Firstly, the basic idea of using demand-supply pricing alone is flawed. If I have to make a car, I will make sure I can recover the cost of making a car by setting a minimum price for the car. The demand-supply can then set my profit margins and not the price of the car as a whole.

Similarly, in a labor market, I have to calculate a certain minimum that each man needs to live his life, so that he can afford quality housing, health care and education for his kids. This minimum is not negotiable. Any margins I want to make after this are subject to demand-supply pricing.

Secondly, The government does not have the power of negative alone. The government does have the power to run its own insurance program if the private insurance providers charge so much for insurance that half of America can’t afford health care. The reason the private insurers charge so much is partly because of flawed business models in the hospitals and partly because of drug-insurance oligopolies and the government can help correct these by introducing competition into the market.

Thirdly, here are FTCs allegations on Intel: “The FTC alleges that Intel strong-armed computer makers into exclusive deals, manipulated technical data to make its chips look more powerful than those from competitors and blocked rivals from making its chips work with Intel’s.” ( Link: http://news.yahoo.com/s/ap/20091216/ap_on_hi_te/us_tec_intel_ftc_antitrust )

How is manipulating data free and fair competition ?

In engineering, we have standards for every component we make to ensure interoperability of the myriad of devices we see around us. These standards in no way affect the quality of product or service adversely. And these standards are what makes the market an even playing ground for any new comer. When companies like Intel, which command largest market shares, fail to abide by these standards, it encourages monopolies and works against the very idea of a free market.

The role of the government is to ensure that there is a free and fair market competition between all players and that no individual is exploited in terms of a wage which doesn’t afford quality housing, health care and education. This is what life, liberty and pursuit of happiness means.

So the government’s role is an active and positive role in shaping a healthy society and not a negative one as you pointed out.

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