[VikingCoder]

I think what bothers me most about your post is that you're right on the verge of pretending that regulating markets causes all of the things we don't like about markets. No. Markets do plenty of things we don't like. And yes, the way we chose to regulate them causes markets to do some other things we don't like, too. That's not a case for not regulating them, though.

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This is the point - smallpox functions well on its own, it just happens that humans prefer bodies that are "living." Hence, doctors try to limit the spread of the disease to meet their health preferences. Whether this is ultimately beneficial is an ongoing debate.

I would point out that in many cases enforcing artificial health on people can have negative outcomes. Recently, the Ebola virus in Africa killed several thousands. If the sick had been allowed to immediately die without care, the disease would not have spread so far. It could be said that attempts to regulate "living" into people merely leads to a masking of human frailty, which can be very dangerous.

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Maybe a slightly less offensive comparison on my part would have been wildfires. They do just fine without human intervention. And yes, maybe humans do intervene too much. But gee, we like our houses to not be on fire. That doesn't mean we let the fire just burn, though.

[miscellaneous]

Reasoning by analogy is not a sound way to make an argument. In fact, reasoning by analogy is always wrong to some greater or lesser degree. It is much better to directly address an argument.

Markets are created by humans when humans exchange things. The current market price express the current knowledge of all participants about the value of some traded thing. This is a decentralized process that often involves millions of different people with skin-in-the-game.

The argument against government regulation follows from this: regulation distorts the market from an equilibrium price. If this is a temporary measure then regulation is only delaying the inevitable and you should let the market reach equilibrium sooner. If it is a permanent measure, then you have a situation where the market no longer reflects the current knowledge of all participants, and at this point you start to lose the core value of a market.

By the way: markets aren't analogous to smallpox and wildfires, and regulation is not analogous to doctors and firefighters. Although this is an interesting insight into your world-view ;)

[VikingCoder]

Illustrating flaws in thinking by analogy is wonderful. People become too rigid in their faith in their current understanding, which is always wrong to some greater or lesser degree. By comparing one complex system to another complex system, we can quickly communicate volumes of information - such as a history of shared experiences. Darmok and Jalad at Tanagra.

Sorry if I was unclear, but I was making the point that a market is a system which can have temporary flaws. Such as a human can have smallpox, or an ecosystem can have a wildfire. I wasn't attempting to make the analogy between a market and smallpox or wildfires, I was attempting to make the analogy to a market fluctuation. Large difference. Perhaps the fault is mine, but I suspect it's more a case that you'd like to think poorly of people who think differently than you do.

Logic is wonderful, because it gives us the tools to have a conversation. Logic fails when two people have different assumptions. At best, it allows us to discover our different assumptions. You assume there is such a thing as an equilibrium price. Given that assumption, you can use logic to debate government regulation.

[miscellaneous]

> A market is a system which can have temporary flaws

I guess this is where our assumptions diverge. I don't believe that a fluctuation in the market price can ever be considered a "flaw". Some people buy stocks and some people short stocks - a price increase is no better or worse than a price decrease. A market fluctuation is merely representative of a change in the opinion of the participants of a market. Market volatility merely demonstrates that there is a high degree of uncertainty amongst participants.

Hence, I don't believe there is any utility in trying to impede market fluctuations since this does nothing to change the root cause: the participants of the market haven't achieved a strong consensus.

[VikingCoder]

The stock market runs on an exchange, which is implemented in software, instanced in hardware, managed by people, and subject to government oversight.

You may not have intended to, but you just asserted, among other things, that that system is perfect.

Please re-read my statement in this light, and try to see if you can find a way to agree with me:

"A market is a system which can have temporary flaws."

Okay, now that you're probably agreeing with me, but concluding that I'm being pedantic... Let me try to bring you back...

If the system itself causes a flaw, which affects prices.

So, if I want to relate to you, an IDEAL market behaves the way you're describing. Maybe no regulators needed.

An ACTUAL market behaves the way I'm describing. Regulators needed.

Once you agree with that, at least, maybe we can debate how BIG of an impact practical considerations have, and how large of a role regulators should have.