[apsec112]

Markets are efficient in the sense that you can't personally make money by trading stocks, not in the sense that the economy is optimal for society as a whole. Pollution is the classic example of a negative externality that harms society by offloading part of the cost of individual behavior to others. But you can't personally make money by exploiting the societal inefficiency of pollution. (In game theory terms, not every Nash equilibrium is a Pareto optimum.)