>It's 'committees or small groups' which made it illegal to buy radium toothpaste. It's 'committees or small groups' which made it illegal to put drugs on the market without testing. It's 'committees or small groups' which put into place federal meat inspections.
You're missing the operative element of my statement, which was "any system where prices are determined". It refers to the specific corruptibility of artifical governmental price fixing and its devastating effects on a free market. It is true that there will always be some element of politics affecting the marketplace, unless there is no government in place. It's OK to have a government that is interested in neutrality and takes all reasonable precautions to ensure things remain free and fair for both the supply and demand sides of the marketplace. Yes, small committees will have some decisions to make, and yes, they would also be subject to possible corruption or bribery, but as long as the government stays roughly within its provisioned and proper sphere (and it's our job to ensure they do so), it shouldn't have such painful direct ramifications.
I was going to reply with the same thing rokhayakebe did. Regulation and government still exist in a free market. If the vendor intentionally misrepresents the contents of his product, he has committed fraud and should be held criminally liable. There's nothing fundamentally incompatible about a standards and testing body and the free market.
Free markets have rules to keep the playing field even and fair, and to prevent the balance of power from tipping too far in any one direction. A market is not free if it is impossible to enter due to monopolistic forces, and a market is not free if the consumers are mislead or otherwise deprived of the information needed to make an informed purchasing decision. Free markets are not anarchy.
I was considering that "illegal to purchase" is equivalent to setting the legal market price to infinity, along with possible illiquid aspects like jail time.
Of course, in practice business will spread over to the illegal marketplace. However, I think you also were excluding the illegal marketplace. Consider that if a committee or small group sets the price of wart removal to, say, $20,000, there will still be an illegal marketplace for that procedure. Vice versa, if the price of heart surgery is set to $1, then there will be no public marketplace for it, but it will still be available in the illegal marketplace.
So in truth there is no such thing as a committee or small group which can absolutely set the price. That said, I, like you, am only considering the public, legal marketplace.
You say "devastating effects on a free market" like it's a universal bad thing. The things I pointed out - the regulation of food and drugs - in truth did have devastating effects on the patent medicine market. I think that's a good thing.
Government price controls on the polio vaccine, and the nearly complete eradication of that disease, caused a collapse of the iron lung manufacturing marketplace. I do not cry over that loss. I don't even think the producers of those iron lungs were seriously distressed about their economic losses.
So I absolutely agree with you that some controls can be devastating. That's, um, why the controls were put into place.
Thus, I think you need to describe specific devastating effects on a specific market, and not make a blanket statement that covers the entire market. I'm happy that the market for 9 year old coal miners has been devastated. (Yes, this was done by prohibition. We could get the same effect by fixing the price of child labor to $1 million/hour.)
"If the vendor intentionally misrepresents the contents of his product"
As I pointed out with Elixir sulfanilamide, which killed 100 people, the producer did not really misrepresent the contents of the product. Quoting from http://www.fda.gov/%20AboutFDA/WhatWeDo/History/ProductRegul... "Selling toxic drugs was, undoubtedly, bad for business and could damage a firm's reputation, but it was not illegal."
Read it, to see how difficult it was to track down the 240 gallons of toxic elixir. The only crime, by the way, was the use of the word "elixir". Had they used "solution" instead then the "FDA would have had no legal authority to ensure the recovery of the drug and many more people probably would have died."
You say "There's nothing fundamentally incompatible about a standards and testing body and the free market". Obviously the standards and testing body has to set certain rules. How are those rules determined? Aren't they equally determined by a 'committee or small group' and as corruptible as the Medicare payouts are now?
For example, various states are trying to prohibit the Constitutional right to an abortion by the round-about means of making it extremely difficult and expensive to operate a medical center which carries out abortions. This is done under the guise of improving safety standards at those centers and making sure that the women getting the abortion are fully informed of the details and have had the time to reflect on the decision.
This seems like a prime example of how a standards body can block the free market, even without price controls.
To make up an example using a less sensitive topic than abortion, consider if every purchase of a beer required sitting through a 2 hour video on the negative effects of alcohol, including video of car crashes caused by driving while intoxicated and surgical footage of liver surgery due to liver cirrhosis. It makes sure that consumers are neither mislead nor deprived of information - and yet it's a burden on the free market, no?
So I don't see the difference. One is a financial limit, another is a regulatory limit, but both are limits to a free market.
How does a free market with a standards and testing body supposed to work, and also be significantly less subject to free market manipulation than what we have now?
Lastly, you used the phrase "provisioned and proper sphere". Such a sphere is only defined by politics, because your sphere and my sphere can be very different. Consider a law like the 14th Amendment, Section 4, which says that reparations for "any claim for the loss or emancipation of any slave" were null and void. Why can't an ex-slaveholder say that taking property isn't part of the proper sphere, and insist on getting compensation? Wouldn't that be the 'neutral' position of the market?
You're missing the operative element of my statement, which was "any system where prices are determined". It refers to the specific corruptibility of artifical governmental price fixing and its devastating effects on a free market. It is true that there will always be some element of politics affecting the marketplace, unless there is no government in place. It's OK to have a government that is interested in neutrality and takes all reasonable precautions to ensure things remain free and fair for both the supply and demand sides of the marketplace. Yes, small committees will have some decisions to make, and yes, they would also be subject to possible corruption or bribery, but as long as the government stays roughly within its provisioned and proper sphere (and it's our job to ensure they do so), it shouldn't have such painful direct ramifications.
I was going to reply with the same thing rokhayakebe did. Regulation and government still exist in a free market. If the vendor intentionally misrepresents the contents of his product, he has committed fraud and should be held criminally liable. There's nothing fundamentally incompatible about a standards and testing body and the free market.
Free markets have rules to keep the playing field even and fair, and to prevent the balance of power from tipping too far in any one direction. A market is not free if it is impossible to enter due to monopolistic forces, and a market is not free if the consumers are mislead or otherwise deprived of the information needed to make an informed purchasing decision. Free markets are not anarchy.