[mbostleman]

>>but it is not ok that a company can pay employees low because the government will pick up the other half>>

I don't think this is a situation that applies to the idea of self-regulation. In this case, a distortion of the market is first created by the government subsidy. So the natural behavior of a business would be to leverage it. Just as the natural behavior of the IRS is to go after things like your company's paying for your cell phone and calling it taxable income.

I would suggest that the idea of self-regulation is best applied where there are no market distortions from the government that have already warped the context.