““The typical undergraduate microeconomics textbook describes cases where markets are unlikely to produce efficient outcomes. These textbooks often claim that, in principle, government intervention could solve the market failure. However, these textbooks also assume that government both (1) has full information about how to solve the problem and (2) has the good faith to use its power to solve the problem. It is as if the textbooks say omniscient angels can intervene to solve market failures. Thus, when undergraduate textbooks recommend government intervention, they mean intervention by idealized governments, not necessarily by real governments. In the real world, libertarians believe, sometimes the best response to serious market failure is just to suck it up and live with it.””
