They had sense enough to not want to lend to people with bad credit scores. Obviously once they were forced into doing so they had to get the bad loans off their balance sheets so they bundled them up and sold them to Fanny and Freddy, other government entities without which none of this could have happened.
"The damage had already been done and the intervention that did occur wasn't enough. The government did spend money but not nearly as much as it should have especially when the economy was going down under already . "
This is exactly the same justification used by doctors who put leeches on patients. You also operate under the foolish assumption that there is some bottomless pit the economy can fall into which is painfully simpleminded. As with any bubble there had been an over valuation of certain goods and when the bubble bursts that over valuation vanishes but the solid parts of the economy remain. So the markets fall and then they stop falling and then they recover. This happens time and time again and government is never needed to bail anything out. This is why what we are seeing now is the end of the slowest recovery in our history with the exception of the great depression which also had enormous government intervention. The only thing government spending can do is steal money away from one part of the economy and give it to another and that creates inefficiency and slows down the recovery.
" The economy almost hit the shitter and was saved through the government intervening but that doesn't mean that the economy will all of a sudden produce at a record breaking pace."
Of course when you look at the aftermath of any other crash you don't see enormous government interventions and yet the economy actually recovers due to a spike in growth and is back to normal within a year or two. That spike in growth is what the government intervention saved us from.
"Plus it was less government intervention (deregulation that began in the Reagan administration; thanks a ton Ronald Reagan one of the dumbest presidents ever) that led to banks giving out subprime loans"
You prove here beyond a shadow of a doubt you have no idea what you are talking about. Deregulation began under Carter and it was quite beneficial. The airlines and trucking industries boomed as a result. But speaking of Reagan you should know he inherited one of the worst economic situations this economy ever faced with the stagflation set up by Nixon and our exodus from the last remnants of the gold standard. His relative inaction gave us one of the best recoveries in history and him doing absolutely nothing after the 87 crash meant that it was barely noticed despite being the largest single day losses in the stock markets in history.
But now you want to blame his slight bit of deregulation from over twenty years ago for the problems in banking today? Never mind that mountains of regulation have been pouring on since then with no sign of slowing? Reagan didn't even make a dent and what his presidency resulted in was an incredibly nice economy for the next two presidents before they finally managed to screw things up again. You have exactly one regulation you can point to as possibly being a contributing factor and that is the part of Glass Stegal which was removed, however that theory gets smashed to bits when you notice that the banks that took advantage of that were actually much better off than the ones that did not during the crash in 2008.
"Stop regurgitating your conservative views as there is clearly no evidence that government intervention caused the Great Recession along with the housing bubble, you have got to be kidding me. "
You apparently haven't heard the conservative views on the banking crisis. It was Bush who did the first huge bailout after all, and Obama just did the same thing as he did but more. Both parties are in complete agreement on this issue that government is blameless and bailing banks out is a good idea. As for "clearly no evidence" you obviously haven't bothered to look at the facts. The federal reserve controls interest rates and they do so only because the government gave them that power, Fanny and Freddy also only exist because of the government involvement. The government sets all the rules for the banking system. If you honestly think they had no hand in this then you are just a sycophant.
Banks are in business to make money, not in the short term but in the long term that is why so many of them are over a hundred years old. It is clearly not in their interest to make bad loans to people with bad credit scores and that is why they historically have avoided doing so. The only reason that changed was because of government mandates.
Don't be too impressed. It's rudimentary level economics that doesn't address the various incentives in competing systems. Yes, there is "market failure" but there is also "government failure". And attempting to address market failure without addressing the costs of the possible government failure, which tends to be deeper and more permanent, will lead to....well, all the problems we currently have with the regulatory state.
+Luaan "Many people don't even consider the direct consequences - thinking beyond that is very rare indeed" that can be applied to corporations as well as government. What is stopping bankers and businessmen from making the same sort sighted mistakes that lead to bigger problems in the long run? Arguably politicians are less likely to make such mistakes because they can't 'cut and run' like business executives can.
