The problem is that when you let everyone do the planning it never
works. It's chaos. When you allow the smartest people to do the planning
Actually it works very well in a chaotic way. The smartest and
luckiest do well. You have companies as Amazon, Ebay, Facebook,
Microsoft, Intel doing really well. Even in industries as steel you

Competition and free allocation of capital works very well in most
areas. For example, I can compare various lawn mowing persons and hire
the one who gives me best service for money.

Same applies to most products and industries.

Where competition and free market allocation does not work, without
regulation, falls into three areas.

1. Where quality of product is not obvious to consumer and needs to be
regulated. For example, milk sold in stores is regulated as to its fat
content, expiration day, etc. Another example of many, is gasoline. If
stores could cheat and sell adulterated products, they would, and it
would be difficult to see real competition, and the public would be
hurt.

2. Financial activities that lead to creation of money, such as
fractional reserve banking in all forms, leads to regular economic
disruptions of large magnitude (think of bank panics).

3. Activities where large costs are externalized and borne by the
public in general. Typical example is industries that dump their
wastes and pollute environment. Without regulation, we would live in a
world like China (search "china environment" in Google Images).

Item number 1 is the most controversial and its proper treatment is
far from simple.

i


Good points. But the problem seems to me to be that aside from a few
isolated places there really isn't a free market anywhere. Every country
interferes in the market to some degree. Some do it sparingly and some
are into it fully. That is the world market, a place where there is no
level playing ground. Whether it's oil cartels, a monopoly on diamonds,
dictatorships with command economies, or countries with protected
markets, it all adds up to a worldwide system that is anything but a
"free market" system. Everything is under someone's control.

Besides that the free market theory is an 18th century idea and last
time I looked it's the 21st century. Things have changed and the free
market is not keeping up with the modern world. It's about time we
produce a modern theory to replace it with. It had its day and now it's
over. All you have to do is look around the world and you will find that
where so called free markets exist the people are not prosperous. A
select few are very wealthy but the majority do not do well. Case in
point, take Mexico. As far as I know Mexico has a capitalistic, free
market system. Corrupt, but a free market. I just heard yesterday that
2/3 of their stock market capitalization is made up of companies all
under the control of one man, Carlos Slim, the richest man in the
country. Mexico also has a lot of billionaires. If you look at the rest
of the nations that are "free market" systems you see the same pattern.
Maybe not as severe but the same thing in general. The majority of the
people are not very well off and a rich elite own everything. Hey, just
like the U.S. So I guess all free market countries are like that. I
think if we try we can come up with something that doesn't distribute
the wealth quite so unfairly.

Hawke