A lot of misconceptions surround free markets. Some are benign, but others are dangerous. Here are the four fallacies that have affected these markets since time immemorial.

Governments Can Solve Problems

If you believe governments can really solve problems, think again. Most solutions are pork-barreled, which means they increase the cost and damage of intervention for their own good. Their own interests over the general public.

One classic example is the New Deal reforms of the 1930s. Although these were expensive at that time, Social Security, one of the surviving political creations, has escalated tax burden since its inception. In simplest terms, these solutions aggravate economic woes. It frequently appears the real rationale behind political decisions is to retain the decision-makers in politics.

Taxes Affect No Output

Taxes, in some cases, are considered as zero-sum game. Governments takes a particular amount out of entities and spends it on other things. We pay taxes, they construct roads and schools, but the total of economic activity remains unchanged. On the other hand, free market supporters stipulate taxes inflict a negative economic impact as it cuts the incentives to produce more, which in turn lowers the national output.

The more an entity earns, the less they keep as a portion of their total income. Yes, removing the bracket creep reduces this for individuals, when increments in income are merely an inflationary phenomenon. But the government simply takes a larger portion as you work harder and generate more income.

Inflation is Inevitable

Inflation is a natural phenomenon, but nothing special about it. Inflation can bolster some groups in the short-term. However, it only helps the government in the long run by rendering more funds to allocate while slashing the real value of its debts. It is no coincidence the main beneficiary of inflation has a hard time controlling inflation. There are several ways to counter inflation, but no one can stop it.

Free Market = No Regulation

Free and unregulated are two different things. But realistically speaking, self-regulated market is too easy to say. Free market economists argue consumer interest groups and self-set industry standards could replace majority of government regulation. They oversee regulation in one way or another. But the lobbying of consumer groups and industry influencing measures can be a more costly manner to get the job done.