Prof. Jonathan Gruber, our guest for this episode, likes to tell his students that economics is a fundamentally right-wing science. What he means by that is that classical economics is built on one powerful explanatory insight: that free markets—networks of buyers and sellers, producers and consumers, weighing the trade-offs of different options and making self-interested choices based on supply and demand—do a better job of deciding how to allocate resources than can be achieved by a top-down, command-economy approach. But as Gruber goes on to explain, that principle only holds when all participants have equal access to markets and to information; in the real world, imbalances in that access lead to market failures, inefficient allocations of resources that leave most people worse off than they would otherwise be. That’s why government regulation still has a role in a properly functioning economy. Tune in to hear Prof. Gruber explain why we need “capitalism with gutter guards” to ensure equitable outcomes, especially in sectors of the economy such as healthcare where the ideal markets envisioned by classical economics are particularly unattainable or undesirable.
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