The way of middle..

Forgive me for I don't know what I am talking about, I had terrible lunch and must make amends.

#1. Ritwik writes something about economics, which as is often the case, goes above my head, with hardly a stumble. However he makes what in my opinion is a curious statement.

"The fact that a tour guide finds it difficult to physically exclude the non-paying tourists does NOT mean that his services are non-excludable. He is charging a fee for his services, and can easily deny his service to anyone".

I think it does imply that his services are non-excludable in the most proper sense.
The guide can not deny his services to anyone, he can only deny service to everyone.

Anyway the post was in response to some other post (which I didn't bother to read) about how market can address the market failure more effectively than government. Frankly to me, this is bit of twister, if market could address the issue why call it market failure in the first place. A bit of paradox, isn't it ? And yet as Bertrand Russell said (OK it could have been Frank Sinatra , I don't care), paradoxes are consequence of incorrect definitions.

Main goal of market is to ensure maximization of utility both in social and individual context, voluntary transaction is the means to do that, this voluntary transaction is primary mechanism. To ensure that transaction is voluntary, a secondary, enforcement mechanism is required. However sometimes it happens that either maximization is not achieved by the voluntary transaction, public aesthetics is one such example. Other times transaction is not voluntary, pollution exemplifies that. These in my opinion are the basic characteristics of market failure. How to rectify market failure may require collective action, which in my opinion, is best handled by state.

Now level of intervention required is still open to debate, it should be minimal and yet able to achieve the goal. The proper level of intervention can be devised by taking the matrix of incentives in account.

Now I come to the main point, market can said to have been failed if and only if the mechanism has failed. However if it is possible, by using technology for example, to keep mechanism functional, market has not failed and is very much in business. Something of the sort I think happened here. It was an issue of technological limitation, which was corrected by employing suitable technological solution, not market failure.

However I must admit I am not sure how prevalent this problem is. Somehow I doubt that tourists will be that penny pinching, or for that matter welcome the idea of using headphone to listen to a guide. At least I hate it.


#2. Later in the same post Ritwik is not happy with "ideological extremism", recommending the middle of the road. Problem is unless one wished to be a roadkill, being middle of the road just for sake of it, is not such a good idea, I mean, to me being always in middle also seems pretty inflexible approach.
Frankly speaking, I understand and agree with him, but I don't like the way the statement is framed. For me important thing is any ideological position should be informed, not least of what it seeks to achieve. This is easier said than done, the goal of life is ever elusive, ultimately it is a matter of guesswork about what we want, which, if one comes to think of it, is ultimately what philosophy boils down to. Moreover I believe the reason behind "extremism" have more to do with human psyche. I guess admitting mistake is an issue of ego, and human mind is not too fond of uncertainty or death. Fear of both death and uncertainty is, I venture, a product of living. I should know, I am an extremist.

#3. Ritwik hearts Ravikiran! What nonsense. If that be the case what is explanation behind war of mustaches.

#4. By the way his admonition to Ravi, and holding forth on layers of political machinery reminds of this story by Isaac Asimov.