Here’s a pretty decent passage from the 2024 Economic Report of the President. It’s from the chapter on housing policy.
Housing shortages and unaffordability have risen over the last 60 years, in large part because of local land-use policies that restrict housing density and what can be built. These effects are felt most by low-income and vulnerable families, which are increasingly priced out of the housing market. Because many amenities are bundled with housing and neighborhoods, housing supply shortages inhibit economic mobility for millions of Americans. Investing in the housing supply and producing affordable units opens the door for upward mobility and increases overall economic growth. (p. 172)
But then the writers add in the very next sentence:
Persistent market failures in the housing market create a role for government.
The Economic Report of the President is written by the economists at the President’s Council of Economic Advisers. I’ve participated in writing chapters in 2 of them, the ones for 1983 and for 1984. I’ve read through the annual report (ERP) every year since and occasionally have read the whole thing.
It seems clear from context that President Biden’s economists regard “local land-use policies that restrict housing density and what can be built” as a market failure.
They’re not. They’re government failure. They involve governments doing certain things that the CEA economists, apparently, and I disapprove of. But it’s government doing these things, not private actors in the free market.
So I decided to do a check. I searched for “market failures” and found many instances in the 2024 ERP. Then I searched for “government failures.” Guess how many I found.
The answer is a four-letter word that starts with “z” and ends in “ero.”
Government involvement is behind most of our problems.
Markets cannot fail, since a market is simply two individuals freely transacting. Aggregations of those individuals may produce results others don't like, but things I don't like isn't "failure". And far too often, markets doing exactly what they ought to do - high house prices for example, are cited as failure. But high prices are information, telling us where we should shift resources to, information that tells us there is demand that is not being met.