Then there is the modern "conservative" ideal of a "free market", which in actuality is a "free-for-all" market. Jobs fly overseas, simple and inexpensive safety equipment/procedures are set aside to add a few more cents to a company's profits, and predatory lending takes hold.
When jobs fly overseas...who do we blame?
A. the consumer for wanting less expensive products
B. the American worker for wanting higher wages
C. the producer for wanting larger profits
D. all of the above
In each case, the individual was simply trying to maximize their utility. In other words, we all want the most bang for our buck.
In a free-market, we're all free to shop around for the best deals. Consumers, producers and workers can all try and avoid getting ripped off. They all have the freedom to say "no thanks" when confronted with lemons.
For example, here I am trying to sell you pragmatarianism. If you don't think it's a valuable product...then you can say "no thanks". Except, what I'm trying to sell to you is the importance of your freedom to say "no thanks". So it's bittersweet when people say "no thanks" to pragmatarianism.
Given that we can't say "no thanks" in the public sector...many times we end up having our tax dollars spent on public goods which do not match our preferences. For example, pacifists end up having to pay for war. This is known as the forced rider problem. It's the inevitable consequence of compulsory taxation. And why do we have compulsory taxation? Because of the free-rider problem. And why is there a free-rider problem? Because people are utility maximizers.
Public goods, such as national defense, are collective...so it's difficult, if not impossible, to prevent somebody from enjoying the benefits. As a result, because people are utility maximizers, it's rational for people to expect that others will pick up the tab for national defense. They could have all of the benefits of national defense at none of the cost. But if nobody picked up the tab...or too few people picked up the tab...then we wouldn't have enough national defense and everybody would suffer as a result.
So we resort to forcing everybody to pick up a portion of the tab. But this doesn't tell us your preferences for public goods. Why? Because somebody else is ordering for you. Maybe it wasn't somebody you voted for. Maybe it was somebody you voted for...but they aren't ordering what they said that they were going to order.
The bottom line is that government planners are not omniscient. They don't know what your true preferences are. Without knowing the actual demand for public goods, it's impossible for them to supply the optimal amounts of public goods. This is known as the preference revelation problem. The solution is to create a market in the public sector and give taxpayers the freedom to shop for themselves. They will use their own tax dollars to communicate their preferences (demand).
Would they lie about their preferences? Why would they? The cost is a foregone conclusion. Because they are utility maximizers, they will try and get the most bang for their tax dollars. They will say "no thanks" to nonsensical uses of their tax dollars. As a result, over time, the supply of public goods will better match taxpayers' preferences. In other words, the allocation of society's resources will become more efficient. We won't end up with too much national defense and not enough public healthcare. Therefore the outcome will be the balance of public goods that maximizes society's benefit.