Stop equating market failure with capitalism being a failure

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Ever since the rise of populist left wing leaders such as Bernie Sanders, Jeremy Corbyn, Justin Trudeau, and Jacinda Ardern, it's become fashionable to claim that capitalism has been a failure. Prime Minister Jacinda Ardern went so far as to describe capitalism as a "blatant failure" due to New Zealand's high rate of homelessness.

The problem with this analysis is that it falsely equates market failure - where the free market fails to provide a good or service at an affordable rate for people - as the entire capitalist system failing, which clearly isn't the case.

A useful way to think of this is that a prop mightn't be able to drop kick the ball particularly well (Australia's Matt Dunning excepted), but that doesn't necessarily make them a bad rugby player. It's just that capitalism is good at some things, and not so good at others.

It's worth pointing out that either Jacinda Ardern realised, or was told, that she had made a mistake, and dialled back her rhetoric the following day by correctly describing what was happening as a market failure, rather than capitalism itself failing.

That's not to say that capitalism is perfect, because it's demonstrably not. But it's also not the blatant failure that seems to be the popular narrative of the zeitgeist.

There are things that capitalism doesn't do well, especially when it comes to the supply of goods and services that provide a social good rather than a profit, or factoring in the environmental costs of production and consumption into its pricing.

Likewise there are things that government intervention doesn't do well either, as it often results in stifling innovation, entrenches economic inefficiencies, and is particularly vulnerable to the whims of publicly pressure even when that pressure flies in the face of the rational thing to do.