Myths/markets regulate themselves

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[[category:myths|Business doesn't need government regulation; a truly free market will regulate itself.]]

Myth: Business doesn't need government regulation; a truly free market will regulate itself.

Myth

Example

• "Saying that regulation works is bullshit. That's the point. You can't regulate better than the market can. Monopolies happened when the government got big. Thank you TR, FDR, and Wilson."

Reality

Markets don't "regulate themselves" in the sense of limiting abuse. When economists talk about how a market "regulates itself," what they mean is that markets reach an equilibrium between supply and demand. This says nothing about whether or not this equilibrium will be a good thing for society.

A marketplace without external regulation deteriorates into a feudal state as the wealthiest collude and use their power to extract more and more wealth from the less-wealthy, resulting in an ever-increasing spiral of wealth concentration accompanied by increasing piracy and squabbling over the remaining wealth as the market's ability to create new wealth deteriorates.

Summary: You can't have a good game without empowered referees.