This podcast is extremely thought-provoking. It is an interview with Clifford Winston who did some research into the question of what really happens when governments act to correct what they perceive as market failure.
Our own prime minister sees market failure everywhere and is hyperactive in creating new laws and taxes to correct this market failure. Interestingly there is not much evidenced-based analysis of the outcomes of this intervention. Perhaps you will not be surprised to hear that Winston, whose book can be downloaded free from the American Enterprise Institute for Public Policy Research Regulated Markets website, concludes that intervention usually is not justified in economic terms.
What you might be surprised to hear is his conclusion that he can find no example of cases where regulation had a positive payoff. Before you dismiss this conclusion out of hand, at least listen to his interview with Russ Roberts to hear his evidence.
Various types of market-failure correcting interventions are examined, but the one that sticks in my mind is the anti-trust legislation. As Dr Winston points out, recent high-profile cases brought under this were aimed at Microsoft and Intel. If they have true monopoly power, it sure doesn't seem to be reflected in above average performance of share price!
If you follow the Econtalk link you will find a link to the downloadable version of the book. I had some trouble following this link in Google Chrome and I have not read the book. It does sound as though it is worth a look.
