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Actually the free market can often be irrational, inefficient and completely unpredictable. The free market (caring only about profits) is what has given us an

• kobeya 9y ago
  In economics "rational" has a very specific, technical meaning, specifically acting in the way that is most profitable. So I'm not 100% sure I understand what you mean when you say that free markets can be irrational by caring only about profits and I would suspect that we are speaking past each other. Regulation doesn't "get captured." Regulatory capture is where a monopolist captures a market by means of regulation. For example, PayPal invented a new business model: digital money transfers. They then lobbied for and got expansion of financial regulations to make it very, very difficult to enter the money services business. So difficult that for 15 years until now they had no serious competition. Were consumers made safer by that regulation? No, because as it turns out the hurdles to getting approval to operate as a MSB really aren't consumer protecting at all, they're just that: very expensive hurdles, outside the reach of a startup. And the innovation we've seen recently with Venmo, Apple & Samsung Pay, etc. is what we could have had all along if they weren't granted a de facto monopoly that took an Apple-sized company to break.