In a totally free market, person A freely enters into an exchange with person B, where he gives X in return for Y — and both are better off.
If A didn’t want Y more than he wanted X, and if B didn’t want X more than he wanted Y, then the exchange would not have taken place — and yet, overall, there is no more X and Y after the exchange than there was before.
But what if A couldn’t just get Y, but instead had to take a bundle of things with it? And, similarly, X was wrapped up in a package of mandates. The simple X for Y swap, where each party could be easily satisfied and could easily evaluate the quality of the items given and received, would become extremely complex, and would increasingly be more about how the f in “X+efg” was far less bad than the k in “Y+jkl”. It may end up that the A’s aversion to k might so far counteract his attraction to Y that the exchange never takes place at all. Which would be a shame since all A and B wanted to do was swap X and Y, after which they’d both feel better off.
Government has ensured that people cannot simply exchange their efforts for money, but must also include labor laws, health insurance, pension plans, and taxes in their calculations of relative value. Is it any wonder that neither employer nor employee is ever really happy with the package?
