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Free markets only work when there are large numbers of sellers and buyers. One example (out of many) of a necessary government intervention is to prevent monopo

Free markets only work when there are large numbers of sellers and buyers. One example (out of many) of a necessary government intervention is to prevent monopolies from forming (or at least regulate them). Whenever one party has an outsized influence, they will tilt the whole market in their favour. It doesn't even have to be a monopoly, if a single player makes up a substantial portion of the market, they can affect it in non-free ways. Even Adam Smith recognised the need for government regulation to ensure that markets remain free. Edit: I think you may have misread my comment; I wasn't claiming that there is no such thing as a market without government interference (though that is probably mostly true). I was claiming that a market cannot be free without government regulating it to keep it free.

eru 6y ago
I am challenging that assumption that markets are so easily monopolized. Markets are more robust than you give them credit for. One argument is that rather often governments themselves are trying to monopolize markets with all their regulatory might, but grey and black markets usually spring up rather quickly. Trying to monopolize a market as a private participant (even a big one) without the government on your side is even harder. I do agree that monopolies are an important consideration when designing regulation. But mostly in the sense that your regulation has to be careful to avoid supporting monopolies. Especially barriers to entry are often overlooked. For example, regardless of content, complexity of regulation itself can be a barrier to entry. Compliance takes a lot of lawyers and accountants. (Eg most agricultural subsidies around the world go to really big farms. And financial regulation's complexity essentially forces banks to become big.) If regulators were really interested in combatting monopolies, there are a few straightforward strategies to try first: * Encourage foreign competitors to enter domestic markets * Encourage companies from different industries to branch out (eg Walmart tried to offer banking services a while ago. Lobbying by banks kept that competition at bay.) * Encourage start-ups. (This is much harder for governments than the first two points. One way to encourage start-ups is via simplifying regulations. But there are lots of other popular ways that don't work well. See eg all the government funding available for tech startups in Europe that sadly doesn't seem to produce much by and large; but it feels good to hand out money.)

eru 6y ago

I am challenging that assumption that markets are so easily monopolized. Markets are more robust than you give them credit for. One argument is that rather often governments themselves are trying to monopolize markets with all their regulatory might, but grey and black markets usually spring up rather quickly. Trying to monopolize a market as a private participant (even a big one) without the government on your side is even harder. I do agree that monopolies are an important consideration when designing regulation. But mostly in the sense that your regulation has to be careful to avoid supporting monopolies. Especially barriers to entry are often overlooked. For example, regardless of content, complexity of regulation itself can be a barrier to entry. Compliance takes a lot of lawyers and accountants. (Eg most agricultural subsidies around the world go to really big farms. And financial regulation's complexity essentially forces banks to become big.) If regulators were really interested in combatting monopolies, there are a few straightforward strategies to try first: * Encourage foreign competitors to enter domestic markets * Encourage companies from different industries to branch out (eg Walmart tried to offer banking services a while ago. Lobbying by banks kept that competition at bay.) * Encourage start-ups. (This is much harder for governments than the first two points. One way to encourage start-ups is via simplifying regulations. But there are lots of other popular ways that don't work well. See eg all the government funding available for tech startups in Europe that sadly doesn't seem to produce much by and large; but it feels good to hand out money.)