In depth respond to the below discussion post. Include two sources and one bible verse. make 2 questions for each response to help them develop their research more.

How do market failures provide rationales for collective interference with individual choices (public policy)?

Perhaps one of the most important things to keep in mind when discussing economics and markets is the difference between the theoretical and reality. Because markets and the behaviors of people within them are so complex on both a macro and micro level it is necessary to create models. Much in the same way research creates small studies that are then used to make generalizations to larger populations, economic models take complex behaviors and simplify them into models to attempt to explain concepts. Weimer and Vining describes these as snapshots of the market at a particular point in time versus a video capturing all the actions (2017). Much like the difference between a picture and a video there is much information lost between the two.

Models make multiple assumptions in order to make sense in the applied setting. For example, most models discuss an efficient market, or a full market with minimal waste. In these examples people's behaviors are governed by rational decisions to fulfill their needs. It is efficient because instead of some hierarchal organization (government) making decisions for everyone, people simply decide how to best utilize their resources every day. This creates a grassroot decision making model of millions of micro decisions instead of larger macro decisions. Such modeling is clean and makes sense when teaching concepts. But it is also cold and, in some regards, lacks empathy to the human condition. What happens if someone loses their job through no fault of their own? A basic principle of capitalism is destruction of inefficient industries with worker being the collateral. In the theoretical model that person would take their skills to another agency and start a new job with minimal time in between. But what happens if there is no immediate demand for that person's skills or there is demand but not in their vicinity? The economic model would simply state that either they move to the new location for full employment, retool themselves with a new skill, or take a less skilled position immediately. All three of these options come at a cost to the individual and perhaps their families. Life is more complex than a model. The model would say that this person and their family should go without until one of these three options is fulfilled. It does not take into account any form of empathy or in a more pragmatic sense, political damage from mass amounts of such suffering. It is here that Weimer and Vining point out that government or other organizations may intercede to interrupt the cruelty of the market for ethical reasons (2017). The human desire to reduce the cruel reality of the market is admirable but then it becomes a question of degree and responsibility.

There are several other examples of when the government will intercede into the markets. Weimer and Vining use the four examples of Public Goods, externalities, natural monopolies, and information asymmetry (2017). Public Goods are those that are not privately owned and are available for anyone to use. Some examples such as national defense, national parks, and roads fit this idea. Everyone benefits, it is difficult to isolate any specific user or beneficiary, and outside of a few examples, people cannot be excluded from their use. The best example of externalities is a negative one and this is, pollution from industry. Modeling would expect the producer to bear the burden of these costs but that is not always the case. In the event that a producer is exporting that burden to the public (industrial dumping or air pollution) and it lowers their costs and violates the market modeling. In the sense of striving for equity the government enacts regulation to shift those costs back to the producer.

Mosca provides a definition of a natural monopoly as one in which the cost of production decreases until it is only enough to support one producer (2008). One of the more common examples cited are utility companies. There is an inelastic need for their product but the nature of the industry limits how much competition they can have. If someone is dissatisfied with their power company, they typically do not have the ability to find another provide. Such monopolies are often partnerships with the government. There is a comingling of regulation, subsidization, and legislation. The lines between public and private can often become blurred.

Information asymmetry is the final category. Information asymmetry relates back to the theoretical modeling scenarios. The economic models often have the underlying assumption that consumers have all available information in order to make their decisions. This is rarely the case even with today's technology available for research. This is also relevant when individuals sell their labor. They often set the price of their labor based on the difficulty associated with the job. Government often sets some minimum amount of regulation since industry would not typically want to bear these costs. If people become desperate enough there could be scenarios where they would be willing to perform unsafe work and business could potentially take advantage of that. Government regulations in the safety industry mean that they have taken the burden of expertise so that the labor pool does not have to take that into account while setting the cost of their labor.

How do government failures provide rationale and justification for public policy?

Weimer and Vining classify government failures into four categories, failures of direct democracy, failure in representative democracy, bureaucratic supply, and failures of decentralized government (2008). While every country in the world deploys their government structure differently there is no perfect solution for governance, policy, or economics. Every attempt to correct a policy also creates an opportunity for a failure. For example, the Direct Democracy.

There is an idea that to correct all forms of decision making to simply have all people vote for everything each time, a Direct Democracy. In theory there is some support for this. It would make sense that people would simply vote and the majority could make the decision. The problem with this is that people do not always vote for what they want, sometime they vote to sabotage their opponents. There are irrational voting schemes. Look to the creation of the Primary Election in the United States. Voters from opposing parties would often vote for candidates that they knew their preferred candidate could beat. This would muddy the waters of elections. Instead of a simple vote, it became a game to some. Another failure of Direct Democracy is the idea of bundling. Often, in order to simplify policies, bundles of packages are created. This is often seen in spending bills. Billions of dollars are approved and often with a major theme to them, for example the most recent Ukraine spending package included $60 billion in defense aid for Ukraine. At the same time, it included $14.1 billion in defense aid for Israel (Lopez, 2024). These are two very different conflicts with different goals and different amounts of support. In order to get one passed, a voter must support both. It inhibits the voter's abilities to support single issues, sacrificing political expediency for accuracy.

A Representative Democracy is a much more common governmental practice but also rife with its own problems. One of the more notorious is the use of lobbyists or special interest groups trying to gain favor with politicians. This could manifest in many ways from direct financial contributions to businesses moving to home districts or even the threat of businesses leaving home districts creating layoffs. The purpose is to make the politician vote favorably for the special interest which may or may not agree with the will of the constituents. Another common complaint is due to the threat of re-election cycles. The phrase "this is an election year" is often served as an excuse for politicians to act more conservatively in order to secure re-election. This means taking the safe route over taking action that may be warranted but also puts their political career at risk.

Weimer and Vining use the term bureaucratic supply to describe failures associated with public goods (2008). These ventures often exist outside the normal market and therefore are not subject to the same market pressures that affect other businesses. One such market pressure is that competition puts pressure on business to become more efficient and usually either drop their price or deliver a better product per price unit. No competition means these industries do not have the same need for innovation and to stay efficient. Also, by skipping the normal market, there is no way to ascertain product valuation. Typically, price comparisons in the market help derive for a product valuation, i.e. if firm x delivers a product for one price and firm y delivers a similar product for a lower price then market value can be established. These firms often exist in isolation and therefore have no local competition to help set a value system.

The final example of government failures are those seen in government decentralization. Often this form of government is used to prohibit the concentration of power in a small piece of a country. While this is true it also makes enacting policies very difficult. Many times, enacting policy require the collaboration of many actors at different levels. This means they must all agree to enact the policy. If, for example, someone in that chain of the process disagrees with the policy choice, they can become a roadblock to sabotage to policy enactment. The odds of having total agreement for any policy are not likely meaning that all levels at best are reluctantly cooperating with policies if not actively trying to resist them.