I have abandoned the market failure premise that supports government intervention into any market. Government should promote market activity by encouraging independent consumers and producers to interact and exchange goods and services.
Government can help maintain the ease of entry and exit into markets by refereeing disputes through the court system and compiling and disseminating data on producers and consumers that can aid in increasing the level of transparency in market transactions. Agencies of government compile large amounts of data that can be used for this purpose.
For example, the U.S. Department of Commerce, through its Bureau of Economic Analysis, publishes data on the economy including information on the growth in gross domestic product. The Federal Reserve provides the public with data on interest rates and per capital productivity. In addition to its jobs report, the U.S. Department of Labor reports on changes in inflation by publishing the consumer and producer price indexes.
Arguably these tasks could be contracted out to the private sector, but economic data published under a private party’s imprimatur would always be subjected to concerns about reliability and credibility.
Even after abandoning market failure as a reason for market intervention on the part of government, I cannot ignore that buyer and sellers may have imperfect information about a good or service’s attributes. Imperfect information may introduce inefficiencies in trade which leads to a dampening of trade and probable slowdowns in the overall economy. If anything by establishing an inventory of information, government can carry out its role as a promoter of the flow of commerce without having to regulate the transactional relationships of market participants or the participants’ entry into the market place to begin with.
It’s unfortunate that for all their rhetoric about free markets that the Republican Party and in particular their nominee for president have not been able to offer an in depth argument for no market intervention and the proper role of government in the markets.