Final answer:
The statement is true and highlights heterodox economists' preference for direct regulation to address social costs. They acknowledge the imperfections of both markets and government interventions, advocating for realistic approaches to policy design. A robust social safety net could also lead to less market regulation by supporting individuals impacted by market changes.
Step-by-step explanation:
The statement suggests that heterodox economists argue for the importance of ex ante regulation over ex post, market-based policies due to the irreversibility of social costs and difficulties in accurately quantifying them through monetary values. This appears to be true, as heterodox economists often emphasize the limitations of market mechanisms in dealing with certain types of social and environmental costs that may not be fully captured through prices. In contrast, direct regulation can proactively prevent or minimize negative outcomes rather than relying on the market to correct them after the fact.
In terms of government intervention, economists acknowledge both the strengths and weaknesses of markets and governments. While markets can fail in the presence of monopolies or externalities, invoking the need for government intervention, any such action must be informed by a realistic assessment of the government's ability to identify and implement effective policy. Economists must avoid idealizing or demonizing market or government mechanisms, and instead analyze the factual merits and drawbacks of each. well-funded social safety net might result in less market regulation because it can alleviate the immediate needs of individuals affected by market fluctuations, reducing the pressure on governments to regulate economic activities. Providing a social safety net could make certain market outcomes more tolerable for the population, thereby potentially reducing calls for intervention. A production possibility curve demonstrating this tradeoff would show an inverse relationship between the extent of the social safety net and the degree of market regulation.