Sam got in trouble for using the term "market failure" in one of his blog posts.
I emailed James Buchanan about language in economics. I basically said we need better terminology. Economists do not speak the same language. How can they expect to communicate with the public? He basically told me to keep fighting the good fight.
So I am introducing two more economic failure terms:
entrepreneurial failure-occurs when an entrepreneur, firm, or some business entity ceases to exist. This can mean a business was attempted but never created or can describe an existing business that has disappeared. For example blacksmithing suffered from entrepreneurial failure. Entrepreneurial subsistence is a precursor to entrepreneurial failure, grow or die. Entrepreneurial success (profits) is the opposite of entrepreneurial failure.
bureaucratic failure-occurs when a bureaucracy fails to meet its specified purpose. For example, the IRS' inability to collect Barry Bonds' or Wesley Snipes' taxes is bureaucratic failure. Another example is the military paying too much for toilet paper. This is part of government failure, but it occurs in existing bureaucracies. The IRS and taxes in general are government failure.
I have too much time on my hands, but I enjoy thinking about this kind of bullshit.
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1 comment:
What about when an firm can't come into existence because of bureaucratic failure. I like the new terms. Russ Roberts and Don over at Cafe Hayek are editors of the encyclopedia of economics. Maybe we can get them involved at some point. Truthiness strikes again.
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