The Free Market Fallacy

The glorification of the free market comes up time and again. Regulation = bad. Free market = more money flow, more jobs, more business. Right?

I’m calling BS on that, and here’s why.

Money is a proxy for what humans value. Money is used when two parties cannot exchange solutions to problems of equal value.

1. Irrationality of people. People can inherrently make decisions that may not be optimal or may be persuaded or forced to make such decisions.

2. Value can be measured on more than just a monetary basis. Hidden/deferred costs.

3. Value is a range, money is precise.

 

4. Decisions often need to be made with imperfect information.

 

5. Available money to parties involved rarely reflects the desires. Ignoring liquidity, accumulated money does not necessarily represent the values of solutions brought to the table… it’s banked “value add” from past, often unrelated problems.

6. Follow the money trail. The people often lamenting regulation are the ones most likely to have an advantage (or perceived advantage).

Not saying free markets should be abolished. Just know that they are a tool and use them with all of their limitations.

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