[pdonis]

The definition of "free market" is that all transactions are voluntary. If what is being sold is not worth the price the buyer would have to pay for it, the buyer can simply choose not to buy it. But whether or not that's true has nothing whatever to do with what price the same item sold for last week. It does have something to do with what price the same item might sell for next week, if that price will be enough lower than the current price to make it worth it to the buyer to wait a week. But that's for the buyer to judge.

If you think buyers are somehow unable to tell when they are being tricked into buying something they don't really need, then you think free markets are basically impossible because you've defined "voluntary" out of existence. The problem with that is that all other methods of regulating the behavior of sellers do even worse. People who are in favor of free markets, like me, aren't in favor of them because we think they're perfect; we only think they're the best we can do. Often there is no perfect solution, since we don't have any omnipotent benevolent dictators to run our economies for us.

[popra]

> The problem with that is that all other methods of regulating the behavior of sellers do even worse.

I think this is where our views diverge. In essence what they're doing is false advertising: "buy this product because it's at X% discount!!!" when in reality it's at a lower discount or in some cases it's not even discounted.

Advertising is regulated, and there are good reasons for that, just think about an ad like "smoke cigarettes, they cure cancer" (granted, hopefully, an overblown example).

Some view free markets as a goal onto themselves, I think this is a mistake. The goal is (or should be) a good society, whatever your definition for "good society" is. Just because the best societies so far developed using some forms of "free markets", doesn't mean that pure to the extreme free markets would be a better means to the goal when compared to more regulated markets.

> The definition of "free market" is that all transactions are voluntary.

That is correct, once both parties agree to the terms (price, quantity, quality, deadlines and so on) the transaction goes through. People usually view governments (the regulator) as third (intrusive) parties to the transaction, that's not true. Governments are representatives of the people, and as such, regulators simply add a priori terms to a transaction.

Historically, regulation has managed to right some (not all) of the more awful side effects of free markets, including: child labor, deadly workplaces, labor bordering slavery, labor inequality, disastrous environmental externalities and more. Is regulation always perfect? No. But then again, by your own admission neither are free markets :).

[pdonis]

> I think this is where our views diverge.

Nothing you say in any way establishes that regulation by government works better than regulation by free market participants. All you're doing is describing what government regulation does.

> People usually view governments (the regulator) as third (intrusive) parties to the transaction, that's not true.

Certainly it is. Government regulators do not give or receive anything as part of the transaction, which is the definition of "a party to the transaction".

> Governments are representatives of the people, and as such, regulators simply add a priori terms to a transaction.

And those terms are not voluntarily chosen by the parties; the parties have to accept them whether they would choose to in the absence of the regulations or not. Therefore the transaction is not voluntary.

> Historically, regulation has managed to right some (not all) of the more awful side effects of free markets, including: child labor, deadly workplaces, labor bordering slavery, labor inequality, disastrous environmental externalities and more.

To the extent these things were "awful" (some, like child labor and labor inequality, weren't necessarily that way), they were not "side effects of free markets". They were side effects of markets that were meddled with by governments in different ways than governments meddle now. (Slavery, for example, was clearly not the result of a free market transaction; the slaves didn't voluntarily agree to be slaves. It could only exist because governments legitimized the taking of slaves by force.)

[popra]

> Nothing you say in any way establishes that regulation by government works better than regulation by free market participants. All you're doing is describing what government regulation does.

Regulation by free market participants? Is that a joke? You mean like rating agencies giving AAA ratings to subprime CDOs? Free markets do not self regulate, they simply don't exist to do that. Free markets don't have foresight or a self preservation instincts, why exactly would they self regulate? Monopolies, strange things, pure free markets inevitably lead to monopolies and monopolies inevitably destroy free markets.

I wonder, in your ideal world, would you do a microbial test on every milk carton you buy? I guess not, you would vote with your money, right? You would buy from trusted brands which have their milk tested by a third party, like a private milk rating agency. I bet you would only buy AAA milk ;). But what if all the milk producers would get together and get to an understanding that none of them will ever rate their milk and thus save themselves a lot of money? Where would you buy your milk now? You would grow your own cows, produce artisan milk? Multiply that for all the products you consume, how much effort would you need to expend in order to participate (and not get completely trashed) in a market unregulated by the government?

> Government regulators do not give or receive anything as part of the transaction, which is the definition of "a party to the transaction".

Governments are elected and as such they represent the people and the peoples will, thus any terms added by the government are in fact terms added by those participating in the transaction. The timing when the terms are added doesn't matter.

> And those terms are not voluntarily chosen by the parties;

Yes they are, when I buy milk, one of my terms is that it should have microbial content below dangerous levels as stated in the regulation related to microbial content of the milk.

> They were side effects of markets that were meddled with by governments in different ways than governments meddle now.

