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 Originally Posted by Jack Sawyer
Hmmm, ok ok, let's continue with the mind experiment
Technically, isn't the free market in play at all times? Aren't they free to do as they wish? Didn't they out of their free will choose this particular path, with resulted in their ridiculous "reprimand" by the FTC? I mean, it IS a scam after all. If this wasn't a problem with the FTC, why would they stop scamming?
How would the free market solve this problem without government intervention? Wouldn't you still need the same whistleblowers and the same watchdogs that are paying attention to sound the alarms? Or would it be done in a completely different way that we do not know of but we'd have to trust because it's the free market and it can do no wrong?
So would this particular scam not be a scam in a fully free market?
One important principle is that you can't keep people from scamming. Create all the rules you want, but someone will always figure out a way to get around them. If the guys in this particular example with the skin gambling site weren't so oblivious and stupid, they would have never gotten caught.
As for how the free market can regulate itself, eCOGRA (https://en.wikipedia.org/wiki/ECOGRA) is a good example. They are an independent company that offers certifications to show that online gambling operations are within certain guidelines, and they have a better long-term reputation than any government licensing jurisdiction on the planet. Companies like eCOGRA showed up because there are no international guidelines or regulatory bodies for online gambling, and it's an excellent example of the market providing accountability in an area where government was not.
Another principle is that it's much easier to corrupt government entities than it is to corrupt profit-driven companies due to the incentives and accountability at play, which is driven by the free market. The example of the FTC giving the "slap on the wrist" in the above case is a good example. If the FTC was profit-driven, not adhering to their own rules (which is what happened with the lack of enforcement) hurts their reputation and their bottom line in a major way. If eCOGRA did that once, their entire business model would fall apart.
The point isn't to be without whistleblowers, watchdogs and other forms of accountability. Those are 100 percent needed because, as I mentioned in my first paragraph above, there is no way to 100 percent stop scamming of some type in virtually any industry or sector. The point is that there is no consistent level of accountability with the FTC and other government agencies whatsoever, as you can see in the lack of enforcement of the existing FTC rules in the above scenario (and I'm sure you can think of an almost endless list of other examples).
It's also not that the free market can "do no wrong" or that it's perfect. Instead, the argument is that it's much more efficient and effective than government intervention at these types of things (and at a lot of other things) because of the incentive structures in place.
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