How free should the free market be?

Not completely, in my opinion. We need rules. Of course, we tend to accept that in most areas. I'm sure there are a few extreme libertarians who can't stand that there is a federal agency that regulates whether a drug is safe enough to be prescribed, I'm pretty happy that we don't just leave that up to the free market. Sure, eventually enough people might make the connection between Vioxx and heart disease, but the human cost in the interim would be pretty substantial. Of course, the FDA has its own problems (currently, its decisions are based on GOP moral standards rather than science), but that doesn't mean that abolishing it would make us better off. Ditto for food quality standards, traffic laws, etc. There are some things that the government should do -- "promote the general welfare" -- as the Constitution puts it.

Am I beating up a straw man right now? I dunno, I've been in some pretty aggressive arguments with those who worship at the Alter of the Free Market. I'm sure that some of those people are horrified at the current proposed bailout (whatever form it ends up taking) because such market intervention is anathema to free market dogma (I'm horrified for other reasons).

As an aside, and allow me to speak in broad generalizations. You're much more likely to find Extreme Free Marketers (privatize stop lights!) in the Republican party. The idea is that, if left entirely to their own devices, devoid of any top-down intervention, the individual actions of people & businesses will spontaneously produce a functioning economy: the Invisible Hand will take over and create order out of chaos, out of individual units pursuing their own ends, from the bottom-up. Yet that exact same party is absolutely befuddled by the idea of evolution. Go figure.

Have I contradicted myself? Have I in one paragraph expressed my desire for the free market to have limits, but then, by "believing" in evolution (there's no such thing as a belief in facts, just ignorance of them), weakened my argument that the free market needs limits? Hell no! The 'problem' with evolution from a human perspective -- knee and back problems, because we've only been bipedal for a short time; cancer susceptibility, because we usually died well before mutant cells became an issue; obesity, because food used to be rate-limiting -- the problem is that evolution can only work on the immediate here and now. To an outside observer, evolution could be driving 'you' off a cliff, but evolution is blind to any long-term perspective, to any knowledge of what is around the bend.

Governments and people, however, are not blind to the consequences of short-term decisions. Option One is for the government to allow companies that made terrible decisions about whom to lend money to, how to invest it, etc. fail and die off. It appears, however, that doing so would end up hurting a lot of non-culpable people (maybe?), or at least, that's the general rationale for why we need a bail-out, that inaction will create a vortex that everyone will get sucked into (just like the Large Haldron Collider). Option Two would be for governments and people to realize that, since we have brains that have learned historical and experimental lessons, perhaps we should set-up some rules for this free market such that rampant speculation doesn't end up sucking us all into the aforementioned vortex.

Put another way, a rational designer could certainly come up with much better ways for designing cells such that we don't have a 50/50 shot of getting cancer if we live past age 60, but evolution doesn't have a rational designer. The American economy does, however, and it would be foolish not to use it to prevent screw ups like the one we're in.