I ended up in a debate with someone who was clearly a Libertarian (debate is a rather positive interpretation; it was more like a monologue as I didn’t really get a chance to say much). The basic point that was being made was that government interference (regulation) gives advantages to (for example) the big banks and distorts the market. In some sense there is some merit in this and I certainly feel that governments have been unduly influenced by the banking sector so that the system now benefits the banks (and their investors) rather than society, I’m just not convinced that the solution is to reduce government involvement.
The Libertarian view seems to be that if we reduce regulation we will have a level playing field and the markets can reach some kind of equilibrium. In some sense they are probably completely correct; with no external influences the markets would reach some kind of equilibrium, it’s just not clear that the equilibrium would be one that would benefit society as a whole. There is nothing to say that the system couldn’t evolve into one in which a small minority have all the wealth and all (or most) of the income. There’s no guarantee that healthcare will be available to all (look at healthcare in the US). There’s no reason to think the system would evolve to one in which all children could attend a suitable school.
The role of government, in my view at least, is to provide some kind of feedback that attempts to shift the equilibrium back to one that is of maximal benefit to society, rather than to one that benefits a minority. It’s my view that governments do need to regulate the markets but should do so in a way that is optimal. Too much regulation is clearly bad, but too little can lead to a system that benefits the few rather than the many. In some sense it seems like it should be constantly evolving. Regulations should be adapted to optimise the markets. If it seems like regulations are hampering growth, reduce the regulation. If it seems like a minority are benefiting at the expense of the rest of society, increase or change the regulations. I just don’t see how you can have no regulations.
A similar argument is made by climate change deniers. They argue that the Earth will settle into some kind of equilibrium. Clearly correct but, again, there is no guarantee that the equilibrium will be one in which we can survive. Venus is in equilibrium, but the surface temperature is about 500 K. It seems like these people say something that has an element of truth and then use that to justify their worldview. I don’t know if it is because they really believe it or because they just can’t see the big picture. Probably a combination of the two.