Except for libertarians (free-market extremists), economists are quick to point out that efficiency isn't everything. Society has goals that can't be met by exclusive reliance on win-wins. Though there's a win-win deal in that heroin sale, it's a loss to society overall. Likewise, though the destitute can't pay for food and therefore can't engage in a win-win with the food vendor, society prefers not to have the destitute die of starvation. The incompatibilities between market efficiency and society's goals are called "market imperfections."

Governments step in discouraging some activities (heroin sales between consenting adults) and encouraging others (food sales to the destitute) to actually create market inefficiencies that compensate for market imperfections. Governments, in effect, put their thumbs on the scales, discouraging some win-wins and encouraging some win-loses. They have a number of tools at their disposal for doing so. Laws banning the sale of heroin, taxes discouraging the sale of tobacco, laws forcing the sale of medical services to the poor, subsidies like food stamps that give the destitute the wherewithal to purchase food when otherwise they couldn't.

One way to think about this is that there aren't really any two party deals. There are always three parties: the two who do the business deal and society. What we really want is win-win-wins, where everyone is happy. There are lots of those. We buy products from folks who want to sell them and society benefits overall. But since not all deals are win-win-win someone has to make sacrifices. I pay taxes--a loss to me--but a win to society. Companies selling dangerous products lose sales because of taxes on their products (sin taxes they're called), a loss to them but again a win to society. I dream of solving everything with win-win-win solutions but in practice there have to be some losses.

Another way to look at it is that society is, in part, you and me, representing our better judgment. I want to do deals that benefit me today, but my better judgment doesn't want me to do deals today that hurt me tomorrow even if they'd be wins for me today. So I win when society wins, or rather my better judgment wins even though my immediate preferences lose.

In passing I'll note that this is a compromise to the Golden Rule. What I'd have done unto me is that I could win always and following the Golden Rule I wish the same for you. But sometimes we lose anyway. To make the Golden Rule work we have to break the Golden rule sometimes. I call this the Golden Paradox.

Government, at its best, can serve as the umbrella policy for us all, looking out farther over time and space--over time in tending to what we'll need in old age and what our children will need; and over space to the needs of others like us, others who are in a situation we might not but nonetheless could find ourselves in--the poor for example, who, maybe we aren't today but could someday become given the vicissitudes of life.

I say our better judgment and therein lies the rub. My better judgment isn't my constant judgment. It flickers into focus far less frequently than my immediate impulsive judgment. This is the human condition. We are all born believers in our impulses, wanting to win always. We have to learn to sacrifice and the learning doesn't come easy. It comes especially hard during downturns and disappointments, when expectations that once were met aren't met anymore. We become crybabies when we lose our perks and partners, and when suddenly society surprises us with new better judgment calls to action to prevent major long term catastrophes like the climate crisis. Our first impulse is to yell "Give us our stuff back! We demand more!"

Ingenious and inventive rhetoricians that we are, we have to come up with a way to yell this without looking like crybabies. It's not hard. Give us a minute and we can devise a moral crusade in support of anything we want. Here's an example:

Win-wins are better than win-loses. They're more efficient and efficiency is good. Trust efficiency. It makes the best possible world. I know I'm demanding that I win here, that I don't have to pay new taxes, but really it's not about me. I'm looking out for society when I say let me win here.

That is the Tea Party rallying cry. It's the heart of libertarianism. Yes, I just said that we are all born Libertarian.

There has long been a debate about how much government intervention is appropriate, basically how much to let things settle at Pareto-optimality through efficient markets and how much to offset the resulting market imperfections. The arguments pro and con intervention are based on some combination of theory and historical evidence.

You couldn't design a better set of circumstances than the past five years for driving a case that market efficiency isn't everything and that government intervention is absolutely necessary. Lately, letting market efficiency have its way more than ever and cutting back on government intervention, we've really screwed the pooch. And the pooch is us (See the editorial below).

It's telling that even though all our recent catastrophes point to the limits of efficiency, the libertarians somehow seem to interpret it all as vindication for their argument that government is bad and markets should be left alone. What it tells, is just how ideological and idealistic libertarians are. They are hands-off not just about the intervention of government, but about the intervention of evidence and any complicating ideas. They have three ideas they hold more sacrosanct than the dreamiest Jim Jones follower:

Government is less efficient than business.
Market efficiency is everything.
People (I) want to win so we should let them (me).

Lately I've been looking for a new definition of progressivism, the counter-force to such folly. I consider the question synonymous with a philosophical one: What is Wisdom? See, it's not like trying to figure out what qualifies someone to be a member of my rock band. I'm not interested in progressivism as one among many offerings. I actually don't know what you'd call it, nor do I care. When asking what a progressive is, I really mean what's the right attitude for facing forward into the present day's combination of confusing mess and spectacular opportunity-not easy to distinguish from one another from this vantage point.