Hmm, difficult to agree with that as a blanket statement. Generally that kind of absolutist thinking is as flawed as the same in the other direction. The optimum is likely somewhere in the middle.

For example, failure to price in externalities in a 'free' market is one of the biggest flaws, and exactly why we find ourselves in a situation of having way too much CO2 in the atmosphere.

I don't think any serious free market advocate thinks the government doesn't have a place in restricting and producing negative and positive externalities, respectively.

A free market generally means one where one's control over their person and private property is not restricted as long as that control is not being exercised to violate other's equal right to their person and private property, and to the commons.

But other than definitions, I agree with you.

Distilled down to its essence a free market grants you protection from involuntary transactions and access to voluntary transactions. Externalities are involuntary transactions, from a free market perspective they aren't any different from robbery or the dreaded... taxes.

However, taxes are collected by the government that our population has voted in (in democratic nations). This is also why we prefer government monopolies over private monopolies, because we have a degree of control, we get to choose.

The only dilemma is that the choice of government is on a societal level, individuals may not get what they voted for. However, there is no good solution to this problem and the search for a solution will only stop after the end of humanity.

Yes, that is a good distillation. There are also taxes that do not violate free market principles, like a tax on usage of land, or any other natural resource.

The incredible thing is that these free-market-respecting taxes are found by economists to have zero negative effects on economic efficiency:

https://en.wikipedia.org/wiki/Land_value_tax

They are also very easy to administer and impossible to evade - thus extremely fair - and do not require creating a surveillance state to monitor private economic interactions, as a sales or income tax do.

Maybe technically, in the sense that there has to be some sort of overarching enforcement and regulation to have a market.

But the major advantage that the free market has is that it is much better than the government at assessing the relative size of positive and negative externalities.

The government consistently underestimates the positive externalities of free market activity. Much like in this case - the people advocating that the government subsidise solar power and commit early have all been shown to have badly misjudged the situation. The free market is much better at getting clean power to people than they thought.

>Maybe technically, in the sense that there has to be some sort of overarching enforcement and regulation to have a market.

Actually, you got it exactly backwards, having a free market in the first place is a political choice the government makes. All of this is merely a fiction in our head, without that fiction we are back to the "Law of the jungle". Everything you can take and protect is yours, which is completely at odds with the idea of a free market.

>But the major advantage that the free market has is that it is much better than the government at assessing the relative size of positive and negative externalities.

The free market is the ultimate henchman of the government, it will optimize for the legislated outcome down to every single letter and squeeze every ounce of efficiency available. If the political context allows it, it will happen. If negative externalities are not balanced out via fees, this is equivalent to the government telling every entity in the economy to abuse the externality.

>The government consistently underestimates the positive externalities of free market activity.

No, it underestimates how reliable its henchman is and for some reason it doesn't know how to talk to the henchman even though it's the most natural thing in the world.

>Much like in this case - the people advocating that the government subsidise solar power and commit early have all been shown to have badly misjudged the situation.

Subsidizing solar power is wrong, for obvious reasons. The goal isn't solar power, the goal is the reduction of CO2 emissions and if possible, the reduction of the CO2 concentration in the atmosphere. This requires a stronger cap and trade system or a CO2 price, in theory these are equivalent, in practice the former is prone to too much meddling.

>The free market is much better at getting clean power to people than they thought.

What we need is less government "intervention" and more government activity in the market as the ultimate investor, let the henchman do the actual work.

The development of solar has been heavily subsidized by governments, so there isn't really a free marker success story here. If anything it's a story of how well long term interests, tethered to Nation-state level wealth via taxation, can work hand in hand with market forces.

The development of fossil fuels has been even more heavily subsidized by governments, to the tune of USD 5.2 trillion in 2017, up from USD 4.7 trillion in 2015.

https://www.imf.org/en/Publications/WP/Issues/2019/05/02/Glo...

How do you suggest any other source of energy compete in this kind of market?

If you push for free markets, Big Oil isn't going to be the first to yield. If we can't get rid of CO₂ subsidies, solar subsidies are necessary.

The free market really has no method of pricing developments with 30+ years to profit/free cash flow. The government first started subsidizing solar to be price competitive in specific situations in the 1970s.

There simply aren't any rational free market actors funding large unprofitable initiatives for 40 years with the expectation that the technology will be a bananza after all the principals have retired or are dead.

Exactly, private market r&d dollars chase a local maximum that influenced by the length of patent laws.

Isn’t the damage to climate and health arguably a subsidy to big oil? While they get that damage for free, of course they win.

Actually, they wouldn't win; many renewables are cheaper than fossil fuels nowadays. Though this is a good point; we need to factor “stealing from the future” and other externalities into the price somehow, if we are to use a capitalist market. (Hence carbon taxes, rather than carbon subsidies, should be government policy.)

If you mean by "free market", a market that prices in all externalities, then yes. If you mean by "free market" a market where environmental destruction is free, then no.

Why not go faster with subsidies?

Which is what most of the world did and what got us to this point.

Pushing for free markets? Capitalism and free markets got us into the whole mess in the first place.

Subsidizing fossil fuels and fraud from Exxon got us where we are now. Although I would recommend subsidizing renewable sources instead of going full free market - just pointing out we never really had that.