Richard Ebeling emails:
I have a new article on the Future of Freedom Foundation website on, "Governments Create Monopolies and Cause Worker Exploitation, Not Free Markets."
Nobel economist, Joseph E. Stiglitz, in a recent article has argued that free markets generate monopolies and cause worker and consumer exploitation due to "market power" and asymmetric information . Not surprisingly, he concludes that the only "cure" is more government regulation and control of private enterprise.
I argue that Stiglitz misinterprets and fails to appreciate the difference between competitive free markets and the consequences from government intervention and "crony" capitalism. The "market failures" to which he points are, in fact, and instead the outcomes form government regulations, controls and restrictions that benefit special interests at the expense of consumers and potential competitions locked out of markets due to favors and privileges for those close to political power.
His argument that knowledge in the market is imperfect in ways that enable sellers to take economic advantage of consumers and others ignores the competitive market's own institutional mechanisms to minimize and reduce the ability of some using superior knowledge to "exploit" others.
And it is the government own interventions into labor markets that are the primary cause of some workers not gains their proper and just due in the transactions of the market place. The very policies is calls for and admires are the cause of the very problems that he bemoans.