Question

Julian simon claims that entrust environmental problems to the market.

like Arrow claims that (Impossibility Theorem) democracy and efficiency cannot be achieved at the same time.

Is the market not only efficient between people and the environment, but also can create a democratic relationship?

Answer 1

SOLUTION

MARKET NOT EFFECIENT TO THE PEOPLE, BUT ALSO HELPS IN CREATING DEMOCRATIC RELATIONSHIP.

Over the course of the twentheith century, the economic borders of the state have sporadically expanded and contrasted as a consequence of war and according to the influence of different political philosophies, ideologies and prevailing value judgements. Prior to the First world war, the state largely played a nightwatchman role, providing basic functions such as defence and law and order. However, government involvement in the economy has climbed to record highs in recent years, with the state playing a more comprehensive role in providing social security, education, physical and mental health and in other resource allocation decisions to thepeople.

Most recently, the global financial resources has futher led to the expansion of the state, with nationalizations of financial institutions, the bail-outs of the automic sector and the fiscal stimulations. A futher relevant developement has been trend towards so called state capitalism in which the profits often invested by the soverign wealth funds which deliver both financial returns and political influence.

This expansion and contraction of the state has significant implifications for environmental policy, raising questions about the appropriate role and scope of the governmennt in protecting the environment. The issue plays an strong emphasis on accounting for both market failure and the government failure and also the governments contribution on the consideration of the market in the downward periods of economic growth.