Yeah, you just have to research the economics. I learned all of this in college (I was an economics major). A lot of people like to present the free market as the best solution in every case, but that isn't true. As this video mentioned, free markets fail. The primary question is what kind of world you want to live in. Economics is primarily concerned with finding the optimal outcome for society. Money is a vital part of that calculation, but the welfare of society is the outcome you are looking to maximize.
I see
Reading the comments
Every episode until now: You guys are awesome for explaining why free markets are the best.
Today's episode: You guys don't know anything about free markets!
Me: I shouldn't read comments.
+TrulyEvilBob Yeah, it's pretty bad.
Sometimes truth hurts, sometimes people catch lies and bribery. Humans are funny.
+TrulyEvilBob Yeah, the comments section is pretty messed up... The dislikes as well, I don't understand why so many people dislike the videos, I think they're great!
@Lec sjfsadk Ideology blinds people.  If someone is given a fact that goes against established beliefs they will reject the fact snd double down on what they already believe, even if it makes no sense to do so or sometimes violently.  It's a piece of human nature we need to constantly point out and fight against.  I hope that helps you understand.Â
@TrulyEvilBob yeah, well I thought so, it's just surprising that people still have so many fixed beliefs. We should be able to understand there's no absolute truth by now, and still... Well, as you say, human nature. I hope I won't fall in this trap for as long as possible - or that I'm not in it right now lol.
For years the Federal Government taxed cigarettes and spent money on anti-smoking campaigns to stop people from consuming tobacco and at the same time the government subsidized tobacco farmers making cigarettes cheaper.
they subsidize like all farmers lol
+KevintheBooth You rekt that fool. +1
@KevintheBooth So your response is subsidies are complex yet you don't say anything to support your position.Â
+KevintheBooth Because government subsidies are funded by the taxpayer, their effect is to redirect funds that would otherwise have been spent in efficient industries that supply the products consumers have most demand for, to industries that are failing to compete in the free market (in this case the agricultural industry). Now, regardless of whether or not famers need governmental assistance, it should be understood that subsidies invariably bear a significant cost not only to the taxpayer, but to the most efficient industries and thus to the productivity of the economy en masse. As such, the burden to provide evidence should fall to the proponents of a subsidy, and in that spirit, I ask: on precisely what grounds do you base your claim that the social utility of granting agricultural subsidies outweighs the aforementioned costs? (The fact that farmers make higher profits, and that the supply of agricultural products increases while the price level falls, in the short term as a result of the subsidy, does not count as an argument in favour of subsidisation, as these are inevitable short-term consequences of any subsidy, and I do not believe that there is a shortage of agricultural products in United States).
Absolutely Lobbying....
I cant believe climate change's existence is still controversial in 2016
ike It's not controversial, but it's redundant. It's happening and there's nothing that can really stop it.
@Wolf's Den It has been linked to CO2, it's been that way for a while, CO2 is a greenhouse gases, which will trap heat, thus increasing the climate change even further. Regulation will create incetives for the market to move away from causes of CO2, slowing our accelerated pace towards the climate change.
Hello from 2019, it hasn´t improved
hello from 2020. I think we've just given up at this point
Well it's 2020 and half the country still doesn't believe in science
So... this video fits the definition of a public good. But it's not provided by the government, it's crowdfunded on patreon... Interesting.
I qualify as a free rider, because I never click ads (personally I think they're unethical) and patreon doesn't take bitcoin.
Maybe doing a video about nonprofit organizations would be interesting. Wikipedia really stands out as a topic for me.
holy bejesus! they predicted the ending of game of thrones !!!!
Crash Course Economics missed an opportunity to acknowledge 'gentrification' is a form of market failure.
This is the part of economics right wingers like to forget about.
both the right and left want what's best, but they see "the best" in different ways.
