So: for the last thirty years, political debate in the United States has been organized around a supposed choice between big government and small government.
This debate rests on mistaken assumptions and should be abandoned. Above all, both sides of the size-of-government debate assume that there is a clear and categorical distinction between “the government” (or “government intervention,” or “regulation”) and “the market” (or “the free market,” or “private markets”). Advocates of the market argue that distributing goods and services through the market makes us more free. In the market, they say, we have choices, while when the government provides goods and services, we do not. Also, they add, businesses in the market cannot coerce us as the government can through fines and imprisonment. Advocates of government intervention, on the other hand, point to the many failures of private markets, and argue that government can correct those failures. They assume that government responds to the needs of the people in ways that private businesses do not.
But the sharp distinctions that both sides of the debate draw between the government and private markets do not exist. After the jump, I offer three reasons why.