The signatories also expressed a criticism we often hear from critics of the free market: the idea of market failure. They wrote:
The laissez-faire model assumes that markets work perfectly if the government does not intervene. But unregulated markets are not beneficial: they reinforce unequal power relations that exacerbate inequality and hinder the implementation of key development policies, including industrial, social and environmental policies.
Whose laissez-faire model? No economist I know who believes in laissez-faire or anything close to it also believes that “markets work perfectly.” We understand that they don’t work perfectly. Our argument is more sophisticated: markets work imperfectly and This also applies to governments. Furthermore, government imperfections, due to poor incentives, poor information, and poor incentives to obtain information, are typically far worse than the incentives of for-profit providers.
The economist critics also wrote:
In Argentina, as in most other countries with complex economic structures and challenges of income and wealth inequality, inflation and foreign debt, there is a need for nuanced and multifaceted policies that recognize the needs of different social groups.
Who could disagree with that? I would go further. In each “There is a need for nuanced and multifaceted policies that recognize the needs of different social groups.” That’s what a free market or even a semi-free market is so good at. You want bacon. I want steak. She wants tofu. In a relatively free market we can all get what we want. If you doubt that, try this experiment. The next time you’re standing in line at a grocery store, without being too obvious, check what the person in front of you and the person behind you have in their shopping cart. You already know the results of this experiment. What they have in their shopping cart has at most a slight overlap with what you have. In the kind of Venn diagram that Vice President Kamala Harris has said lovesthe area that the three circles have in common is very small and may even be a zero set. Now compare that with government facilities. Governments tend, partly out of laziness, partly due to lack of information, and mainly due to a lack of incentives, to favor ‘one size fits all’ provisions.
The above is from my latest Hoover article: David R. Henderson, “Critics of Milei’s policy strike,” Defining ideasJanuary 9, 2025. It is about the economist critics of Milei, but it also addresses their general criticism of free markets.
Read the whole thing.