My old employer's blog has a terrific post on "second best economics":

Suppose that I told you that in the absence of the necessary conditions for teleportation, the next best thing is to forget all about the conditions for teleportation and instead fly at near the speed of light. Would you find this helpful if what you actually had was a Toyota and a half-tank of gas? Many "second-best" policy recommendations are a bit like that: the ideal market is a fantasy, so here is an ideal government to fix things. Obviously, this is not very helpful. If we are going to be hard-headed empiricists on the lookout for real-world imperfections, then we must admit imperfections equitably and not blanch in the face of the often appalling failures of government to operate as intended.

The excerpt really doesn't do it justice. Please read the whole thing.

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