How can anyone forget about political environmentalists when they are everywhere. This isn't economics- it's the state trying to manipulate the market.
whoo the OG libertarians!
@Worthless Urchin I don't know what left-wing/right-wing really means, but I need to let you and RaitoYagami88 know that it is not meant to be about opinions in politics. Also, I don't think it is a topic in science. Economics is its own topic and a different feature in society, although it sometimes involves government and politics (like what this Crash Course video mentions).
I think it is more uneducated with special interest
"... sometimes markets get it wrong...."
Oh. You noticed.
glances at comment section....why did I think it was a good idea to look in here again?
Literally watching this an hour before the final exam XD
We didnât get a satisfying ending to Game of Thrones. Too many people illegally downloaded I guess.
Came here to say this
"Sometimes"
Short version: my [the speaker] god [the government] is perfect.
0:36
Adriene: in 2015
Captions : iN 2105
really
7:31 education example perfectly applies to health care lol. Single payer health care system is arguably more important than k-12 education
without governmental regulation, our self destructive human nature fueled by myopic greed is unsustainable and we'd drive ourselves to extinction.
It's not about greed, it's about organising.
If you can't organise all then no incentive in doing something by your own.
Economist Palpatine:
Did you hear the tragedy of commons? It's the story that the producers don,t want you to hear.
I love you guys!!
You're doing a great job!!
You're making us aware of a lot of stuff that we think are just boring and not important!
P.s. I've never been so intrested in economics and I'm studying economy since 2011
Thank you!
1:59 well I guess there where too many freeloaders.
Because we definitely didn't get a satisfying ending to GOT
If nuclear weapons were selling at Target, I would've bombed my school already........
thank you guys for making these, i can wrap my head around the topic in your 10 min video when i cant in a 2 hr university lecture
omg my two favs in one vid <3
Woah! AC/DC Econ is on here!! Moving up in the youtube food chain.
Love this episode - Clearly shows how economics can be applied to improving our society, especially from the environmental aspect which is something I am particularly interested in.
And i am sure other episodes would appeal to other viewers with different interests too~
Crap, I did my test on exactly this matter today :(. Fortunately it went quite well.
the greatest channel ever â¤
love u mr &mrs bublesđâ¤
Thanks for sharing in such an illustrative way. It's so much easier to understand things this way.
Could you please make a video about foreign exchange controls?
12.11 into the vid I got annoyed at how fast they talk so I went to playback speed and put all the way down so funny đđ
Thank you for that anecdote on the acid rain program - that is fascinating and positive news!
Thank you, sir. what are the effects of market failure on prices, efficiency of market operation and economic welfare?
how to stop smoking:
STOP SMOKING
Erudite - having or showing great knowledge or learning.
I've been watching since episode one, and Adriene Hill gets prettier and prettier
2:00 Trust me it wasn't the pirates that made got's ending suck. Lol you guys are great.
great series . keep it going guys!
This presentation encouraging me to shift to economic fields
Whoâs watching this episode after The Bells đ
Thaankssss â¤ď¸â¤ď¸â¤ď¸â¤ď¸â¤ď¸â¤ď¸
When they said illegally downloading I just started downloading bo2 for pc
mmmm..... these videos have a nice little "velvet glove around the iron fist" thing going on.
Joel - 2019-05-23
She predicted the unsatisfying end to Game of Thrones ......wow
Luke Lim - 2019-10-24
you beat me by 5 months. people are still watching crash course video 3 years after it posted huh
Jess Lannister - 2019-11-23
The power of economics.
ali ali khalid - 2019-12-27
I laughed when she said that I thought it was a joke then i saw the video was a 3 years ago đ
Pirate Butler - 2020-03-02
SHE HAS SPOKEN!!!!!
Gnytmare - 2020-03-30
@Luke Lim Yep. it is a required course video in most microeconomics classes across the nation. :)