How markets fail Essay Example | Topics and Well Written Essays - 3000 words

How markets fail - Essay causeHe said that despite the fact that there atomic number 18 economic thinkers such as the utopian and reality-based economic thinkers market put forward still fail mainly because of the unseen variables. According to Cassidy, market can fail despite the fact that the prevailing conditions ar favorable (403). To many, a financial crisis of such spirit in an advance sparing appears to be a phenomenon of the past. It is like diseases such as smallpox which are still found in poorer countries, but essentially eradicated from the developed countries. However, Cassidy warns that financial crisis can still bechance despite the fact that the parsimony is advanced. Cassidy was aiming at responding to the disaster that hit the western banking system unpredictedly. The financial crisis occurred during the period of time when roughly people were expecting positive results. Both the utopian thinkers and real-based economic thinkers could non tell what was g oing to come. They could not anticipate nor imagined that the disaster would originate at home. All they knew was that there was a growing current look imbalance between the United States and china and that incase of any form of financial crisis, these two countries are likely to be the first one to experience the crisis. Most people believed that changes in technology and the tinge of globalization had enabled the central bank to figure out the secret to conducting monetary policy in a stabilizing way. Because of this, intimately people including the economic thinkers believed that the central was equipped with necessary knowledge, skills and know how having kept the economy on track after a series of ups and down in the 1990s. Most economies did no even so stop to ponder about the case of japan, which experienced economic bubble despite the fact that its economy was advanced. They claim that it would have been a normal phenomenon to find a financial or banking crisis in Japan given that Tokyo, a hybrid economy, lacks real market economy like the Great Britain. Unexpectedly, the disaster afflicted the economy that was believed to be advanced and strong to resist the tides. Most people, including the economic thinkers had no real answers to the unexpected phenomenon. Cassidy had an idea of what might be the cause of the unusual breakdown. As mentioned above, Cassidy wanted to clarify the fact that in event of financial crisis, bankers do not have bigger responsibilities and therefore, no one should lay saddle to them (405). Cassidy argues that even if bankers had tried their best to meet the interest of their shareholders, there is no assurance that would have satiate the interest of everybody. This is because society, according to Cassidy has different believes and perceptions, which may not be good for banks. Cassidy asserted that the belief that most of the economist have about the market is a mere theory. He particularly criticizes the belief that m ost of the proponents of the free markets have about market behavior. Cassidy questioned whether producers and consumers in a free market can film to a beneficial government issue for a whole society. He also questioned the argument brought forth by the famous economist, Adam Smith that states that market systems is similar to an enormous decentralized machine for conveying signals and that the resulting outcome is both efficient and stable. Cassidy cautiously explore various areas of these