Really? I suppose you have an example to back that up? While you think of one, I suggest reading about working conditions and child labor during the industrial revolution.

> Slavery, for example, was clearly not the result of a free market transaction; the slaves didn't voluntarily agree to be slaves. It could only exist because governments legitimized the taking of slaves by force.

WAT? Before slavery, slavery was illegal? And the slaves didn't voluntarily agree to be slaves, as opposed to the slaves who voluntarily agree to be slaves?

[pdonis]

> Regulation by free market participants? Is that a joke?

No. I'm using "regulation" in a more general sense here, to mean "giving market participants incentives to behave in particular ways, and not to behave in other ways". That's what's really important. And every time you buy or sell something, or refuse to buy or sell something, you are contributing to the incentives of other market participants. Government regulation isn't magic; it's just another way of affecting incentives.

> Free markets do not self regulate

You are incorrect. To take just the most obvious example, prices in a free market are regulated by supply and demand. That is "self regulation", as opposed to, say, prices being regulated by government dictates.

> in your ideal world, would you do a microbial test on every milk carton you buy?

I think you need to spend some time actually looking at the models that libertarian economists have put together to show how a world without government regulation would work. I suggest David Friedman's The Machinery of Freedom for a start.

Just as a brief response, you are making an underlying assumption that the only thing stopping, for example, milk suppliers from leaving harmful microbes in milk is government regulation. Do you have any support for that assumption?

> Governments are elected and as such they represent the people and the peoples will, thus any terms added by the government are in fact terms added by those participating in the transaction.

I can see we're just going to have to disagree here. Your definition of "voluntary" simply makes no sense to me. Nor is it the definition actually used in economics, where it is generally considered obvious that government regulations are involuntary with respect to individual market transactions.

> when I buy milk, one of my terms is that it should have microbial content below dangerous levels as stated in the regulation related to microbial content of the milk.

But suppose I disagree with you about what a "safe" microbial content is. I have no option to buy milk with different levels. So even if this particular transaction is "voluntary" for you, because the regulations just happen to match your preferences, that doesn't mean it's voluntary for others who have different preferences.

If you object that no reasonable person would have different preferences for microbial content in milk, I suggest that you spend some time looking into the disputes over whether pasteurization actually removes beneficial microbes (and nutrients) from milk. It is by no means the slam dunk that you appear to think it is.

> I suggest reading about working conditions and child labor during the industrial revolution.

I already have. And one of the things I read was that the industrial companies who imposed those conditions had government monopolies; they weren't competing in a free market. That's why they were able to exploit workers and children.

> Before slavery, slavery was illegal?

You're not reading very carefully. Slavery was legal, because governments legitimized it; there was never a time when it was illegal (prior to it being outlawed in most of the developed world over the past century or two). But it wasn't voluntary for the slaves, so you can't use slavery as an example of a free market having "awful" effects.

> as opposed to the slaves who voluntarily agree to be slaves?

Can you give any examples of slaves who voluntarily agreed to be enslaved? I'm not aware of any; the closest thing would be indentured servants, but they were only indentured for a specified period of time, and there were limits on what they could be required to do as part of their servitude. No such limits existed for slaves.

[popra]

> No. I'm using "regulation" in a more general sense here, to mean "giving market participants incentives to behave in particular ways, and not to behave in other ways".

I'm using regulation in the sense of preventing destructive behavior.

> You are incorrect. To take just the most obvious example, prices in a free market are regulated by supply and demand. That is "self regulation", as opposed to, say, prices being regulated by government dictates.

I'm not against free markets, free prices for their most part are essential signals for free markets. We're not talking about price control.

> Just as a brief response, you are making an underlying assumption that the only thing stopping, for example, milk suppliers from leaving harmful microbes in milk is government regulation. Do you have any support for that assumption?

You conveniently ignored my previous examples of destructive byproducts of free markets. Monopolies for one are inevitable in pure free markets. Your assumption is that ALL suppliers will by some magic willfully expend the effort to provide people with safe milk. Care to explain why all of them will do that?

> If you object that no reasonable person would have different preferences for microbial content in milk, I suggest that you spend some time looking into the disputes over whether pasteurization actually removes beneficial microbes (and nutrients) from milk. It is by no means the slam dunk that you appear to think it is.

I will argue that no reasonable average person is equipped to reliably determine what safe milk is. You might be better equipped than the average, but most people around you aren't. Even so, you may have a different preference towards microbial levels in milk, but if you get them wrong you will become sick, and in some cases infectious. Once you're infectious, you are a danger to me. Putting someone at risk is a form of aggression. And in that case my rights of not being subjected to aggression thump your rights to choose specific levels of bacterial content in milk. Same argument goes for some drugs, food, guns, medical drugs, pollution or chlorine in the water for that matter or a lot more other regulated things.

