I think he's referring to the tendency for competition to destroy the environment, which is an unpriced common good, in the name of individual profits. It should be well known by now that a free market is not sufficient to have a stable society. At least you need structures on top to regulate it, protecting the environment and people.

I think an alternative to regulation is flexible pricing of externalities. So if you pollute, someone could evaluate exactly the impact of your pollution, and you would pay a tax to mitigate its impact or clean it up (or cleanup yourself and most avoid the tax).

I think this should work well in many cases actually![1] (I think perhaps including some soft issues like impacts of products and advertisement on our well being?) But I think simple regulation is the ideal mechanism for many kinds of activities. Here are some examples.

(1) Very large disasters and large risks. The pricing mechanism breaks down at large risks, because a company owing much more than it's valued will go insolvent, and never be able to pay the equivalent to the damage caused. At the limit entire environments can collapse in a way that just couldn't be easily restored or paid back to health. Think burning a book, no amount of money will bring it back from smoke -- don't burn the book :)

(2) Practicality of monitoring. Some kinds of activities are hard to monitor, and tracking usages and risks is probably more trouble than its worth, compared to regulating or banning certain products or practices. I leaded gasoline may be a good example. You probably wouldn't want leaded gasoline to be sold freely and then have regulators or entities going over every car and checking emissions, and carefully pricing its impact on people's health. There's little upside to using leaded gasoline (esp. compared to alternatives like adding ethanol), measuring it and evaluating it is difficult, and it impacts everyone.

(3) Simplicity. Many claim that regulations make life more complex, but I think traditional regulations and laws can make life simpler! Pricing the impact of lead, spontaneous mechanisms for pricing pollution (say trying to convince everyone to boycott leaded fuels) or something else are much more complicated than simply: ban leaded fuels, period. If absolutely necessary (as was the case with aviation gasoline I believe, for a time!), you can make special provisions for laws too. I think managing cognitive complexity should be a significant element in legislation and regulation.

I think anyone that defends free markets should staunchly defend their regulation. Because the only way we can live sustainably in a complex world with complex risks brought by activities and technologies in a market economy is introducing pricing and regulation mechanisms on top. In other words, free markets are a mechanism for pricing between two entities (usually individuals, or an individual and a company). Fundamentally, we also need mechanisms for pricing between one entity and society (generally parties outside the two-party negotiation).

[1] I think this mechanism (tracking impact and directly pricing impact) is very underutilized (I think it could become a major component of society really![2]). Also regulations can very literal (say banning a compound or dictating materials and specifications), or they can be flexible: performance and results oriented. If you're fighting say noise pollution, you could dictate a certain amount of insulator of a certain material in a house or car. However, you can also simply dictate a minimum amount of attenuation between sounds emitted inside and captured outside, and this isn't too difficult to measure (my father, a civil engineer, used to sing the praises of this kind of regulation all the time).

[2] See this link for more, and related ideas on improving society: https://news.ycombinator.com/item?id=29043752

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The other major important missing element is that large organizations and even governments are generally oriented toward maximizing economic resources (i.e. profit, GDP, etc.), and not maximizing (human) meaning, or the effect of those resources in creating good lives for everyone (quality of life, quality of experience, etc.). We should also reorient as many structures as possible toward that goal: effective meaning. We should have metrics that try to measure it imperfectly, and make more decisions in that direction[3].

I do also think we should maintain freedom of self-determination as well, because for many decisions each person is best equipped to know what's best for himself.

An ideal society balances collective wisdom helping individuals, and individual wisdom going contrary to collective wisdom when he/she knows what's best in a certain situation. This wisdom (which perhaps could be defined as knowing what matters, and knowing how to get there) of course comes from science, philosophy, art, culture, and is a major part on things working at all :)

That's a fundamental progress too imo: progress in wisdom, not just technology. Are we wise enough to know the importance of wisdom?

[3] More here: https://www.reddit.com/r/slatestarcodex/comments/175ig4l/wha...