| Free markets are always regulated. I can't have slaves. In California, I can't have non-competes. I'm not allowed to dump toxic waste in the water supply. I need to take care of injured employees. I can't sell toxic food. Etc. Free market capitalism is really good algorithm at approximating an optimal solution to the problem posed to it. Regulation is needed to define the problem. Regulation is really poor at coming up with solutions to problems, and free market capitalism is really poor at defining problems. I'd recommend a quick re-read of Adam Smith. Building codes are an example of a bad regulations. They require e.g. a specific spacing of wooden beams, and specific materials used. That's regulation defining a solution. When people come up with better ways to achieve the same level of safety, it's banned. In contrast, for example, a lot of codes around EMI and consumer electronics are good regulations. They require bounds on how much EMI is emitted, but leave the free market to solve the problem. That works well. Fines and mandatory insurance are another example of good regulation, whereas bans are usually bad regulation. If there is an externality, a fine places a cost on it, and a free market can optimize to it. A ban distorts a free market. Mandatory insurance too allows us to price in the cost of externalities with market mechanisms. In this case, if you allow logging where: - Underbush has to be removed to within some level - Trees ought to be left to a specific spacing ... and so on, things will work out okay. If you require loggers to have insurance, such that if a fire breaks out where they logged within some time window, insurance covers the damage, very smart finance people will figure out which things are high ROI and which are low ROI, and things will work out even better. |