Those seeking stark contrasts in Wednesday's debate between between US President Barack Obama and Republican presidential nominee Mitt Romney presumably came away disappointed. The repeating sequence ran something like:
Romney: "Well, yes, X, but I'll do X better and smarter than you because I'm Mitt Romney and you're not."
Romney's best laugh line came after Obama asserted that his "small government" opponent wants to take America back to the bad old days of 2008, when only 80,700 pages of new regulations were added to the US government's Federal Register, as opposed to the much more robust 2011 period when that number rose to 82,419 pages.
"Regulation," replied Romney, "is essential. You can't have a free market work if you don't have regulation. ... You couldn't have people opening up banks in their -- in their garage and making loans. I mean, you have to have regulations so that you can have an economy work."
Romney's objection to government regulation isn't that it's inherently bad or that it doesn't work. It's that some of it may be wrong-headed (e.g. designating a few banks "too big to fail") or that the regulations may not be specific enough to allow for regime certainty (e.g. failure to carefully define some terms in a piece of mortgage regulation). But Mitt's down with the idea that a "free economy" can be run from Capitol Hill and the Oval Office, if only we pick the right guys to run it.
As the kids say: Facepalm. The difference between a free economy and an un-free economy IS government – i.e. top-down, hierarchic, uniform, centralized -- regulation. And the difference between free and un-free is a lot like the difference between not pregnant and pregnant. A pregnant woman is pregnant whether she's carrying a one-day-old fertilized embryo, a five-day-old blastocyst, or a six-month-old fetus.
Not to be facile: There's more regulation in a free economy than Adam Smith's beautiful and useful "Invisible Hand" metaphor might indicate as a superficial assessment. But regulation in a free economy is continuously emergent and multi-variably contingent, shaped by a distributed and networked aggregate of voluntary interactions, not by political edict. It's a beautiful thing (see Kevin Carson's The Desktop Regulatory State for more information on it). Non-government regulation produces a continuously improving quality of life for market actors.
Political government and its regulatory schemes don't just impede that process, they seek to freeze it in place, in favor of whichever market actors happen to be on top at the moment (or, as in the case of the "too big too fail" banks, find themselves hanging from a cliff and reaching up for a hand from their politically connected friends).
Hence Romney's obvious horror at the notion of "people opening up banks ... in their garage and making loans." He's not interested in a "free economy." He's interested in proving himself a worthy servant of the existing un-free economy's current masters.