> And one of the things I read was that the industrial companies who imposed those conditions had government monopolies;

There were thousands of private mining companies, thousands of private textile/cotton companies, and so on. Thousands of anything doesn't make a monopoly. I'm not sure what are you referring to.

>> as opposed to the slaves who voluntarily agree to be slaves?

That was a question for you, based on a statement of yours, not my statement.

> You're not reading very carefully. Slavery was legal, because governments legitimized it; there was never a time when it was illegal (prior to it being outlawed in most of the developed world over the past century or two). But it wasn't voluntary for the slaves, so you can't use slavery as an example of a free market having "awful" effects.

OK ... So basically your argument is ... because people had their freedom taken from them by some who then proceeded to sell and buy them, effectively turning them in commodities - this can't be used as an example of buying and selling?? You will have to elaborate on that, because if that's your argument it's dubious to say the least.

There was a need for labor in the market, and the market happily fulfilled the need by stripping people of their freedom and turning them into cheap commodities - it externalized the suffering. The fact that governments eventually taxed this trade (I'm assuming this is what you mean by "governments legitimized it") did not legalize it or legitimized it, since it was a practice already very well entrenched. I hope you are aware that slavery did not start or end in the US, in fact it predates by a lot most forms of anything which would resemble a government.

[pdonis]

> I'm using regulation in the sense of preventing destructive behavior.

Which is impossible. The best we can do is to give people as much incentive as possible not to engage in destructive behavior. The best way we know to do that is a free market. It's certainly not perfect but the alternatives are even worse.

> We're not talking about price control.

I said prices were just one example. Any "regulation" other than voluntary transactions in a free market has the same issues as price control does: it masks essential signals.

> Monopolies for one are inevitable in pure free markets.

On the contrary; monopolies are short-lived in pure free markets, because the conditions for natural monopolies are rare. Long-lived monopolies only occur because of government regulation. The original meaning of the word "monopoly" was a royal privilege granted to certain people to be the only allowed sellers of particular products.

> Your assumption is that ALL suppliers will by some magic willfully expend the effort to provide people with safe milk.

I made no such assumption. You were the one making an assumption, namely that the conditions imposed by government regulations were the optimal ones. (As I explained before, you also implicitly assumed that everyone had the same preferences, which is necessary for a "one size fits all" regulation to even possibly be optimal.)

> I will argue that no reasonable average person is equipped to reliably determine what safe milk is.

Really? Then how did people manage to do it for the thousands of years that milk was produced and consumed before we had microbial testing labs?

> my rights of not being subjected to aggression thump your rights to choose specific levels of bacterial content in milk

No, your rights of not being subjected to aggression trump my infecting you. So if I consume tained milk, and get infected, and infect you in turn, you have a valid claim against me for restitution. But that in no way demonstrates that the government is justified in preempting me.

> I'm not sure what are you referring to.

Look up how those mining companies, for example, got the rights to mine a specific area. They were given exclusive rights by governments (usually state or county governments, depending on how the land ownership was handled).

> So basically your argument is ... because people had their freedom taken from them by some who then proceeded to sell and buy them, effectively turning them in commodities - this can't be used as an example of buying and selling?

No; once again, you're not reading very carefully. The transaction that was involuntary was the initial enslavement of the slaves; they didn't voluntarily choose to be slaves. If their enslavement is taken as given, the transactions in which they were bought and sold were obviously buying and selling. But in a free market, you can't sell something you don't have a right to in the first place; and the only way to gain a valid right to something is to either produce it yourself, or buy it from someone else in a free market transaction. Since the slaves did not originally become commodities by a free market transaction, no transaction in which they were subsequently bought and sold can be a free market transaction. It can be a legally allowed transaction, but that's not the same as being a free market transaction.

> There was a need for labor in the market, and the market happily fulfilled the need

Not a free market. See above.

> The fact that governments eventually taxed this trade (I'm assuming this is what you mean by "governments legitimized it")

No. You are apparently very ignorant of the history of slavery. It has existed as long as civilization has existed; most wars for most of human history have ended up with the winning side enslaving the losing side. Governments legitimized it by practicing it directly. Offloading the grunt work to private companies or individuals and taxing the proceeds was a later innovation.

> it was a practice already very well entrenched

By governments. See above.

> I hope you are aware that slavery did not start or end in the US

Of course I am. See above.

> in fact it predates by a lot most forms of anything which would resemble a government.

This really depends on what you call a "government"; city-states at the beginning of civilization already had governments in at least some senses of the word. But even if we use a narrow sense of "government", it is still true that most governments in human history have practiced slavery directly, as I described above (by enslaving populations they defeated in wars). They certainly did not confine themselves to just taxing it. As I said above, that was a later innovation.