Sunday, February 28, 2010

Do Government Polices Increase or Decrease Efficiency?

Through the first couple of weeks during class we have been discussing different aspects of Urban Economics, more specifically
government policies related to the issues that come with urban sprawl. From these early discussions many economic topics have
come up.
The main economic topic that comes up in discussions is the topic of efficiency. What I've been noticing is that there has been
some debate about whether there is such a thing as efficient when it relates to urban sprawl. The main problem as I see it is that we
are searching for a way to define efficient urban sprawl. This is our mistake because instead of trying to define per se in stone what
is efficient sprawl versus what isn't efficient sprawl, we should be observing the market for symptoms of inefficiency. If we can find
even one economic symptom of inefficiency, we can observe this inefficiency to determine what its cause is in order to fix it. As a
classical economist, I believe that if there is signs of government intervention or other outside intervention there has been or still is
a market failure present which relates to market inefficiency.
I believe that the presence of government policies is the sign of government intervention, but my economist side wants to call
it government interference. The reason I call it government interference is because I believe that there are signs that the government
implements policies that cause market failure instead of solving market failures; one such instance is the policies that either permit
or restrict building additions onto one's own personal property. This is a caused market failure that we have been referring to in
class as a government failure, because the government has increased the transactions cost for increasing the utility of one's
personal property.
To conclude, we can find proof of both, government intervention, in the policies they implement, and that there are market
failures that relate to urban sprawl and urban development. Thus, what we should do is examine the policies that we have
currently implemented and determine whether they are there to solve a market failure or if the policies are whats causing the
market failures.

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