I have noticed that both the Democrats and the Republicans benefit from a general ignorance of free markets, and they are quite content doing so. One such point of ignorance is deregulation. Deregulation in practice has little to do with free markets. Further, “Freer” markets do not necessarily, in application, lead to a state of affairs similar to that under Free Markets. Consider the classic issue of price controls and prejudice. Government regulation shoves a wedge under the table leading people to be able to afford to indulge their prejudices. Consequently, another wedge is shoved in from the otherside in an attempt to level the table, that is, laws against discrimination. At this point, removing one or the other wedge would make the table inspire a horrific disgust in especially those who are forced to eat at it. As one can imagine, this constant shimming of the table makes it unstable and top heavy and only the tallest can reach the table to eat comfortably at it. The metaphor could be expanded further, but this is not my main point.
Along this model, suppose that the structure of regulations is illustrated as above.
Removing the blue regulation leads to a different set of affairs, but comparison to the free market has no validity. I need not necessarily assume that the free market is flat to make this argument, for if the free market is not the definition of flat (it is), then flat is unknowable precisely because of the stack of regulations and resultant distortions continues innumerably below – Hazlitt’s one lesson.
